§936 Adjustment for Current Policies

Summary

Makes budget offices change their PAYGO score when a new law changes one of four things: payments to doctors under section 1395w–4 of title 42, the Estate and Gift Tax in subtitle B of title 26, the alternative minimum tax (AMT), or certain tax provisions from EGTRRA or JGTRRA (but not parts made permanent by the Pension Protection Act of 2006, not the estate and gift tax changes, not the AMT itself, and not income tax rates for people over $200,000 single / $250,000 joint). The rule stays in effect through December 31, 2011. When a bill meets the rule, the adjustment equals the difference between (A) the budget numbers projected as scheduled on December 31, 2009 and (B) what those numbers would have been under a specific “what if” assumption for that area. For Medicare doctors, the “what if” is keeping 2009 nominal payment rates through December 31, 2014 and then using the scheduled rates after that (or a shorter period if the bill only covers fewer years). For the estate and gift tax, the “what if” keeps 2009 tax rates and exemption amounts through December 31, 2011, with exemptions indexed for inflation as described below (or only for the bill’s covered years). For AMT relief, the “what if” raises AMT exemption amounts so the number of taxpayers affected never exceeds the 2008 level through December 31, 2011 (or only for the bill’s covered years). For extending middle‑class tax cuts, the rule applies if a bill extends any of several listed tax breaks (examples include the 10% bracket, child credit, marriage tax changes, education and child care credits, some tax brackets, capital gains and dividend rates for taxpayers with AGI up to $200,000/$250,000, phaseouts, and section 179 increases); the adjustment is the difference between scheduled revenues/outlays and making those provisions permanent (or limited to the bill’s covered years if not permanent). Indexed amounts rise each year by the cost‑of‑living adjustment using “calendar year 2008” in place of “calendar year 1992.” For estimates, middle‑class tax items are calculated assuming the AMT stayed as scheduled on December 31, 2009 and, if many items are in one bill, they are estimated in the order they appear; AMT changes are estimated as if all the middle‑class provisions were made permanent.