American Tax Reduction Plan Act

American Tax Reduction Plan Act - States as the purposes of this Act: (1) the reduction of the public debt; (2) the imposition of limits on Federal spending; (3) the inducement of Members of Congress to eliminate unneeded Federal programs; (4) the reduction of individual income taxes; (5) the reduction of corporate income taxes; (6) tax relief for homeowners; and (7) the indexation of tax rates to reflect inflation of income.

Title I: Individual Income Tax Rate Reductions - Amends the Internal Revenue Code to reduce individual and estate and trust income tax rates for 1979 and 1980, and to make a permanent reduction in such rates for years after 1981.

Title II: Provisions Relating to Capital Gains - Reduces the alternative tax on capital gains to 25 percent of the net capital gain. Eliminates capital gains as an item of tax preference for purposes of the minimum and maximum tax.

Allows a taxpayer to elect to offset against taxable income all capital losses not in excess of taxable income. Permits a one year carryover of losses in excess of taxable income.

Title III: Corporate Income Tax Rate Reductions; Provisions Providing Tax Consistency - Reduces corporate tax rates to 16 percent of the first $25,000 of taxable income and 18 percent of so much of the taxable income that exceeds $25,000. Reduces the surtax to 22 percent of the amount that exceeds the surtax exemption. Establishes a permanent $50,000 surtax exemption for all corporations except certain controlled corporations.

Repeals the investment tax credit.

Eliminates the tax exemption for (1) interest earned on industrial development bonds issued to governmental units and tax-exempt organizations; (2) interest on bonds issued for the construction of specified facilities and for industrial parks; and (3) interest earned on certain small issues of industrial development bonds.

Repeals the allowance for deductions with respect to the amortization of any certified pollution control facility based on a period of 60 months.

Repeals the allowance for deductions of intangible drilling and development costs for oil and gas wells.

States that the last taxable year in which financial institutions may use the percentage method of computing additions to bad debt reserves shall be the taxable year beginning before 1979 instead of 1988 as is currently provided.

Repeals the existing percentages allowed for depletion of mines, wells, and specified natural deposits, and the percentages allowed for oil and gas wells. Specifies those treatment processes for mineral deposits which are considered mining, and those which are not so considered, for the purposes of the percentage depletion allowance.

Repeals the allowance for special deductions for domestic corporations which do business in North, Central, or Sourth America, or in the West Indies, and derive a certain percentage of their gross income from outside the United States.

Repeals provisions allowing special tax treatment for Domestic International Sales Corporations (DISC).

Repeals provisions of the Merchant Marine Act of 1936 which permit domestic shipping companies to exclude from gross income amounts deposited in the capital construction fund for the purpose of building new vessels.

Establishes a tax credit for contributions to an employee stock ownership plan. Limits such credit to one half of one percent of the taxpayer's liability for the taxable year. Sets forth requirements for the establishment of such plans.

Title IV: Provisions Relating to Indexing for Inflation - Requires inflation adjustments to income brackets for purposes of the individual income tax, the normal tax on corporate income, and the surtax exemption. Requires a similar adjustment to capital assets for purposes of determining gain or loss.

Eliminates the declining balance and sum of the years-digit methods of computing allowable depreciation expense. Limits deductions for such depreciation to amounts determined by a replacement cost straight line method, or by any other consistent method which does not yield an amount which exceeds the total amount allowed under the replacement cost straight line method during the first two-thirds of the property's useful life.

Title V: Limitation of Increases in Federal Spending - Limits the increase in Federal expenditures for any fiscal year to two percent of the expenditures for the previous year, after adjustments for inflation.