Economic Stimulus Tax Act of 1993

Summary: Economic Stimulus Tax Act of 1993 - Amends the Internal Revenue Code (IRC) to repeal the limitation on passive activity losses and credits. 
Shortens the recovery period (providing for accelerated depreciation) for residential rental property and nonresidental real property. 
Restores the ten-percent general investment tax credit. 
Allows individuals and corporations a deduction of 50 percent of the net capital gain from assets held for at least one year. 
Increases the deduction for health insurance costs for self-employed individuals from 25 percent to 100 percent.  Makes such deduction permanent. 
Repeals the Tax Reform Act of 1986 to restore IRC provisions relating to income averaging. 
Removes the ceiling on wages subject to social security taxes and provides a reduction in such taxes.

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Economic Stimulus 
Tax Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. REPEAL OF LIMITATION ON PASSIVE ACTIVITY LOSSES AND CREDITS.

    (a) In General.--Section 469 (relating to passive activity losses 
and credits limited) is hereby repealed.
    (b) Conforming Amendment.--The table of sections for subpart C of 
part II of subchapter E of chapter 1 is amended by striking the item 
relating to section 469.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 3. ACCELERATED DEPRECIATION SCHEDULE FOR REAL ESTATE.

    (a) In General.--Paragraph (1) of section 168(c) (relating to 
applicable recovery period) is amended by striking the items relating 
to residential rental property and nonresidential real property and 
inserting the following:

        ``Residential rental property................          15 years
        Nonresidential real property.................       18 years''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 1993.

SEC. 4. RESTORATION OF 10-PERCENT INVESTMENT TAX CREDIT.

    (a) Allowance of Credit.--Section 46 (relating to amount of 
investment credit) is amended by striking ``and'' at the end of 
paragraph (2), by striking the period at the end of paragraph (3) and 
inserting ``, and'', and by adding at the end thereof the following new 
paragraph:
            ``(4) the general investment credit.''
    (b) Amount of Credit.--Section 48 is amended by adding at the end 
thereof the following new subsection:
    ``(c) General Investment Credit.--
            ``(1) In general.--For purposes of section 46, the general 
        investment credit for any taxable year is an amount equal to 10 
        percent of the qualified investment for such taxable year.
            ``(2) Qualified investment.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the qualified investment for any taxable year is the 
                aggregate of--
                            ``(i) the applicable percentage of the 
                        basis of each new section 38 property placed in 
                        service by the taxpayer during such taxable 
                        year, plus
                            ``(ii) the applicable percentage of the 
                        cost of each used section 38 property placed in 
                        service by the taxpayer during such taxable 
                        year.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for any 
                property shall be determined under paragraphs (2) and 
                (7) of section 46(c) (as in effect on the day before 
                the date of the enactment of the Revenue Reconciliation 
                Act of 1990).
                    ``(C) Certain rules made applicable.--The 
                provisions of subsections (b) and (c) of section 48 (as 
                in effect on the day before the date of the enactment 
                of the Revenue Reconciliation Act of 1990) shall apply 
                for purposes of this paragraph.
            ``(3) Section 38 property.--For purposes of this 
        subsection, the term `section 38 property' means--
                    ``(A) tangible personal property (other than an air 
                conditioning or heating unit), or
                    ``(B) other tangible property (not including a 
                building and its structural components) but only if 
                such property--
                            ``(i) is used as an integral part of 
                        manufacturing, production, or extraction or of 
                        furnishing transportation, communications, 
                        electrical energy, gas, water, or sewage 
                        disposal services, or
                            ``(ii) constitutes a research facility used 
                        in connection with any of the activities 
                        referred to in clause (i), or
                            ``(iii) constitutes a facility used in 
                        connection with any of the activities referred 
                        to in clause (i) for the bulk storage of 
                        fungible commodities (including commodities in 
                        a liquid or gaseous state), or
                    ``(C) elevators and escalators, but only if--
                            ``(i) the construction, reconstruction, or 
                        erection of the elevator or escalator is 
                        completed by the taxpayer, or
                            ``(ii) the original use of such elevator or 
                        escalator commences with the taxpayer, or
                    ``(D) single purpose agricultural or horticultural 
                structures; or
                    ``(E) a storage facility (not including a building 
                and its structural components) used in connection with 
                the distribution of petroleum or any primary product of 
                petroleum.
        Such term includes only property to which section 168 applies 
        without regard to any useful life and any other property with 
        respect to which depreciation (or amortization in lieu of 
        depreciation) is allowable and having a useful life (determined 
        as of the time such property is placed in service) of 3 years 
        or more.
            ``(4) Coordination with other credits.--This subsection 
        shall not apply to any property to which the energy credit or 
        rehabilitation credit would apply unless the taxpayer elects to 
        waive the application of such credits to such property.
            ``(5) Certain progress expenditure rules made applicable.--
        Rules similar to rules of subsection (c)(4) and (d) of section 
        46 (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990) shall apply for 
        purposes of this subsection.''
    (c) Technical Amendments.--
            (1) Subparagraph (C) of section 49(a)(1) is amended by 
        striking ``and'' at the end of clause (ii), by striking the 
        period at the end of clause (iii) and inserting ``, and'', and 
        by adding at the end thereof the following new clause:
                            ``(iv) the basis of any new section 38 
                        property and the cost of any used section 38 
                        property.''
            (2) Subparagraph (E) of section 50(a)(2) is amended by 
        inserting ``or 48(c)(5)'' before the period at the end thereof.
            (3) Paragraph (5) of section 50(a) is amended by adding at 
        the end thereof the following new subparagraph:
                    ``(D) Special rules for certain property.--In the 
                case of any section 38 property which is 3-year 
                property (within the meaning of section 168(e))--
                            ``(i) the percentage set forth in clause 
                        (ii) of the table contained in paragraph (1)(B) 
                        shall be 66 percent,
                            ``(ii) the percentage set forth in clause 
                        (iii) of such table shall be 33 percent, and
                            ``(iii) clauses (iv) and (v) of such table 
                        shall not apply.''
            (4)(A) The section heading for section 48 is amended to 
        read as follows:

``SEC. 48. OTHER CREDITS.''

            (B) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by striking the item 
        relating to section 48 and inserting the following:

                              ``Sec. 48. Other credits.''
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

SEC. 5. 50 PERCENT DEDUCTION FOR CERTAIN CAPITAL GAINS.

    (a) Taxpayers Other Than Corporations.--Part I of subchapter P of 
chapter 1 (relating to treatment of capital gains) is amended by adding 
at the end the following new section:

``SEC. 1202. DEDUCTION FOR CERTAIN CAPITAL GAINS.

    ``(a) General Rule.--If for any taxable year a taxpayer other than 
a corporation has a qualified net capital gain, there shall be allowed 
as a deduction from gross income an amount equal to 50 percent of the 
qualified net capital gain.
    ``(b) Qualified Net Capital Gain.--For purposes of this section--
            ``(1) In general.--The term `qualified net capital gain' 
        means the lesser of--
                    ``(A) the net capital gain for the taxable year, or
                    ``(B) the net capital gain for the taxable year 
                determined by taking into account only gain or loss 
                from qualified assets.
            ``(2) Qualified assets.--The term `qualified asset' means 
        any property with a holding period of at least 1 year at the 
        time of disposition, other than--
                    ``(A) stock or securities for which there is a 
                market on an established securities market or 
                otherwise, and
                    ``(B) property (other than stock or securities) of 
                a kind regularly traded on an established market.
    ``(c) Estates and Trusts.--In the case of an estate or trust, the 
deduction under subsection (a) shall be computed by excluding the 
portion (if any) of the gains for the taxable year from sales or 
exchanges of capital assets which, under section 652 and 662 (relating 
to inclusions of amounts in gross income of beneficiaries of trusts), 
is includible by the income beneficiaries as gain derived from the sale 
or exchange of capital assets.''
    (b) Corporations.--Section 1201 (relating to alternative tax for 
corporations) is amended by redesignating subsection (b) as subsection 
(c) and by inserting after subsection (a) the following new subsection:
    ``(b) Deduction for Certain Capital Gains.--
            ``(1) In general.--If for any taxable year a corporation 
        has a qualified net capital gain, there shall be allowed as a 
        deduction from gross income an amount equal to 50 percent of 
        the qualified net capital gain.
            ``(2) Qualified net capital gain.--For purposes of this 
        subsection, the term `qualified net capital gain' has the 
        meaning given such term in section 1202(b).''
    (c) Conforming Amendments.--
            (1)(A) Subsection (h) of section 1 is amended by inserting 
        after ``net capital gain'' each place it appears the following: 
        ``(other than qualified net capital gain (within the meaning of 
        section 1202(b))''.
            (B) Subsection (a) of section 1201 is amended by inserting 
        after ``net capital gain'' each place it appears the following: 
        ``(other than qualified net capital gain (within the meaning of 
        section 1202(b))''.
            (2) Subsection (a) of section 62 is amended by adding at 
        the end the following new paragraph:
            ``(15) Qualified net capital gains.--The deduction allowed 
        by section 1202.''
            (3)(A) The heading for section 1201 is amended to read as 
        follows:

``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS; DEDUCTION FOR CERTAIN 
              CAPITAL GAINS.''

            (B) The item relating to section 1201 in the table of 
        sections for part I of subchapter P of chapter 1 is amended to 
        read as follows:

                              ``Sec. 1201. Alternative tax for 
                                        corporations; deduction for 
                                        certain capital gains.''
            (4) The table of sections for part I of subchapter P of 
        chapter 1 is amended by adding at the end the following new 
        item:

                              ``Sec. 1202. Deduction for certain 
                                        capital gains.''
    (d) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges after the date of the enactment of this 
Act.

SEC. 6. INCREASE IN DEDUCTIBLE HEALTH INSURANCE COSTS FOR SELF-EMPLOYED 
              INDIVIDUALS.

    (a) Deduction Made Permanent.--
            (1) In general.--Subsection (l) of section 162 (relating to 
        special rules for health insurance costs of self-employed 
        individuals) is amended by striking paragraph (6).
            (2) Conforming amendment.--Subsection (a) of section 110 of 
        the Tax Extension Act of 1991 is amended by striking paragraph 
        (2).
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1991.
    (b) Deduction Increased to 100 Percent.--
            (1) In general.--Paragraph (1) of section 162(l) is amended 
        by striking ``25 percent'' and inserting ``100 percent''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 1992.

SEC. 7. RESTORATION OF INCOME AVERAGING.

    (a) In General.--Section 141 of the Tax Reform Act of 1986 (and the 
amendments made by such section) are hereby repealed, and the Internal 
Revenue Code of 1986 shall be applied and administered as if such 
section (and amendments) had not been enacted.
    (b) Effective Date.--The repeal made by this section shall apply to 
taxable years beginning after December 31, 1993.

SEC. 8. MODIFICATIONS IN SOCIAL SECURITY TAXES.

    (a) Removal of Ceiling on Wages Subject to Tax.--
            (1) FICA taxes.--
                    (A) Section 3121(a) (defining wages) is amended by 
                striking paragraph (1).
                    (B) Section 3121 is amended by striking subsection 
                (x) (relating to applicable contribution base).
            (2) SECA tax.--
                    (A) Section 1402(b) (defining self-employment 
                income) is amended--
                            (i) in the 1st sentence, by striking 
                        paragraph (1), and
                            (ii) by striking the 2d sentence.
                    (B) Section 1402 is amended by striking subsection 
                (k) (relating to applicable contribution base).
    (b) Reduction in Social Security Taxes.--
            (1) Employee tax.--Subsection (a) of section 3101 (relating 
        to rate of tax on employees) is amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--In addition to 
other taxes, there is hereby imposed on the income of every individual 
a tax equal to 4.55 percent of the wages (as defined in section 
3121(a)) received by the individual with respect to employment (as 
defined in section 3121(b)).''
            (2) Employer tax.--Subsection (a) of section 3111 (relating 
        to rate of tax on employers) is amended to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--In addition to 
other taxes, there is hereby imposed on every employer an excise tax 
equal to 4.55 percent of the wages (as defined in section 3121(a)) paid 
by the employer with respect to employment (as defined in section 
3121(b)).''
            (3) Self-employment tax.--Subsection (a) of section 1401 
        (relating to rate of tax on self-employment income) is amended 
        to read as follows:
    ``(a) Old-Age, Survivors, and Disability Insurance.--In addition to 
other taxes, there is hereby imposed for each taxable year, on the 
self-employment income of every individual, a tax equal to 6.82 percent 
of the amount of the self-employment income for the taxable year.''
    (c) Conforming Amendments.--
            (1)(A) Paragraphs (2) and (3) of section 3121(i) (relating 
        to computation of wages in certain cases) are each amended by 
        striking ``, subject to the provisions of subsection (a)(1) of 
        this section,''.
            (B) Paragraph (4) of section 3121(i) is amended by striking 
        ``, subject to the provisions of subsection (a)(1),''.
            (C) Section 3121(s) (relating to concurrent employment by 2 
        or more employers) is amended by striking ``3102, 3111, and 
        3121(a)(1)'' and inserting ``3102 and 3111''.
            (2) Section 3122 (relating to Federal service) is amended 
        by striking the 3d sentence.
            (3) Subsections (a), (b), (c), and (d) of section 3125 
        (relating to returns in the case of governmental employees in 
        the States, Guam, American Samoa, and the District of Columbia) 
        are each amended by striking the last sentence.
            (4)(A) Clause (i) of section 3231(e)(2)(A) is amended by 
        striking ``The'' and inserting ``In the case of the taxes 
        imposed by sections 3201(b), 3211(a)(2), and 3221(b), the''.
            (B) Subparagraph (B) of section 3231(e)(2) is amended to 
        read as follows:
                    ``(B) Applicable base.--For purposes of 
                subparagraph (A), the term `applicable base' means for 
                any calendar year the contribution and benefit base 
                determined under section 230 of the Social Security Act 
                for such calendar year; except that, for such purposes 
                and for purposes of computing average monthly 
                compensation under section 3(j) of the Railroad 
                Retirement Act of 1974 (except with respect to annuity 
                amounts determined under subsection (a) or (f)(3) of 
                section 3 of such Act), clause (2) of the first 
                sentence, and the second sentence, of section 230(c) of 
                the Social Security Act shall be disregarded.''
            (C) Subparagraph (C) of section 3231(e)(2) (defining 
        compensation for purposes of railroad retirement tax) is 
        amended by inserting after ``employers)'' the following: ``, as 
        such section was in effect immediately before its repeal by the 
        Farm and Small Business Tax Equity Act of 1993,''.
            (D) The heading of paragraph (2) of section 3231(e) is 
        amended by striking ``bases'' and inserting ``base to tier 2 
        taxes''.
            (5) Section 6413 is amended by striking subsection (c) 
        (relating to special refunds for employees receiving wages from 
        more than 1 employer).
            (6) Section 230(c) of the Social Security Act (42 U.S.C. 
        430(c)) is amended by striking ``and sections 1402, 3121, 3122, 
        3125, 6413, and 6654 of the Internal Revenue Code of 1954''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to remuneration paid after December 31, 1993, and 
with respect to earnings from self-employment attributable to taxable 
years beginning after such date.

                                 

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