Competitiveness Tax Credit Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Competitiveness Tax Credit Act''.

SEC. 2. TEMPORARY INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER 
              PRODUCTIVE EQUIPMENT.

    (a) Allowance of Credit.--Section 46 of the Internal Revenue Code 
of 1986 (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 the following new paragraph:
            ``(4) the manufacturing and other productive equipment 
        credit.''
    (b) Amount of Credit.--Section 48 of such Code is amended by adding 
at the end the following new subsection:
    ``(c) Manufacturing and Other Productive Equipment Credit.--
            ``(1) In general.--For purposes of section 46, the 
        manufacturing and other productive equipment credit for any 
        taxable year is an amount equal to the sum of--
                    ``(A) the domestic equipment credit, and
                    ``(B) the nondomestic equipment credit.
            ``(2) Amount of domestic and nondomestic equipment 
        credits.--For purposes of this subsection--
                    ``(A) Domestic equipment credit.--
                            ``(i) In general.--The domestic equipment 
                        credit for any taxable year is 10 percent of 
                        the amount equal to the product of--
                                    ``(I) the domestic equipment ratio, 
                                and
                                    ``(II) the qualified increase 
                                amount.
                            ``(ii) Domestic equipment ratio.--The 
                        domestic equipment ratio for any taxable year 
                        is a fraction in which--
                                    ``(I) the numerator is the 
                                aggregate bases of the qualified 
                                manufacturing and other productive 
                                equipment properties placed in service 
                                during such taxable year which are of 
                                domestic origin, and
                                    ``(II) the denominator is the 
                                aggregate bases of all qualified 
                                manufacturing and other productive 
                                equipment properties placed in service 
                                during such taxable year.
                    ``(B) Nondomestic equipment credit.--
                            ``(i) In general.--The nondomestic 
                        equipment credit for any taxable year is 7 
                        percent of the amount equal to the product of--
                                    ``(I) the nondomestic equipment 
                                ratio, and
                                    ``(II) the qualified increase 
                                amount.
                            ``(ii) Nondomestic equipment ratio.--The 
                        nondomestic equipment ratio for any taxable 
                        year is a fraction in which--
                                    ``(I) the numerator is the 
                                aggregate bases of the qualified 
                                manufacturing and other productive 
                                equipment properties placed in service 
                                during such taxable year which are not 
                                of domestic origin, and
                                    ``(II) the denominator is the 
                                aggregate bases of all qualified 
                                manufacturing and other productuve 
                                equipment properties placed in service 
                                during such taxable year.
                    ``(C) Determination of domestic origin.--
                            ``(i) In general.--Property shall be 
                        treated as being of domestic origin only if--
                                    ``(I) the property was completed in 
                                the United States, and
                                    ``(II) at least 50 percent of the 
                                basis of the property is attributable 
                                to value added within the United 
                                States.
                            ``(ii) United states.--The term `United 
                        States' includes the Commonwealth of Puerto 
                        Rico and the possessions of the United States.
            ``(3) Qualified manufacturing and other productive 
        equipment property.--For purposes of this subsection--
                    ``(A) In general.--The term `qualified 
                manufacturing and other productive equipment property' 
                means any property--
                            ``(i) which is used as an integral part of 
                        the manufacture or production of tangible 
                        personal property and increases the efficiency 
                        of the manufacturing or production process;
                            ``(ii) which is tangible property to which 
                        section 168 applies, other than 3-year property 
                        (within the meaning of section 168(e)),
                            ``(iii) which is section 1245 property (as 
                        defined in section 1245(a)(3)), and
                            ``(iv)(I) the construction, reconstruction, 
                        or erection of which is completed by the 
                        taxpayer, or
                            ``(II) which is acquired by the taxpayer, 
                        if the original use of such property commences 
                        with the taxpayer.
                    ``(B) Special rule for computer software.--In the 
                case of any computer software--
                            ``(i) which is used to control or monitor a 
                        manufacturing or production process,
                            ``(ii) which increases the efficiency of 
                        the manufacturing or production process, and
                            ``(iii) with respect to which depreciation 
                        (or amortization in lieu of depreciation) is 
                        allowable,
                such software shall be treated as qualified 
                manufacturing and other productive equipment property.
            ``(4) Qualified increase amount.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified increase 
                amount' means the excess (if any) of--
                            ``(i) the aggregate bases of qualified 
                        manufacturing and other productive equipment 
                        properties placed in service during the taxable 
                        year, over
                            ``(ii) the base amount.
                    ``(B) Base amount.--The term `base amount' means 
                the product of--
                            ``(i) the fixed-base percentage, and
                            ``(ii) the average annual gross receipts of 
                        the taxpayer for the 4 taxable years preceding 
                        the taxable year for which the credit is being 
                        determined (in this subsection referred to as 
                        the `credit year').
                    ``(C) Minimum base amount.--In no event shall the 
                base amount be less than 50 percent of the amount 
                determined under subparagraph (A)(i).
                    ``(D) Fixed-base percentage.--
                            ``(i) In general.--The fixed-base 
                        percentage is the percentage which the 
                        aggregate amounts described in subparagraph 
                        (A)(i) for taxable years beginning after 
                        December 31, 1987, and before January 1, 1993, 
                        is of the aggregate gross receipts of the 
                        taxpayer for such taxable years.
                            ``(ii) Rounding.--The percentages 
                        determined under clause (i) shall be rounded to 
                        the nearest \1/100\ of 1 percent.
                    ``(E) Other rules.--Rules similar to the rules of 
                paragraphs (4) and (5) of section 41(c) shall apply for 
                purposes of this paragraph.
            ``(5) 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.
            ``(6) Certain progress expenditure rules made applicable.--
        Rules similar to rules of subsections (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.
            ``(7) Termination date.--This subsection shall not apply to 
        any property placed in service after the expiration of the 2-
        year period beginning on the date of the enactment of this 
        Act.''
    (c) Technical Amendments.--
            (1) Clause (ii) of section 49(a)(1)(C) of such Code is 
        amended by inserting ``or qualified manufacturing and other 
        productive equipment property'' after ``energy property''.
            (2) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by inserting ``or 48(c)(6)'' before the period at the 
        end.
            (3)(A) The section heading for section 48 of such Code 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 of such Code 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--
            (1) property acquired by the taxpayer after the date of the 
        enactment of this Act, and
            (2) property the construction, reconstruction, or erection 
        of which is completed by the taxpayer after the date of the 
        enactment of this Act, but only to the extent of the basis 
        thereof attributable to construction, reconstruction, or 
        erection after such date.

Summary: Competitiveness Tax Credit Act - Amends the Internal Revenue Code to allow an investment tax credit for manufacturing and other productive equipment based upon a determination of the domestic origin of such property. Makes such credit applicable for the two-year period beginning on the date of enactment of this Act.