I

104TH CONGRESS

1ST SESSION H. R. 2800

To amend the Internal Revenue Code of 1986 to impose a 5-percent tax

on all wagering and to use the revenues from such tax to enhance

funding for public elementary and secondary education, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

DECEMBER 18 (legislative day, DECEMBER 15), 1995

Mr. FIELDS of Louisiana introduced the following bill; which was referred to

the Committee on Ways and Means, and in addition to the Committee

on Economic and Educational Opportunities, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to impose

a 5-percent tax on all wagering and to use the revenues

from such tax to enhance funding for public elementary

and secondary education, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Education Trust Fund

5 Act’’.
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1 TITLE I—TAX AND TRUST FUND

2 SEC. 101. ADDITIONAL 5 PERCENT TAX ON NET PROCEEDS

3 OF WAGERING.

4 (a) IN GENERAL.—Chapter 35 of the Internal Reve5 nue Code of 1986 (relating to taxes on wagering) is

6 amended by redesignating subchapter C as subchapter D

7 and by inserting after subchapter B the following new sub8 chapter:

9 ‘‘Subchapter C—Tax on Net Proceeds From

10 Wagers

‘‘Sec. 4415. Imposition of tax.

‘‘Sec. 4416. Definitions and special rules.

11 ‘‘SEC. 4415. IMPOSITION OF TAX.

12 ‘‘(a) IN GENERAL.—There is hereby imposed on the

13 payment of wagering proceeds an excise tax equal to 5

14 percent of the net wagering proceeds paid during any cal15 endar quarter.

16 ‘‘(b) NET WAGERING PROCEEDS.—For purposes of

17 subsection (a)—

18 ‘‘(1) IN GENERAL.—The term ‘net wagering

19 proceeds’ means the proceeds from a wager deter20 mined—

21 ‘‘(A) by reducing the amount paid by the

22 amount of the wager, and

23 ‘‘(B) without regard to any tax imposed by

24 this section.
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1 ‘‘(2) NONCASH PROCEEDS.—Proceeds which are

2 not money shall be taken into account at their fair

3 market value.

4 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by sub5 section (a) shall be paid by the person making payment

6 of the wagering proceeds.

7 ‘‘(d) CREDIT FOR DEDICATED STATE TAXES.—

8 ‘‘(1) IN GENERAL.—The tax imposed by this

9 section on the net wagering proceeds paid during

10 any calendar quarter shall be reduced (but not below

11 zero) by an amount equal to the dedicated State tax

12 imposed on such proceeds.

13 ‘‘(2) DEDICATED STATE TAX.—For purposes of

14 paragraph (1), the term ‘dedicated State tax’ means

15 any excise tax imposed by a maintenance-of effort

16 State on net wagering proceeds to the extent that

17 the revenues from such tax are set-aside solely for

18 purposes described in title II of the Education Trust

19 Fund Act.

20 ‘‘(3) MAINTENANCE-OF-EFFORT STATE.—For

21 purposes of paragraph (2), the term ‘maintenance22 of-effort State’ means, with respect to any calendar

23 year, any State if—

24 ‘‘(A) the average per pupil expenditure in

25 such State (as determined for purposes of part
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1 A of title I of the Elementary and Secondary

2 Education Act of 1965) for such calendar year

3 is not less than such average for the preceding

4 calendar year, or

5 ‘‘(B) in any case in which such average for

6 the calendar year is less than such average for

7 the preceding calendar year, there is a percent8 age reduction in State expenditures for all pur9 poses which is at least as great as the percent10 age reduction in such average.

11 For purposes of the preceding sentence, State fund12 ing shall be determined without regard to any dedi13 cated State tax on net wagering proceeds to the ex14 tent the amount of such tax on such proceeds does

15 not exceed 5 percent of such proceeds.

16 ‘‘SEC. 4416. DEFINITIONS AND SPECIAL RULES.

17 ‘‘(a) WAGER.—For purposes of section 4415, the

18 term ‘wager’ means—

19 ‘‘(1) any wager placed with a person engaged in

20 the business of accepting wagers,

21 ‘‘(2) any wager placed in a wagering pool if

22 such pool is conducted for profit, and

23 ‘‘(3) any wager placed in a lottery conducted

24 for profit.

25 Such term shall not include bingo.
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1 ‘‘(b) TERRITORIAL EXTENT.—The tax imposed by

2 this subchapter shall apply only to wagers—

3 ‘‘(1) accepted in the United States, or

4 ‘‘(2) placed by a person who is in the United

5 States—

6 ‘‘(A) with a person who is a citizen or resi7 dent of the United States, or

8 ‘‘(B) in a wagering pool or lottery con9 ducted by a person who is a citizen or resident

10 of the United States.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1) Subsection (a) of section 4411 of such Code

13 is amended by inserting ‘‘or 4415’’ after ‘‘4401’’.

14 (2) Paragraph (1) of section 4421 of such Code

15 is amended by striking ‘‘The term’’ and inserting

16 ‘‘Except as provided in section 4416, the term’’.

17 (3) The table of subchapters for chapter 35 of

18 such Code is amended by striking the last item and

19 inserting the following new items:

‘‘Subchapter C. Tax on net proceeds from wagers.

‘‘Subchapter D. Miscellaneous provisions.’’

20 (c) EFFECTIVE DATE.—

21 (1) IN GENERAL.—The amendments made by

22 this section shall apply to calendar quarters begin23 ning more than 90 days after the date of the enact24 ment of this Act.
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1 (2) TRANSITIONAL RULE.—Any person who, on

2 the first day of the first calendar quarter beginning

3 more than 90 days after the date of the enactment

4 of this Act, is engaged in an activity which makes

5 such person liable for payment of the tax imposed by

6 section 4415 of the Internal Revenue Code of 1986

7 shall be treated as commencing such activity on such

8 date for purposes of such section and section 4901

9 of such Code. The preceding sentence shall not apply

10 to any person who before such date paid the tax im11 posed by section 4411 of such Code for the year

12 which includes such date.

13 SEC. 102. NATIONAL EDUCATION TRUST FUND.

14 (a) IN GENERAL.—Subchapter A of chapter 98 of the

15 Internal Revenue Code of 1986 (relating to trust fund

16 code) is amended by adding at the end the following new

17 section:

18 ‘‘SEC. 9512. NATIONAL EDUCATION TRUST FUND.

19 ‘‘(a) CREATION OF TRUST FUND.—There is estab20 lished in the Treasury of the United States a trust fund

21 to be known as the ‘National Education Trust Fund’, con22 sisting of such amounts as may be appropriated or cred23 ited to such Trust Fund as provided in this section or sec24 tion 9602(b).

25 ‘‘(b) TRANSFERS TO TRUST FUND.—
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1 ‘‘(1) IN GENERAL.—There are hereby appro2 priated to the National Education Trust Fund

3 amounts equivalent to the net revenues received in

4 the Treasury from the taxes imposed by section

5 4401 (relating to tax on wagers) to the extent at6 tributable to the basic percentage under such sec7 tion.

8 ‘‘(2) NET REVENUES.—For purposes of para9 graph (1), the term ‘net revenues’ means the

10 amount estimated by the Secretary based on the ex11 cess of—

12 ‘‘(A) the taxes referred to in paragraph (1)

13 which are received in the Treasury, over

14 ‘‘(B) the decrease in the tax imposed by

15 chapter 1 resulting from such taxes.

16 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

17 in the National Education Trust Fund shall be available,

18 as provided in appropriation Acts, only for purposes of

19 making expenditures to carry out title II of the Education

20 Trust Fund Act.’’

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for such subchapter A is amended by adding at the end

23 the following new item:

‘‘Sec. 9512. National Education Trust Fund.’’
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1 TITLE II—EDUCATIONAL

2 ENHANCEMENT

3 SEC. 201. EDUCATION TRUST FUND PURPOSES.

4 Funds from the National Education Trust Fund may

5 be used by local educational agencies only for the purpose

6 of educating students, including improving classroom in7 structional materials, renovating or building school facili8 ties and buildings, and increasing teacher salaries.

9 SEC. 202. GRANTS TO LOCAL EDUCATIONAL AGENCIES.

10 (a) IN GENERAL.—The Secretary of Education is au11 thorized to provide grants from the National Education

12 Trust Fund established under section 9512 of the Internal

13 Revenue Code of 1986 to State educational agencies for

14 use by local educational agencies to improve education in

15 elementary and secondary schools as described in section

16 201.

17 (b) ELIGIBILITY OF LOCAL EDUCATIONAL AGEN18 CIES.—A local educational agency in a State is eligible to

19 receive a grant under this section from the Education

20 Trust Fund established pursuant to section 9512 of the

21 Internal Revenue Code of 1986 for any fiscal year if the

22 number of children in the local educational agency counted

23 under subsection 1124(c) of the Elementary and Second24 ary Education Act of 1965, before application of the

25 weighting factor described in subsection (d) of this section,
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1 is at least 10, and if the number of children counted for

2 grants under section 1124 of the Elementary and Second3 ary Education Act of 1965 is at least 18 percent of the

4 total population aged 5 to 17 years, inclusive, in the local

5 educational agency. Funds made available as a result of

6 applying this subsection shall be reallocated by the State

7 educational agency to other eligible local educational agen8 cies in the State in proportion to the distribution of other

9 funds under this section.

10 (c) GRANTS FOR LOCAL EDUCATIONAL AGENCIES,

11 THE DISTRICT OF COLUMBIA, AND PUERTO RICO.—

12 (1) IN GENERAL.—Of the funds made available

13 for the National Education Trust Fund as estab14 lished under section 9512 of the Internal Revenue

15 Code of 1986 in a fiscal year, seventy-four percent

16 shall be made available to carry out this section. The

17 amount of the grant that a local educational agency

18 in a State or that the District of Columbia is eligible

19 to receive under this section for any fiscal year shall

20 be the product of—

21 (A) the weighted child count determined

22 under subsection (d); and

23 (B) the amount in the second sentence of

24 subparagraph 1124(a)(1) of the Elementary

25 and Secondary Education Act of 1965.
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1 (2) PUERTO RICO.—For each fiscal year, the

2 amount of the grant for which the Commonwealth of

3 Puerto Rico is eligible under this section shall be

4 equal to the number of children counted under sub5 section (d) for Puerto Rico, multiplied by the

6 amount determined in subparagraph 1124(a)(3) of

7 the Elementary and Secondary Education Act of

8 1965.

9 (d) WEIGHTED CHILD COUNT.—

10 (1) IN GENERAL.—The weighted child count

11 used to determine a local educational agency’s allo12 cation under this section is the larger of the two

13 amounts determined under clause (i) or (ii), as fol14 lows:

15 (A) BY PERCENTAGE OF CHILDREN.—This

16 amount is determined by adding—

17 (i) the number of children determined

18 under section 1124(c) of the Elementary

19 and Secondary Education Act of 1965 for

20 that local educational agency constituting

21 up to 12.20 percent, inclusive, of the local

22 educational agency’s total population aged

23 5 to 17, inclusive, multiplied by 1.0;

24 (ii) the number of such children con25 stituting more than 12.20 percent, but not
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1 more than 17.70 percent, of such popu2 lation, multiplied by 1.75;

3 (iii) the number of such children con4 stituting more than 17.70 percent, but not

5 more than 22.80 percent, of such popu6 lation, multiplied by 2.5;

7 (iv) the number of such children con8 stituting more than 22.80 percent, but not

9 more than 29.70 percent, of such popu10 lation, multiplied by 3.25; and

11 (v) the number of such children con12 stituting more than 29.70 percent of such

13 population, multiplied by 4.0.

14 (B) BY NUMBER OF CHILDREN.—This

15 amount is determined by adding—

16 (i) the number of children determined

17 under section 1124(c) of the Elementary

18 and Secondary Education Act of 1965 con19 stituting up to 1,917, inclusive, of the local

20 educational agency’s total population aged

21 5 to 17, inclusive, multiplied by 1.0;

22 (ii) the number of such children be23 tween 1,918 and 5,938, inclusive, in such

24 population, multiplied by 1.5;
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1 (iii) the number of such children be2 tween 5,939 and 20,199, inclusive, in such

3 population, multiplied by 2.0;

4 (iv) the number of such children be5 tween 20,200 and 77,999, inclusive, in

6 such population, multiplied by 2.5; and

7 (v) the number of such children in ex8 cess of 77,999 in such population, multi9 plied by 3.0.

10 (2) PUERTO RICO.—Notwithstanding subpara11 graph (A), the weighting factor for Puerto Rico

12 under this paragraph shall not be greater than the

13 total number of children counted under subsection

14 1124(c) of the Elementary and Secondary Education

15 Act of 1965 multiplied by 1.72.

16 SEC. 203. LOANS TO LOCAL EDUCATIONAL AGENCIES.

17 (a) ELIGIBILITY OF LOCAL EDUCATIONAL AGEN18 CIES.—A local educational agency in a State is eligible to

19 receive a low interest loan, payable over a period not to

20 exceed 30 years, under this section from the Education

21 Trust Fund established pursuant to section 9512 of the

22 Internal Revenue Code of 1986 for any fiscal year if the

23 number of children in the local educational agency counted

24 under subsection 1124(c) of the Elementary and Second25 ary Education Act of 1965, before application of the
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1 weighting factor described in section 201(c), is at least

2 10, and if the number of children counted for grants under

3 section 1124 of the Elementary and Secondary Education

4 Act of 1965 is less than 18 percent of the total population

5 aged 5 to 17 years, inclusive, in the local educational agen6 cy.

7 (b) LOANS FOR LOCAL EDUCATIONAL AGENCIES,

8 THE DISTRICT OF COLUMBIA, AND PUERTO RICO.—

9 (1) IN GENERAL.—Of the funds made available

10 for the National Education Trust Fund as estab11 lished under the section 9512 of the Internal Reve12 nue Code of 1986 in a fiscal year, twenty-four per13 cent shall be made available to carry out this sec14 tion. The amount of the loan that a local educational

15 agency in a State or that the District of Columbia

16 is eligible to receive under this section for any fiscal

17 year shall be the product of—

18 (A) the weighted child count determined

19 under section 202(c); and

20 (B) the amount in the second sentence of

21 subparagraph 1124(a)(1) of the Elementary

22 and Secondary Education Act of 1965.

23 (2) PUERTO RICO.—For each fiscal year, the

24 amount of the grant for which the Commonwealth of

25 Puerto Rico is eligible under this section shall be
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1 equal to the number of children counted under sec2 tion 202(c) for Puerto Rico, multiplied by the

3 amount determined in subparagraph 1124(a)(3) of

4 the Elementary and Secondary Education Act of

5 1965.

6 (c) LOAN REPAYMENT.—Interest for a loan received

7 under subsection (a) shall be based upon administrative

8 costs, but shall not exceed 2 percent of the loan amount.

9 (d) DISTRIBUTION.—Funds made available as a re10 sult of applying subsection (a) shall be reallocated by the

11 State educational agency to other eligible local educational

12 agencies in the State in proportion to the distribution of

13 other funds under section 201.

14 SEC. 204. EDUCATION COMMISSION.

15 (a) ESTABLISHMENT.—There is established a com16 mission to be known as the ‘‘National Commission on

17 Educational Enhancement’’.

18 (b) PURPOSE.—The purpose of the Commission is to

19 make recommendations to the Secretary of Education to

20 enhance educational programs for elementary and second21 ary school students, including purchasing of necessary

22 textbooks and providing a safe physical environment by

23 improving the structural soundness of school facilities.

24 (c) MEMBERS.—
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1 (1) APPOINTMENT.—The Commission shall be

2 composed of 9 members, appointed by the President

3 with not less than two individuals to represent the

4 following groups or organizations:

5 (A) Local educational agencies.

6 (B) Teachers or principals.

7 (C) Parents.

8 (2) CHAIRPERSON. The Chairperson shall be

9 elected by the members of the Commission each

10 year.

11 (3) TERMS.—The term of office of a member

12 appointed to the Commission shall be for four years.

13 (4) VACANCY.—A member appointed to fill a

14 vacancy shall be appointed only for the remainder of

15 such term. A member may serve after the expiration

16 of that member’s term until a successor has taken

17 office.

18 (5) APPOINTMENT DATE.—Members of the

19 Commission shall be appointed no later than 90 days

20 after the enactment of this Act.

21 (d) BASIC PAY.—

22 (1) RATES OF PAY.—Except as provided in

23 paragraph (2), each member shall be entitled to re24 ceive the daily equivalent of the minimum annual

25 rate of basic pay payable for grade GS–15 of the
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1 General Schedule for each day (including travel

2 time) during which they are engaged in the actual

3 performance of duties vested in the Commission.

4 (2) PROHIBITION OF COMPENSATION OF FED5 ERAL EMPLOYEES.—Members of the Commission

6 who are full-time officers or employees of the United

7 States or Members of Congress may not receive ad8 ditional pay, allowances, or benefits by reason of

9 their service on the Commission.

10 (3) TRAVEL EXPENSES.—Each member shall receive

11 travel expenses, including per diem in lieu of subsistence,

12 in accordance with sections 5702 and 5703 of title 5,

13 United States Code.

14 (e) APPLICABILITY OF CERTAIN CIVIL SERVICE

15 LAWS.—The Director of the Commission may be ap16 pointed without regard to the provisions of title 5, United

17 States Code, governing appointments in the competitive

18 service, and may be paid without regard to the provisions

19 of chapter 51 and subchapter III of chapter 53 of that

20 title relating to classification and General Schedule pay

21 rates, except that an individual so appointed may not re22 ceive pay in excess of the annual rate of basic pay payable

23 for GS–15 of the General Schedule.

24 (f) EXPERTS AND CONSULTANTS.—The Commission

25 may procure temporary and intermittent services under
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1 section 3109(b) of title 5, United States Code, but at rates

2 for individuals not to exceed the daily equivalent of the

3 minimum annual rate of basic pay payable for GS–15 of

4 the General Schedule.

5 (g) ANNUAL REPORT.—The Commission shall trans6 mit an annual report to the Secretary of Education, Presi7 dent, and the Congress not later than one year after the

8 date of the appointment of a majority of members and

9 every succeeding year thereafter. The report shall contain

10 a detailed statement of the findings and conclusions of the

11 Commission and a review of how funds from the Edu12 cation Trust Fund were spent.

13 (h) FUNDS FOR COMMISSION.—Of the funds made

14 available for the National Education Trust Fund as estab15 lished under section 9512 of the Internal Revenue Code

16 of 1986, two percent may be used by the Commission to

17 comply with the requirements of this section.

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