I

104TH CONGRESS

2D SESSION H. R. 3333

To amend the Internal Revenue Code of 1986 to reduce by 50 percent

certain tax benefits allowable to profitable large corporations which make

certain workforce reductions.

IN THE HOUSE OF REPRESENTATIVES

APRIL 25, 1996

Ms. MCKINNEY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on International Relations, and Banking and Financial Services, 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 reduce

by 50 percent certain tax benefits allowable to profitable

large corporations which make certain workforce reductions.

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 ‘‘Corporate Welfare Re5 duction and Job Preservation Act of 1996’’.
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1 SEC. 2. CONGRESSIONAL FINDINGS.

2 The Congress finds the following:

3 (1) Corporations are subject to a tax rate of up

4 to 34 percent or 35 percent.

5 (2) Due to tax deductions, exclusions, and cred6 its, the net tax liability actually paid by many cor7 porations is far below the real rate. In fact, certain

8 special-interest tax deductions and expenditures pro9 vide corporations with an extra $70,000,000,000 per

10 year. Additionally, direct Government subsidies to

11 corporations will amount to $30,000,000,000 per

12 year.

13 (3) Over the past several years, one of the most

14 serious problems affecting the middle-class has been

15 corporate downsizing. Many large, wealthy, and

16 profitable corporations have reduced the number of

17 their American employees by transferring those jobs

18 to foreign countries or have reduced the number of

19 their employees in order to realize an immediate

20 short-term profit or increase in stock value.

21 (4) Between April 3, 1975, and January 31,

22 1996, the relocation of manufacturing operations re23 sulted in over 4,500,000 workers seeking adjustment

24 assistance for workers under chapter 2 of title II of

25 the Trade Act of 1974. Because many displaced
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1 workers did not seek assistance, this figure is far

2 below the actual number of workers displaced.

3 (5) A higher priority should be given to preserv4 ing American jobs and adding fairness to the Fed5 eral tax system by closing loopholes and eliminating

6 unnecessary expenditures, thus providing additional

7 funds to assist in balancing the Federal budget by

8 2002 while maintaining Medicare and Medicaid at

9 acceptable levels.

10 SEC. 3. REDUCTION OF TAX BENEFITS FOR PROFITABLE

11 LARGE CORPORATIONS WHICH REDUCE

12 WORKFORCE.

13 (a) IN GENERAL.—Subchapter C of chapter 1 of the

14 Internal Revenue Code of 1986 (relating to corporate dis15 tributions and adjustments) is amended by adding at the

16 end the following new part:

17 ‘‘PART VII—REDUCTION OF TAX BENEFITS FOR

18 PROFITABLE LARGE CORPORATIONS WHICH

19 REDUCE WORKFORCE

‘‘Sec. 386. Reduction of tax benefits for profitable large corporations which reduce workforce.

20 ‘‘SEC. 386. REDUCTION OF TAX BENEFITS FOR PROFITABLE

21 LARGE CORPORATIONS WHICH REDUCE

22 WORKFORCE.

23 ‘‘(a) IN GENERAL.—For any taxable year, if any

24 profitable large corporation reduces by 15 percent or more
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1 the number of employees who perform any task or func2 tion at any facility in the United States, the amount of

3 each facility-related tax benefit shall be reduced by 50 per4 cent.

5 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur6 poses of this section—

7 ‘‘(1) FACILITY-RELATED TAX BENEFIT.—

8 ‘‘(A) IN GENERAL.—The term ‘facility-re9 lated tax benefit’ means—

10 ‘‘(i) any tax benefit to the extent at11 tributable to a facility described in sub12 section (a), or

13 ‘‘(ii) to the extent that a tax benefit

14 is not attributable to any facility, a pro

15 rata portion of such tax benefit (as deter16 mined under regulations prescribed by the

17 Secretary).

18 ‘‘(B) EXCEPTION.—Such term shall not in19 clude—

20 ‘‘(i) any deduction under section 127

21 or 129 or any other deduction for the cost

22 of employee health care, child care, job

23 training, or retraining, or

24 ‘‘(ii) any other tax benefit (other than

25 wages) which the Secretary determines by
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1 regulation to be a tax benefit for costs in2 curred primarily for the benefit of employ3 ees rather than the employer.

4 ‘‘(2) LARGE CORPORATION.—The term ‘large

5 corporation’ means a corporation or partnership

6 which is not a small-business concern (within the

7 meaning of section 3 of the Small Business Act, as

8 in effect on the date of the enactment of this sec9 tion).

10 ‘‘(3) PROFITABLE.—Any large corporation shall

11 be treated as profitable, for any taxable year, if the

12 sum of taxable income (if any) for the 5-taxable-year

13 period ending with the preceding taxable year (or, if

14 shorter, the period consisting of all preceding taxable

15 years of such large corporation) equals or exceeds

16 the sum of the net operating losses (if any) attrib17 utable to such period.

18 ‘‘(4) RELATED PERSONS.—

19 ‘‘(A) IN GENERAL.—All related persons

20 shall be treated as one person.

21 ‘‘(B) RELATED PERSONS DEFINED.—The

22 term ‘related persons’ means—

23 ‘‘(i) persons bearing a relationship de24 scribed in section 267 or 707(b), and
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1 ‘‘(ii) persons treated as a single em2 ployer under subsection (a) or (b) of sec3 tion 52.

4 ‘‘(5) TAX BENEFIT.—The term ‘tax benefit’

5 means a credit, deduction, or exclusion allowable

6 under this title.’’

7 (b) TRANSMISSION OF DATA BY SECRETARY OF

8 LABOR.—The Secretary of Labor shall transmit to the

9 Secretary of the Treasury, not less than annually, a list

10 of corporations and partnerships described in section

11 386(a) of the Internal Revenue Code of 1986 (as added

12 by this section).

13 (c) CLERICAL AMENDMENT.—The table of parts for

14 subchapter C of chapter 1 of such Code is amended by

15 adding at the end the following new item:

‘‘Part VII. Reduction of tax benefits for profitable large corporations which reduce workforce.’’

16 (d) EFFECTIVE DATE.—This section and the amend17 ments made by this section shall apply to taxable years

18 beginning after December 31, 1996.
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1 SEC. 4. ACCELERATION OF LOANS MADE BY CERTAIN GOV2 ERNMENT ENTITIES AS PENALTY AGAINST

3 PROFITABLE LARGE CORPORATIONS WHICH

4 REDUCE WORKFORCE.

5 (a) OPIC LOANS.—Section 235 of the Foreign As6 sistance Act of 1961 (22 U.S.C. 2195) is amended by add7 ing at the end the following:

8 ‘‘(g) LIMITATIONS ON ASSISTANCE TO PROFITABLE

9 LARGE CORPORATIONS THAT REDUCE WORKFORCE.—

10 ‘‘(1) IN GENERAL.—If a facility-related tax ben11 efit of an entity for a taxable year is reduced by rea12 son of section 386(a) of the Internal Revenue Code

13 of 1986, then—

14 ‘‘(A) the entity shall immediately repay to

15 the Corporation the amount of any loan made

16 by the Corporation to the entity under section

17 234;

18 ‘‘(B) any insurance policy provided by the

19 Corporation to the entity under such section is

20 rescinded; and

21 ‘‘(C) until the Secretary of the Treasury

22 determines that the activity on the basis of

23 which the facility-related tax benefit of the en24 tity was so reduced has ceased, the Corporation

25 may not, during the immediately succeeding

26 taxable year of the entity, extend credit, partici-
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1 pate in an extension of credit, or provide any

2 insurance, directly to the entity under such sec3 tion.

4 ‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.—

5 Interest shall accrue on any amount required by

6 paragraph (1)(A) to be repaid to the Corporation at

7 a rate of 10 percent per month.’’.

8 (b) EXPORT-IMPORT BANK LOANS.—Section 2 of the

9 Export-Import Bank Act of 1945 (12 U.S.C. 635) is

10 amended by adding at the end the following:

11 ‘‘(f) LIMITATIONS ON ASSISTANCE TO PROFITABLE

12 LARGE CORPORATIONS THAT REDUCE WORKFORCE.—

13 ‘‘(1) IN GENERAL.—If a facility-related tax ben14 efit of an entity for a taxable year is reduced by rea15 son of section 386(a) of the Internal Revenue Code

16 of 1986, then—

17 ‘‘(A) the entity shall immediately repay to

18 the Bank the amount of any loan made by the

19 Bank to the entity;

20 ‘‘(B) any insurance policy provided by the

21 Bank to the entity is rescinded; and

22 ‘‘(C) until the Secretary of the Treasury

23 determines that the activity on the basis of

24 which the facility-related tax benefit of the en25 tity was so reduced has ceased, the Bank may
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1 not, during the immediately succeeding taxable

2 year of the entity, extend credit, participate in

3 an extension of credit, or provide any insurance,

4 directly to the entity.

5 ‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.—

6 Interest shall accrue on any amount required by

7 paragraph (1)(A) to be repaid to the Bank at a rate

8 of 10 percent per month.’’.

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