I

103D CONGRESS

1ST SESSION H. R. 461

To amend the Internal Revenue Code of 1986 to allow accelerated depreciation for equipment used to manufacture advanced materials or to develop

advanced technologies, to reduce capital gains taxes, and to impose

a minimum tax on foreign and foreign-owned corporations operating

in the United States.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1993

Mr. HUNTER introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow accelerated depreciation for equipment used to manufacture

advanced materials or to develop advanced technologies,

to reduce capital gains taxes, and to impose a minimum

tax on foreign and foreign-owned corporations operating

in the United States.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. 3-YEAR DEPRECIABLE LIFE FOR SEMICONDUC2 TOR MANUFACTURING EQUIPMENT AND

3 EQUIPMENT USED TO MANUFACTURE AD4 VANCED MATERIALS OR TO DEVELOP AD5 VANCED TECHNOLOGIES.

6 (a) IN GENERAL.—Subparagraph (A) of section

7 168(e)(3) of the Internal Revenue Code of 1986 (relating

8 to classification of property) is amended by striking ‘‘and’’

9 at the end of clause (i), by striking the period at the end

10 of clause (ii) and inserting a comma, and by adding at

11 the end thereof the following:

12 ‘‘(iii) any semiconductor manufactur13 ing equipment, and

14 ‘‘(iv) any equipment used to manufac15 ture advanced materials or to develop ad16 vanced technologies.

17 Clause (iv) shall not apply if the taxpayer elects

18 not to apply such clause. Such an election shall

19 apply to the taxable year for which made and

20 all subsequent taxable years and, once made,

21 shall be irrevocable.’’

22 (b) ADVANCED MATERIALS AND TECHNOLOGIES.—

23 Subsection (e) of section 168 of such Code (relating to

24 classification of property) is amended by adding at the end

25 thereof the following new paragraph:
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1 ‘‘(5) ADVANCED MATERIALS AND TECH2 NOLOGIES.—For purposes of paragraph (3)(A)(iv)—

3 ‘‘(A) IN GENERAL.—The determination of

4 whether any material is an advanced material

5 or whether any technology is an advanced tech6 nology shall be made as of the date the equip7 ment referred to in such paragraph is placed in

8 service.

9 ‘‘(B) INITIAL LIST OF ADVANCED MATE10 RIALS AND TECHNOLOGIES.—

11 ‘‘(i) IN GENERAL.—The term ‘ad12 vanced material’ and ‘advanced technology’

13 mean any material or technology listed in

14 clause (ii) and determined by the Secretary

15 to be an advanced material or technology.

16 ‘‘(ii) INITIAL LIST.—

17 Advanced structural materials

18 Electronic and photonic materials

19 Biotechnologies

20 Materials processing

21 Environmental technologies

22 Design and engineering tools

23 Commercialization and production systems

24 Advanced process equipment

25 Networks and communications
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1 Powertrain

2 Propulsion

3 ‘‘(C) MODIFICATIONS TO LIST.—Materials

4 and technologies may be added to or deleted

5 from the list in subparagraph (B)(ii) based on

6 recommendations of experts selected by the Sec7 retary. Any deletion from such list shall not

8 take effect before the date which is 5 years

9 after the date the decision to make such dele10 tion is published in the Federal Register.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1) Subparagraph (B) of section 168(e)(3) of

13 such Code is amended by striking clause (ii) and by

14 redesignating the succeeding clauses accordingly.

15 (2) Subparagraph (B) of section 168(g)(3) of

16 such Code is amended by striking the following:

17 ‘‘(B)(ii) ....................... 5’’

18 and inserting in lieu thereof the following:

19 ‘‘(A)(iii) ........................3

20 ‘‘(A)(iv) .........................3.’’

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to equipment placed in service

23 after the date of the enactment of this Act.
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1 SEC. 2. REDUCTION IN INDIVIDUAL CAPITAL GAINS RATE.

2 (a) GENERAL RULE.—Subsection (h) of section 1 of

3 the Internal Revenue Code of 1986 (relating to maximum

4 capital gains rate) is amended to read as follows:

5 ‘‘(h) MAXIMUM CAPITAL GAINS RATE.—

6 ‘‘(1) IN GENERAL.—If a taxpayer has a net

7 capital gain for any taxable year, then the tax im8 posed by this section shall not exceed the sum of—

9 ‘‘(A) a tax computed at the rates and in

10 the same manner as if this subsection had not

11 been enacted on the taxable income reduced by

12 the net capital gain, plus

13 ‘‘(B) a tax equal to the sum of—

14 ‘‘(i) 7.5 percent of so much of the net

15 capital gain as does not exceed—

16 ‘‘(I) the maximum amount of

17 taxable income to which the 15-per18 cent rate applies under the table ap19 plicable to the taxpayer, reduced by

20 ‘‘(II) the taxable income to which

21 subparagraph (A) applies, plus

22 ‘‘(ii) 15 percent of the net capital gain

23 in excess of the net capital gain to which

24 clause (i) applies.

25 ‘‘(2) TRANSITIONAL RULE.—In the case of a

26 taxable year which includes the date of the enact-
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1 ment of this paragraph, the amount of the net cap2 ital gain for purposes of paragraph (1) shall not ex3 ceed the net capital gain determined by only taking

4 into account gains and losses properly taken into ac5 count for the portion of the taxable year after such

6 date.’’

7 (b) TECHNICAL AMENDMENTS.—

8 (1) Paragraph (1) of section 170(e) of such

9 Code is amended by striking ‘‘the amount of gain’’

10 in the material following subparagraph (B)(ii) and

11 inserting ‘‘13/28 (19/34 in the case of a corporation)

12 of the amount of gain’’.

13 (2)(A) The second sentence of section

14 7518(g)(6)(A) of such Code is amended by strik15 ing ‘‘28 percent (34 percent in the case of a corpora16 tion)’’ and inserting ‘‘15 percent’’.

17 (B) The second sentence of section

18 607(h)(6)(A) of the Merchant Marine Act, 1936, is

19 amended by striking ‘‘28 percent (34 percent in the

20 case of a corporation)’’ and inserting ‘‘15 percent’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to sales and exchanges occurring

23 after the date of the enactment of this Act in taxable years

24 ending after such date.
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1 SEC. 3. REDUCTION IN CORPORATE CAPITAL GAINS RATE.

2 (a) GENERAL RULE.—Section 1201 of the Internal

3 Revenue Code of 1986 (relating to alternative tax for cor4 porations) is amended by redesignating subsection (b) as

5 subsection (c), and by striking subsection (a) and inserting

6 the following:

7 ‘‘(a) GENERAL RULE.—If for any taxable year a cor8 poration has a net capital gain, then, in lieu of the tax

9 imposed by section 11, 511, or 831(a) (whichever applies),

10 there is hereby imposed a tax (if such tax is less than

11 the tax imposed by such section) which shall consist of

12 the sum of—

13 ‘‘(1) a tax computed on the taxable income re14 duced by the net capital gain, at the same rates and

15 in the same manner as if this subsection had not

16 been enacted, plus

17 ‘‘(2) a tax of 15 percent of the net capital gain.

18 ‘‘(b) TRANSITIONAL RULE.—In the case of a taxable

19 year which includes the date of the enactment of this para20 graph, the amount of the net capital gain for purposes

21 of subsection (a) shall not exceed the net capital gain de22 termined by only taking into account gains and losses

23 properly taken into account for the portion of the taxable

24 year after such date.’’

25 (b) TECHNICAL AMENDMENTS.—
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1 (1) Clause (iii) of section 852(b)(3)(D) of such

2 Code is amended by striking ‘‘66 percent’’ and in3 serting ‘‘85 percent’’.

4 (2) Paragraphs (1) and (2) of section 1445(e)

5 of such Code are each amended by striking ‘‘34 per6 cent’’ and inserting ‘‘15 percent’’.

7 (c) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to sales and exchanges occurring

9 after the date of the enactment of this Act in taxable years

10 ending after such date.

11 SEC. 4. REDUCTION OF MINIMUM TAX RATE ON CAPITAL

12 GAINS.

13 (a) IN GENERAL.—Subparagraph (A) of section

14 55(b)(1) of the Internal Revenue Code of 1986 (relating

15 to tentative minimum tax) is amended to read as follows:

16 ‘‘(A) the sum of—

17 ‘‘(i) 15 percent of the lesser of—

18 ‘‘(I) the net capital gain (deter19 mined with the adjustments provided

20 in this part and (to the extent appli21 cable) the limitations of sections

22 1(h)(2) and 1201(b)), or

23 ‘‘(II) so much of the alternative

24 minimum taxable income for the tax-
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1 able year as exceeds the exemption

2 amount, plus

3 ‘‘(ii) 20 percent (24 percent in the

4 case of a taxpayer other than a corpora5 tion) of the amount (if any) by which the

6 excess referred to in clause (i)(II) exceeds

7 the net capital gain (as so determined), re8 duced by’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 this section shall apply to sales and exchanges occurring

11 after the date of the enactment of this Act in taxable years

12 ending after such date.

13 SEC. 5. MINIMUM TAX ON FOREIGN AND FOREIGN-OWNED

14 CORPORATIONS.

15 (a) IN GENERAL.—Subchapter A of chapter 1 of the

16 Internal Revenue Code of 1986 (relating to determination

17 of tax liability) is amended by adding at the end thereof

18 the following new part:

19 ‘‘PART VIII—MINIMUM TAX ON CERTAIN FOREIGN

20 AND FOREIGN-OWNED CORPORATIONS

‘‘Sec. 59B. Minimum tax on certain foreign and foreign-owned

corporations.

21 ‘‘SEC. 59B. MINIMUM TAX ON CERTAIN FOREIGN AND FOR22 EIGN-OWNED CORPORATIONS.

23 ‘‘(a) IMPOSITION OF TAX.—In the case of a corpora24 tion to which this section applies, there is hereby imposed
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1 (in addition to any other tax imposed by this subtitle) a

2 tax equal to the excess (if any) of—

3 ‘‘(1) 34 percent of the product of—

4 ‘‘(A) 5 percent, and

5 ‘‘(B) the gross receipts of the taxpayer

6 from the sale or leasing of property manufac7 tured by the taxpayer or by any foreign person

8 that is a related party of the taxpayer, over

9 ‘‘(2) the aggregate tax imposed under sections

10 11, 55, and 1201 for such year.

11 ‘‘(b) TAXPAYERS TO WHICH SECTION APPLIES.—

12 This section shall apply to a corporation for the taxable

13 year if such corporation is—

14 ‘‘(1) a domestic corporation which is 25-percent

15 foreign-owned, or

16 ‘‘(2) a foreign corporation engaged in a trade or

17 business within the United States.

18 ‘‘(c) DEFINITIONS.—For purposes of this section, the

19 term ‘25-percent foreign-owned’, ‘foreign person’, and ‘re20 lated party’ have the respective meanings given such terms

21 by section 6038A(c).’’

22 (b) CLERICAL AMENDMENT.—The table of parts for

23 such subchapter A is amended by adding at the end there24 of the following new item:

‘‘Part VIII. Minimum tax on certain foreign and foreign-owned

corporations.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

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