II 

115TH CONGRESS 

1ST SESSION S. 1551 

To provide for the establishment of free market enterprise zones in order 

to help facilitate the creation of new jobs, entrepreneurial opportunities, 

enhanced and renewed educational opportunities, and increased community involvement in bankrupt or economically distressed areas. 

IN THE SENATE OF THE UNITED STATES 

JULY 13, 2017 

Mr. PAUL (for himself and Mr. MCCONNELL) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To provide for the establishment of free market enterprise 

zones in order to help facilitate the creation of new 

jobs, entrepreneurial opportunities, enhanced and renewed educational opportunities, and increased community involvement in bankrupt or economically distressed 

areas. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Economic Freedom Zones Act of 2017’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

TITLE I—PROHIBITION OF FEDERAL GOVERNMENT BAILOUTS 

Sec. 101. Prohibition of Federal Government bailouts. 

TITLE II—DESIGNATION OF ECONOMIC FREEDOM ZONES (EFZ) 

Sec. 201. Eligibility requirements for Economic Freedom Zone status. 

Sec. 202. Application and duration of designation. 

TITLE III—FEDERAL TAX INCENTIVES 

Sec. 301. Tax incentives related to Economic Freedom Zones. 

TITLE IV—FEDERAL REGULATORY REDUCTIONS 

Sec. 401. Suspension of certain laws and regulations. 

TITLE V—EDUCATIONAL ENHANCEMENTS 

Sec. 501. Educational opportunity tax credit. 

Sec. 502. School choice through portability. 

Sec. 503. Special Economic Freedom Zone visas. 

Sec. 504. Economic Freedom Zone educational savings accounts. 

TITLE VI—COMMUNITY ASSISTANCE AND REBUILDING 

Sec. 601. Nonapplication of Davis-Bacon. 

Sec. 602. Economic Freedom Zone charitable tax credit. 

3 SEC. 2. DEFINITIONS. 

4 In this Act: 

5 (1) CITY.—The term ‘‘city’’ means any unit of 

6 general local government that is classified as a mu7 nicipality by the United States Census Bureau, or is 

8 a town or township as determined jointly by the Di9 rector of the Office of Management and Budget and 

10 the Secretary. 


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1 (2) COUNTY.—The term ‘‘county’’ means any 

2 unit of local general government that is classified as 

3 a county by the United States Census Bureau. 

4 (3) ELIGIBLE ENTITY.—The term ‘‘eligible enti5 ty’’ means a municipality or a zip code. 

6 (4) MUNICIPALITY.—The term ‘‘municipality’’ 

7 has the meaning given that term in section 101(40) 

8 of title 11, United States Code. 

9 (5) SECRETARY.—The term ‘‘Secretary’’ means 

10 the Secretary of the Treasury. 

11 (6) ZIP CODE.—The term ‘‘zip code’’ means 

12 any area or region associated with or covered by a 

13 United States Postal zip code of not less than 5 dig14 its. 

15 TITLE I—PROHIBITION OF FED16 ERAL GOVERNMENT BAIL17 OUTS 

18 SEC. 101. PROHIBITION OF FEDERAL GOVERNMENT BAIL19 OUTS. 

20 (a) DEFINITIONS.—In this section— 

21 (1) the term ‘‘credit rating’’ has the meaning 

22 given that term in section 3(a)(60) of the Securities 

23 Exchange Act of 1934 (15 U.S.C. 78c(a)(60)); 

24 (2) the term ‘‘credit rating agency’’ has the 

25 meaning given that term in section 3(a)(61) of the 


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1 Securities Exchange Act of 1934 (15 U.S.C. 

2 78c(a)(61)); 

3 (3) the term ‘‘Federal assistance’’ means the 

4 use of any advances from the Federal Reserve credit 

5 facility or discount window that is not part of a pro6 gram or facility with broad-based eligibility under 

7 section 13(3)(A) of the Federal Reserve Act (12 

8 U.S.C. 343(3)(A)), Federal Deposit Insurance Cor9 poration insurance, or guarantees for the purpose 

10 of— 

11 (A) making a loan to, or purchasing any 

12 interest or debt obligation of, a municipality; 

13 (B) purchasing the assets of a munici14 pality; 

15 (C) guaranteeing a loan or debt issuance 

16 of a municipality; or 

17 (D) entering into an assistance arrange18 ment, including a grant program, with an eligi19 ble entity; 

20 (4) the term ‘‘insolvent’’ means, with respect to 

21 an eligible entity, a financial condition such that the 

22 eligible entity— 

23 (A) has any debt that has been given a 

24 credit rating lower than a ‘‘B’’ by a nationally 


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1 recognized statistical rating organization or a 

2 credit rating agency; 

3 (B) is not paying its debts as they become 

4 due, unless such debts are the subject of a bona 

5 fide dispute; or 

6 (C) is unable to pay its debts as they be7 come due; and 

8 (5) the term ‘‘nationally recognized statistical 

9 rating organization’’ has the meaning given that 

10 term in section 3(a)(62) of the Securities Exchange 

11 Act of 1934 (15 U.S.C. 78c(a)(62)). 

12 (b) PROHIBITION OF FEDERAL GOVERNMENT BAIL13 OUTS.— 

14 (1) PROHIBITION OF FEDERAL ASSISTANCE.— 

15 Notwithstanding any other provision of law, no Fed16 eral assistance may be provided to an eligible entity 

17 (other than the assistance provided for in this Act 

18 for an area that is designated as an Economic Free 

19 Zone). 

20 (2) PROHIBITION OF FINANCIAL ASSISTANCE

21 TO BANKRUPT OR INSOLVENT ELIGIBLE ENTITIES.— 

22 Except as provided in paragraph (1), the Federal 

23 Government may not provide financial assistance— 


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1 (A) to a municipality that is a debtor 

2 under chapter 9 of title 11, United States Code; 

3 or 

4 (B) to a municipality that is insolvent. 

5 TITLE II—DESIGNATION OF ECO6 NOMIC FREEDOM ZONES 

7 (EFZ) 

8 SEC. 201. ELIGIBILITY REQUIREMENTS FOR ECONOMIC 

9 FREEDOM ZONE STATUS. 

10 (a) DESIGNATION OF MUNICIPALITIES AS ECONOMIC

11 FREEDOM ZONES.— 

12 (1) IN GENERAL.—An eligible entity that is a 

13 municipality may be designated by the Secretary as 

14 an Economic Freedom Zone if the municipality— 

15 (A) meets the requirements under section 

16 109(c) of title 11, United States Code; 

17 (B) is at risk of insolvency, as determined 

18 under paragraph (2); 

19 (C) has been subject to receivership by the 

20 State within the last 3 years; 

21 (D) has been a debtor under chapter 9 of 

22 title 11, United States Code, within the last 3 

23 years; 


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1 (E) has been subject to a financial advi2 sory board, emergency manager, or similar enti3 ty that— 

4 (i) has arisen from the legislative or 

5 executive authority of the State; and 

6 (ii) exercises significant financial con7 trol over the finances of the entity within 

8 the last 3 years; or 

9 (F) is in receivership or is being overseen 

10 by the Federal Government. 

11 (2) AT RISK OF INSOLVENCY.—A municipality 

12 is at risk of insolvency if— 

13 (A) an independent actuarial firm that has 

14 been engaged by the municipality and that does 

15 not have a conflict of interest with the munici16 pality, including any previous relationship with 

17 the municipality, as determined by the Sec18 retary— 

19 (i) determines that the municipality is 

20 insolvent (as defined in section 101(a)(4) 

21 of title 11, United States Code); and 

22 (ii) submits its analysis regarding the 

23 insolvency of the municipality to the Sec24 retary; and 


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1 (B) the Secretary has reviewed and ap2 proved the determination of insolvency by the 

3 actuarial firm. 

4 (b) DESIGNATION OF COUNTIES, CITIES, AND ZIP

5 CODES AS ECONOMIC FREEDOM ZONES.— 

6 (1) IN GENERAL.—An eligible entity may be 

7 designated by the Secretary as an Economic Free8 dom Zone if the eligible entity— 

9 (A) is a county or city that— 

10 (i) is located in a non-metropolitan 

11 statistical area (as defined by the Director 

12 of the Office of Management and Budget); 

13 and 

14 (ii) meets the requirements under 

15 paragraph (2); or 

16 (B) is a zip code that meets the require17 ments under paragraph (2). 

18 (2) LOW ECONOMIC AND HIGH POVERTY

19 AREA.— 

20 (A) IN GENERAL.—An eligible entity shall 

21 be eligible for designation as an Economic Free22 dom Zone under paragraph (1) if the eligible 

23 entity is designated by the Secretary as a low 

24 economic or high poverty area under subpara25 graph (B). 


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1 (B) DESIGNATION AS LOW ECONOMIC AND

2 HIGH POVERTY AREA.—The Secretary, after re3 viewing supporting data as determined appro4 priate, shall designate an eligible entity as a low 

5 economic or high poverty area if— 

6 (i) the State or local government with 

7 jurisdiction over the eligible entity certifies 

8 that— 

9 (I) the eligible entity is one of 

10 pervasive poverty, unemployment, and 

11 general distress; 

12 (II) the average rate of unem13 ployment within such eligible entity 

14 during the most recent 3-month pe15 riod for which data is available is at 

16 least 1.5 times the national unemploy17 ment rate for the period involved; 

18 (III) during the most recent 3- 

19 month period, at least 30 percent of 

20 the residents of the eligible entity 

21 have incomes below the national pov22 erty level; or 

23 (IV) at least 70 percent of the 

24 residents of the eligible entity have in25 comes below 80 percent of the median 


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1 income of households within the juris2 diction of the local government (as de3 termined in the same manner as 

4 under section 119(b)(2) of the Hous5 ing and Community Development Act 

6 of 1974); and 

7 (ii) the Secretary determines that 

8 such a designation is appropriate. 

9 (c) REFUSAL TO GRANT STATUS.—The Secretary 

10 may refuse to designate an eligible entity as an Economic 

11 Freedom Zone if the Secretary determines that any re12 quirement under this Act, including any requirement 

13 under subsection (a)(2), has not been satisfied. 

14 SEC. 202. APPLICATION AND DURATION OF DESIGNATION. 

15 (a) APPLICATION.—The Secretary shall develop pro16 cedures to enable an eligible entity to submit to the Sec17 retary an application for designation as an Economic 

18 Freedom Zone under this title. 

19 (b) DURATION.—The designation by the Secretary of 

20 an eligible entity as a Economic Freedom Zone shall be 

21 for a period of 10 years. 


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1 TITLE III—FEDERAL TAX 

2 INCENTIVES 

3 SEC. 301. TAX INCENTIVES RELATED TO ECONOMIC FREE4 DOM ZONES. 

5 (a) IN GENERAL.—Chapter 1 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the 

7 following new subchapter: 

8 ‘‘Subchapter Z—Economic Freedom Zones 

‘‘PART I—TAX INCENTIVES

‘‘PART II—DEFINITIONS

9 ‘‘PART I—TAX INCENTIVES 

‘‘Sec. 1400V–1. Economic Freedom Zone individual flat tax. 

‘‘Sec. 1400V–2. Economic Freedom Zone corporate flat tax. 

‘‘Sec. 1400V–3. Zero percent capital gains rate. 

‘‘Sec. 1400V–4. Reduced payroll taxes. 

‘‘Sec. 1400V–5. Increase in expensing under section 179. 

10 ‘‘SEC. 1400V–1. ECONOMIC FREEDOM ZONE INDIVIDUAL 

11 FLAT TAX. 

12 ‘‘(a) IN GENERAL.—In the case of any individual 

13 whose principal residence (within the meaning of section 

14 121) is located in an Economic Freedom Zone for the tax15 able year, in lieu of the tax imposed by section 1, there 

16 shall be imposed a tax equal to 5 percent of the taxable 

17 income of such taxpayer. For purposes of this title, the 

18 tax imposed by the preceding sentence shall be treated as 

19 a tax imposed by section 1. 

20 ‘‘(b) JOINT RETURNS.—In the case of a joint return 

21 under section 6013, subsection (a) shall apply so long as 


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1 either spouse has a principal residence (within the mean2 ing of section 121) in an Economic Freedom Zone for the 

3 taxable year. 

4 ‘‘(c) ALTERNATIVE MINIMUM TAX NOT TO APPLY.— 

5 The tax imposed by section 55 shall not apply to any tax6 payer to whom subsection (a) applies. 

7 ‘‘SEC. 1400V–2. ECONOMIC FREEDOM ZONE CORPORATE 

8 FLAT TAX. 

9 ‘‘(a) IN GENERAL.—In the case of any corporation 

10 located in an Economic Freedom Zone for the taxable 

11 year, in lieu of the tax imposed by section 11, there shall 

12 be imposed a tax equal to 5 percent of the taxable income 

13 of such corporation. For purposes of this title, the tax im14 posed by the preceding sentence shall be treated as a tax 

15 imposed by section 11. 

16 ‘‘(b) LIMITATION.—Subsection (a) shall not apply to 

17 any corporation for any taxable year if the adjusted gross 

18 income of such corporation for such taxable year exceeds 

19 $500,000,000. 

20 ‘‘(c) LOCATED.—For purposes of this section, a cor21 poration shall be considered to be located in an Economic 

22 Freedom Zone if— 

23 ‘‘(1) not less than 10 percent of the total gross 

24 income of such corporation is derived from the active 


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1 conduct of a trade or business within an Economic 

2 Freedom Zone, or 

3 ‘‘(2) at least 25 percent of the employees of 

4 such corporation are residents of an Economic Free5 dom Zone. 

6 ‘‘(d) ALTERNATIVE MINIMUM TAX NOT TO

7 APPLY.—The tax imposed by section 55 shall not apply 

8 to any taxpayer to whom subsection (a) applies. 

9 ‘‘SEC. 1400V–3. ZERO PERCENT CAPITAL GAINS RATE. 

10 ‘‘(a) EXCLUSION.—Gross income shall not include 

11 qualified capital gain from the sale or exchange of— 

12 ‘‘(1) any Economic Freedom Zone asset held 

13 for more than 5 years, or 

14 ‘‘(2) any real property located in an Economic 

15 Freedom Zone. 

16 ‘‘(b) ECONOMIC FREEDOM ZONE ASSET.—For pur17 poses of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘Economic Free19 dom Zone asset’ means— 

20 ‘‘(A) any Economic Freedom Zone busi21 ness stock, 

22 ‘‘(B) any Economic Freedom Zone part23 nership interest, and 

24 ‘‘(C) any Economic Freedom Zone busi25 ness property. 


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1 ‘‘(2) ECONOMIC FREEDOM ZONE BUSINESS

2 STOCK.— 

3 ‘‘(A) IN GENERAL.—The term ‘Economic 

4 Freedom Zone business stock’ means any stock 

5 in a domestic corporation if— 

6 ‘‘(i) such stock is acquired by the tax7 payer, before the date on which such cor8 poration no longer qualifies as an Eco9 nomic Freedom Zone business due to the 

10 lapse of 1 or more Economic Freedom 

11 Zones, at its original issue (directly or 

12 through an underwriter) solely in exchange 

13 for cash, 

14 ‘‘(ii) as of the time such stock was 

15 issued, such corporation was an Economic 

16 Freedom Zone business (or, in the case of 

17 a new corporation, such corporation was 

18 being organized for purposes of being an 

19 Economic Freedom Zone), and 

20 ‘‘(iii) during substantially all of the 

21 taxpayer’s holding period for such stock, 

22 such corporation qualified as an Economic 

23 Freedom Zone business. 


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1 ‘‘(B) REDEMPTIONS.—A rule similar to 

2 the rule of section 1202(c)(3) shall apply for 

3 purposes of this paragraph. 

4 ‘‘(3) ECONOMIC FREEDOM ZONE PARTNERSHIP

5 INTEREST.—The term ‘Economic Freedom Zone 

6 partnership interest’ means any capital or profits in7 terest in a domestic partnership if— 

8 ‘‘(A) such interest is acquired by the tax9 payer, before the date on which such partner10 ship no longer qualifies as an Economic Free11 dom Zone business due to the lapse of 1 or 

12 more Economic Freedom Zones, from the part13 nership solely in exchange for cash, 

14 ‘‘(B) as of the time such interest was ac15 quired, such partnership was an Economic 

16 Freedom Zone business (or, in the case of a 

17 new partnership, such partnership was being 

18 organized for purposes of being an Economic 

19 Freedom Zone), and 

20 ‘‘(C) during substantially all of the tax21 payer’s holding period for such interest, such 

22 partnership qualified as an Economic Freedom 

23 Zone business. A rule similar to the rule of 

24 paragraph (2)(B) shall apply for purposes of 

25 this paragraph. 


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1 ‘‘(4) ECONOMIC FREEDOM ZONE BUSINESS

2 PROPERTY.— 

3 ‘‘(A) IN GENERAL.—The term ‘Economic 

4 Freedom Zone business property’ means tan5 gible property if— 

6 ‘‘(i) such property was acquired by 

7 the taxpayer by purchase (as defined in 

8 section 179(d)(2)) after the date on such 

9 taxpayer qualifies as an Economic Free10 dom Zone business and before the date on 

11 which such taxpayer no longer qualifies as 

12 an Economic Freedom Zone business due 

13 to the lapse of 1 or more Economic Free14 dom Zones, 

15 ‘‘(ii) the original use of such property 

16 in the Economic Freedom Zone commences 

17 with the taxpayer, and 

18 ‘‘(iii) during substantially all of the 

19 taxpayer’s holding period for such prop20 erty, substantially all of the use of such 

21 property was in an Economic Freedom 

22 Zone business of the taxpayer. 

23 ‘‘(B) SPECIAL RULE FOR BUILDINGS

24 WHICH ARE SUBSTANTIALLY IMPROVED.— 


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1 ‘‘(i) IN GENERAL.—The requirements 

2 of clauses (i) and (ii) of subparagraph (A) 

3 shall be treated as met with respect to— 

4 ‘‘(I) property which is substan5 tially improved by the taxpayer before 

6 the date on which such taxpayer no 

7 longer qualifies as an Economic Free8 dom Zone business due to the lapse of 

9 1 or more Economic Freedom Zones, 

10 and 

11 ‘‘(II) any land on which such 

12 property is located. 

13 ‘‘(ii) SUBSTANTIAL IMPROVEMENT.— 

14 For purposes of clause (i), property shall 

15 be treated as substantially improved by the 

16 taxpayer only if, during any 24-month pe17 riod beginning after the date on which the 

18 taxpayer qualifies as an Economic Free19 dom Zone business additions to basis with 

20 respect to such property in the hands of 

21 the taxpayer exceed the greater of— 

22 ‘‘(I) an amount equal to the ad23 justed basis of such property at the 

24 beginning of such 24-month period in 

25 the hands of the taxpayer, or 


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1 ‘‘(II) $5,000. 

2 ‘‘(5) TREATMENT OF ECONOMIC FREEDOM

3 ZONE TERMINATION.—Except as otherwise provided 

4 in this subsection, the termination of the designation 

5 of the Economic Freedom Zone shall be disregarded 

6 for purposes of determining whether any property is 

7 an Economic Freedom Zone asset. 

8 ‘‘(6) TREATMENT OF SUBSEQUENT PUR9 CHASERS, ETC.—The term ‘Economic Freedom Zone 

10 asset’ includes any property which would be an Eco11 nomic Freedom Zone asset but for paragraph 

12 (2)(A)(i), (3)(A), or (4)(A) (i) or (ii) in the hands 

13 of the taxpayer if such property was an Economic 

14 Freedom Zone asset in the hands of a prior holder. 

15 ‘‘(7) 5-YEAR SAFE HARBOR.—If any property 

16 ceases to be an Economic Freedom Zone asset by 

17 reason of paragraph (2)(A)(iii), (3)(C), or (4)(A)(iii) 

18 after the 5-year period beginning on the date the 

19 taxpayer acquired such property, such property shall 

20 continue to be treated as meeting the requirements 

21 of such paragraph; except that the amount of gain 

22 to which subsection (a) applies on any sale or ex23 change of such property shall not exceed the amount 

24 which would be qualified capital gain had such prop25 erty been sold on the date of such cessation. 


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1 ‘‘(c) ECONOMIC FREEDOM ZONE BUSINESS.—For 

2 purposes of this section, the term ‘Economic Freedom 

3 Zone business’ means any enterprise zone business (as de4 fined in section 1397C), determined— 

5 ‘‘(1) after the application of section 1400(e), 

6 ‘‘(2) by substituting ‘80 percent’ for ‘50 per7 cent’ in subsections (b)(2) and (c)(1) of section 

8 1397C, and 

9 ‘‘(3) by treating only areas that are Economic 

10 Freedom Zones as an empowerment zone or enter11 prise community. 

12 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

13 For purposes of this section— 

14 ‘‘(1) QUALIFIED CAPITAL GAIN.—Except as 

15 otherwise provided in this subsection, the term 

16 ‘qualified capital gain’ means any gain recognized on 

17 the sale or exchange of— 

18 ‘‘(A) a capital asset, or 

19 ‘‘(B) property used in the trade or busi20 ness (as defined in section 1231(b)). 

21 ‘‘(2) CERTAIN GAIN NOT QUALIFIED.—The 

22 term ‘qualified capital gain’ shall not include any 

23 gain attributable to periods before the date on which 

24 the a business qualifies as an Economic Freedom 

25 Zone business or after the date that is 4 years after 


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1 the date on which such business no longer qualifies 

2 as an Economic Freedom Zone business due to the 

3 lapse of 1 or more Economic Freedom Zones. 

4 ‘‘(3) CERTAIN GAIN NOT QUALIFIED.—The 

5 term ‘qualified capital gain’ shall not include any 

6 gain which would be treated as ordinary income 

7 under section 1245 or under section 1250 if section 

8 1250 applied to all depreciation rather than the ad9 ditional depreciation. 

10 ‘‘(4) INTANGIBLES NOT INTEGRAL PART OF

11 ECONOMIC FREEDOM ZONE BUSINESS.—In the case 

12 of gain described in subsection (a)(1), the term 

13 ‘qualified capital gain’ shall not include any gain 

14 which is attributable to an intangible asset which is 

15 not an integral part of an Economic Freedom Zone 

16 business. 

17 ‘‘(5) RELATED PARTY TRANSACTIONS.—The 

18 term ‘qualified capital gain’ shall not include any 

19 gain attributable, directly or indirectly, in whole or 

20 in part, to a transaction with a related person. For 

21 purposes of this paragraph, persons are related to 

22 each other if such persons are described in section 

23 267(b) or 707(b)(1). 

24 ‘‘(e) SALES AND EXCHANGES OF INTERESTS IN

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1 NOMIC FREEDOM ZONE BUSINESSES.—In the case of the 

2 sale or exchange of an interest in a partnership, or of 

3 stock in an S corporation, which was an Economic Free4 dom Zone business during substantially all of the period 

5 the taxpayer held such interest or stock, the amount of 

6 qualified capital gain shall be determined without regard 

7 to— 

8 ‘‘(1) any gain which is attributable to an intan9 gible asset which is not an integral part of an Eco10 nomic Freedom Zone business, and 

11 ‘‘(2) any gain attributable to periods before the 

12 date on which the a business qualifies as an Eco13 nomic Freedom Zone business or after the date that 

14 is 4 years after the date on which such business no 

15 longer qualifies as an Economic Freedom Zone busi16 ness due to the lapse of 1 or more Economic Free17 dom Zones. 

18 ‘‘SEC. 1400V–4. REDUCED PAYROLL TAXES. 

19 ‘‘(a) IN GENERAL.— 

20 ‘‘(1) EMPLOYEES.—The rate of tax under 

21 3101(a) (including for purposes of determining the 

22 applicable percentage under sections 3201(a) and 

23 3211(a)(1)) shall be 4.2 percent for any remunera24 tion received during any period in which the individVerDate Sep 11 2014 04:02 Jul 21, 2017 Jkt 069200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\S1551.IS S1551

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1 ual’s principal residence (within the meaning of sec2 tion 121) is located in an Economic Freedom Zone. 

3 ‘‘(2) EMPLOYERS.— 

4 ‘‘(A) IN GENERAL.—The rate of tax under 

5 section 3111(a) (including for purposes of de6 termining the applicable percentage under sec7 tions 3221(a)) shall be 4.2 percent with respect 

8 to remuneration paid for qualified services dur9 ing any period in which the employer is located 

10 in an Economic Freedom Zone. 

11 ‘‘(B) QUALIFIED SERVICES.—For purposes 

12 of this section, the term ‘qualified services’ 

13 means services performed— 

14 ‘‘(i) in a trade or business of a quali15 fied employer, or 

16 ‘‘(ii) in the case of a qualified em17 ployer exempt from tax under section 

18 501(a) of the Internal Revenue Code of 

19 1986, in furtherance of the activities re20 lated to the purpose or function consti21 tuting the basis of the employer’s exemp22 tion under section 501 of such Code. 

23 ‘‘(C) LOCATION OF EMPLOYER.—For pur24 poses of this paragraph, the location of an emVerDate Sep 11 2014 04:02 Jul 21, 2017 Jkt 069200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S1551.IS S1551

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1 ployer shall be determined in the same manner 

2 as under section 1400V–2(c). 

3 ‘‘(3) SELF-EMPLOYED INDIVIDUALS.—The rate 

4 of tax under section 1401(a) shall be 8.40 percent 

5 any taxable year in which such individual was lo6 cated (determined under section 1400V–2(c) as if 

7 such individual were a corporation) in an Economic 

8 Freedom Zone. 

9 ‘‘(b) TRANSFERS OF FUNDS.— 

10 ‘‘(1) TRANSFERS TO FEDERAL OLD-AGE AND

11 SURVIVORS INSURANCE TRUST FUND.—There are 

12 hereby appropriated to the Federal Old-Age and 

13 Survivors Trust Fund and the Federal Disability In14 surance Trust Fund established under section 201 

15 of the Social Security Act (42 U.S.C. 401) amounts 

16 equal to the reduction in revenues to the Treasury 

17 by reason of the application of subsection (a). 

18 Amounts appropriated by the preceding sentence 

19 shall be transferred from the general fund at such 

20 times and in such manner as to replicate to the ex21 tent possible the transfers which would have oc22 curred to such Trust Fund had such amendments 

23 not been enacted. 

24 ‘‘(2) TRANSFERS TO SOCIAL SECURITY EQUIVA25 LENT BENEFIT ACCOUNT.—There are hereby approVerDate Sep 11 2014 04:02 Jul 21, 2017 Jkt 069200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S1551.IS S1551

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1 priated to the Social Security Equivalent Benefit Ac2 count established under section 15A(a) of the Rail3 road Retirement Act of 1974 (45 U.S.C. 231n–1(a)) 

4 amounts equal to the reduction in revenues to the 

5 Treasury by reason of the application of paragraphs 

6 (1) and (2) of subsection (a). Amounts appropriated 

7 by the preceding sentence shall be transferred from 

8 the general fund at such times and in such manner 

9 as to replicate to the extent possible the transfers 

10 which would have occurred to such Account had 

11 such amendments not been enacted. 

12 ‘‘(3) COORDINATION WITH OTHER FEDERAL

13 LAWS.—For purposes of applying any provision of 

14 Federal law other than the provisions of the Internal 

15 Revenue Code of 1986, the rate of tax in effect 

16 under section 3101(a) shall be determined without 

17 regard to the reduction in such rate under this sec18 tion. 

19 ‘‘SEC. 1400V–5. INCREASE IN EXPENSING UNDER SECTION 

20 179. 

21 ‘‘(a) IN GENERAL.—In the case of an Economic 

22 Freedom Zone business, for purposes of section 179— 

23 ‘‘(1) the limitation under section 179(b)(1) 

24 shall be increased by the lesser of— 


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1 ‘‘(A) 200 percent of the amount in effect 

2 under such section (determined without regard 

3 to this section), or 

4 ‘‘(B) the cost of section 179 property 

5 which is Economic Freedom Zone business 

6 property placed in service during the taxable 

7 year, and 

8 ‘‘(2) the amount taken into account under sec9 tion 179(b)(2) with respect to any section 179 prop10 erty which is Economic Freedom Zone business 

11 property shall be 50 percent of the cost thereof. 

12 ‘‘(b) ECONOMIC FREEDOM ZONE BUSINESS PROP13 ERTY.—For purposes of this section, the term ‘Economic 

14 Freedom Zone business property’ has the meaning given 

15 such term under section 1400V–3(b)(4), except that for 

16 purposes of subparagraph (A)(ii) thereof, if property is 

17 sold and leased back by the taxpayer within 3 months 

18 after the date such property was originally placed in serv19 ice, such property shall be treated as originally placed in 

20 service not earlier than the date on which such property 

21 is used under the leaseback. 

22 ‘‘(c) RECAPTURE.—Rules similar to the rules under 

23 section 179(d)(10) shall apply with respect to any quali24 fied zone property which ceases to be used in an empower25 ment zone by an enterprise zone business. 


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1 ‘‘PART II—DEFINITIONS 

‘‘Sec. 1400V–6. Economic Freedom Zone. 

2 ‘‘SEC. 1400V–6. ECONOMIC FREEDOM ZONE. 

3 ‘‘For purposes of this subchapter, the term ‘Eco4 nomic Freedom Zone’ means any area which is an Eco5 nomic Freedom Zone under title II of the Economic Free6 dom Zone Act.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sub8 chapters for chapter 1 of such Code is amended by insert9 ing after the item relating to subchapter Y the following 

10 new item: 

‘‘SUBCHAPTER Z—ECONOMIC FREEDOM ZONES’’. 

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

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 TITLE IV—FEDERAL 

15 REGULATORY REDUCTIONS 

16 SEC. 401. SUSPENSION OF CERTAIN LAWS AND REGULA17 TIONS. 

18 (a) ENVIRONMENTAL PROTECTION AGENCY.—For 

19 each area designated as an Economic Freedom Zone 

20 under this Act, the Administrator of the Environmental 

21 Protection Agency shall not enforce, with respect to that 

22 Economic Freedom Zone, and the Economic Freedom 

23 Zone shall be exempt from compliance with— 


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1 (1) part D of the Clean Air Act (42 U.S.C. 

2 7501 et seq.) (including any regulations promul3 gated under that part); 

4 (2) section 402 of the Federal Water Pollution 

5 Control Act (33 U.S.C. 1342); 

6 (3) sections 139, 168, 169, 326, and 327 of 

7 title 23, United States Code; 

8 (4) section 304 of title 49, United States Code; 

9 and 

10 (5) sections 1315 through 1320 of Public Law 

11 112–141 (126 Stat. 549). 

12 (b) DEPARTMENT OF THE INTERIOR.— 

13 (1) WILD AND SCENIC RIVERS.—For each area 

14 designated as an Economic Freedom Zone under 

15 this Act, the Secretary of the Interior shall not en16 force, with respect to that Economic Freedom Zone, 

17 and the Economic Freedom Zone shall be exempt 

18 from compliance with the Wild and Scenic Rivers 

19 Act (16 U.S.C. 1271 et seq.). 

20 (2) NATIONAL HERITAGE AREAS.—For the pe21 riod beginning on the date of enactment of this Act 

22 and ending on the date on which an area is removed 

23 from designation as an Economic Freedom Zone, 

24 any National Heritage Area located within that Eco25 nomic Freedom Zone shall not be considered to be 


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1 a National Heritage Area and any applicable Fed2 eral law (including regulations) relating to that Na3 tional Heritage Area shall not apply. 

4 TITLE V—EDUCATIONAL 

5 ENHANCEMENTS 

6 SEC. 501. EDUCATIONAL OPPORTUNITY TAX CREDIT. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 25D the fol10 lowing new section: 

11 ‘‘SEC. 25E. CREDIT FOR QUALIFIED ELEMENTARY AND SEC12 ONDARY EDUCATION EXPENSES. 

13 ‘‘(a) IN GENERAL.—In the case of an individual, 

14 there shall be allowed as a credit against the tax imposed 

15 by this chapter for the taxable year an amount equal to 

16 the qualified elementary and secondary education expenses 

17 of an eligible student. 

18 ‘‘(b) LIMITATION.—The amount taken into account 

19 under subsection (a) with respect to any student for any 

20 taxable year shall not exceed $5,000. 

21 ‘‘(c) DEFINITIONS.—For purposes of this section— 

22 ‘‘(1) QUALIFIED ELEMENTARY AND SECONDARY

23 EDUCATION EXPENSES.—The term ‘qualified ele24 mentary and secondary education expenses’ has the 

25 meaning given such term under section 530(b)(3). 


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1 ‘‘(2) ELIGIBLE STUDENT.—The term ‘eligible 

2 student’ means any student who— 

3 ‘‘(A) is enrolled in, or attends, any public, 

4 private, or religious school (as defined in section 

5 530(b)(3)(B)), and 

6 ‘‘(B) whose principal residence (within the 

7 meaning of section 123) is located in an Eco8 nomic Freedom Zone. 

9 ‘‘(3) ECONOMIC FREEDOM ZONE.—The term 

10 ‘Economic Freedom Zone’ means any area which is 

11 an Economic Freedom Zone under title II of the 

12 Economic Freedom Zone Act.’’. 

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

14 for subpart A of part IV of subchapter A of chapter 1 

15 of such Code is amended by inserting after the item relat16 ing to section 25D the following new item: 

‘‘Sec. 25E. Credit for qualified elementary and secondary education expenses.’’. 

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

18 this section shall apply to expenditures made in taxable 

19 years beginning after the date of the enactment of this 

20 Act. 

21 SEC. 502. SCHOOL CHOICE THROUGH PORTABILITY. 

22 (a) IN GENERAL.—Subpart 2 of part A of title I of 

23 the Elementary and Secondary Education Act of 1965 (20 

24 U.S.C. 6331 et seq.) is amended by adding at the end 

25 the following: 


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1 ‘‘SEC. 1128. SCHOOL CHOICE THROUGH PORTABILITY. 

2 ‘‘(a) AUTHORIZATION.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding sections 

4 1124, 1124A, and 1125 and any other provision of 

5 law, and to the extent permitted under State law, a 

6 State educational agency may allocate grant funds 

7 under this subpart among the local educational 

8 agencies in the State based on the formula described 

9 in paragraph (2). 

10 ‘‘(2) FORMULA.—A State educational agency 

11 may allocate grant funds under this subpart for a 

12 fiscal year among the local educational agencies in 

13 the State in proportion to the number of eligible 

14 children enrolled in public schools served by the local 

15 educational agency and enrolled in State-accredited 

16 private schools within the local educational agency’s 

17 geographic jurisdiction, for the most recent fiscal 

18 year for which satisfactory data are available, com19 pared to the number of such children in all such 

20 local educational agencies for that fiscal year. 

21 ‘‘(b) ELIGIBLE CHILD.— 

22 ‘‘(1) IN GENERAL.—In this section, the term 

23 ‘eligible child’ means a child— 

24 ‘‘(A) from a family with an income below 

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1 cent satisfactory data published by the Depart2 ment of Commerce; and 

3 ‘‘(B) who resides in an Economic Freedom 

4 Zone as designated under title II of the Eco5 nomic Freedom Zones Act of 2017. 

6 ‘‘(2) CRITERIA OF POVERTY.—In determining 

7 the families with incomes below the poverty level for 

8 the purposes of paragraph (2), a State educational 

9 agency shall use the criteria of poverty used by the 

10 Census Bureau in compiling the most recent decen11 nial census. 

12 ‘‘(3) IDENTIFICATION OF ELIGIBLE CHIL13 DREN.—On an annual basis, on a date to be deter14 mined by the State educational agency, each local 

15 educational agency that receives grant funding in ac16 cordance with subsection (a) shall inform the State 

17 educational agency of the number of eligible children 

18 enrolled in public schools served by the local edu19 cational agency and enrolled in State-accredited pri20 vate schools within the local educational agency’s ge21 ographic jurisdiction. 

22 ‘‘(c) DISTRIBUTION TO SCHOOLS.—Each local edu23 cational agency that receives grant funding under sub24 section (a) shall distribute such funds to the public schools 

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1 ited private schools with the local educational agency’s ge2 ographic jurisdiction— 

3 ‘‘(1) based on the number of eligible children 

4 enrolled in such schools; and 

5 ‘‘(2) in the manner that would, in the absence 

6 of such Federal funds, supplement the funds made 

7 available from the non-Federal resources for the 

8 education of pupils participating in programs under 

9 this part, and not to supplant such funds.’’. 

10 (b) TABLE OF CONTENTS.—The table of contents in 

11 section 2 of the Elementary and Secondary Education Act 

12 of 1965 is amended by inserting after the item relating 

13 to section 1127 the following: 

‘‘Sec. 1128. School choice through portability.’’. 

14 SEC. 503. SPECIAL ECONOMIC FREEDOM ZONE VISAS. 

15 (a) DEFINITIONS.—In this section: 

16 (1) ABANDONED; DILAPIDATED.—The terms 

17 ‘‘abandoned’’ and ‘‘dilapidated’’ shall be defined by 

18 the States in accordance with the provisions of this 

19 Act. 

20 (2) FULL-TIME EMPLOYMENT.—The term ‘‘full21 time employment’’ means employment in a position 

22 that requires at least 35 hours of service per week 

23 at any time, regardless of who fills the position. 

24 (b) PURPOSE.—The purpose of this section is to fa25 cilitate increased investment and enhanced human capital 


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1 in Economic Freedom Zones through the issuance of spe2 cial regional visas. 

3 (c) AUTHORIZATION.—The Secretary of Homeland 

4 Security, in collaboration with the Secretary of Labor, 

5 may issue Special Economic Freedom Zone Visas, in a 

6 number determined by the Governor of each State, in con7 sultation with local officials in regions designated by the 

8 Secretary of the Treasury as Economic Freedom Zones, 

9 to authorize qualified aliens to enter the United States for 

10 the purpose of— 

11 (1) engaging in a new commercial enterprise 

12 (including a limited partnership)— 

13 (A) in which such alien has invested, or is 

14 actively in the process of investing, capital in an 

15 amount not less than the amount specified in 

16 subsection (d); and 

17 (B) which will benefit the region des18 ignated as an Economic Freedom Zone by cre19 ating full-time employment of not fewer than 5 

20 United States citizens, aliens lawfully admitted 

21 for permanent residence, or other immigrants 

22 lawfully authorized to be employed in the 

23 United States (excluding the alien and the 

24 alien’s immediate family); 


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1 (2) engaging in the purchase and renovation of 

2 dilapidated or abandoned properties or residences 

3 (as determined by State and local officials) in which 

4 such alien has invested, or is actively in the process 

5 of investing, in the ownership of such properties or 

6 residences; or 

7 (3) residing and working in an Economic Free8 dom Zone. 

9 (d) EFFECTIVE PERIOD.—A visa issued to an alien 

10 under this section shall expire on the later of— 

11 (1) the date on which the relevant Economic 

12 Freedom Zone loses such designation; or 

13 (2) the date that is 5 years after the date on 

14 which such visa was issued to such alien. 

15 (e) CAPITAL AND EDUCATIONAL REQUIREMENTS.— 

16 (1) NEW COMMERCIAL ENTERPRISES.—Except 

17 as otherwise provided under this section, the min18 imum amount of capital required to comply with 

19 subsection (c)(1)(A) shall be $50,000. 

20 (2) RENOVATION OF DILAPIDATED OR ABAN21 DONED PROPERTIES.—An alien is not in compliance 

22 with subsection (c)(2) unless the alien— 

23 (A) purchases a dilapidated or abandoned 

24 property in an Economic Freedom Zone; and 


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1 (B) not later than 18 months after such 

2 purchase, invests not less than $25,000 to re3 build, rehabilitate, or repurpose the property. 

4 (3) VERIFICATION.—A visa issued under sub5 section (c) shall not remain in effect for more than 

6 2 years unless the Secretary of Homeland Security 

7 has verified that the alien has complied with the re8 quirements described in subsection (c). 

9 (4) EDUCATION AND SKILL REQUIREMENTS.— 

10 An alien is not in compliance with subsection (c)(3) 

11 unless the alien possesses— 

12 (A) a bachelor’s degree (or its equivalent) 

13 or an advanced degree; 

14 (B) a degree or specialty certification 

15 that— 

16 (i) is required for the job the alien will 

17 be performing; and 

18 (ii) is specific to an industry or job 

19 that is so complex or unique that it can be 

20 performed only by an individual with the 

21 specialty certification; 

22 (C)(i) the knowledge required to perform 

23 the duties of the job the alien will be per24 forming; and 


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1 (ii) the nature of the specific duties is so 

2 specialized and complex that such knowledge is 

3 usually associated with attainment of a bach4 elor’s or higher degree; or 

5 (D) a skill or talent that would benefit the 

6 Economic Freedom Zone. 

7 (f) ADDITIONAL PROVISIONS.— 

8 (1) GEOGRAPHIC LIMITATION.—An alien who 

9 has been issued a visa under this section is not per10 mitted to live or work outside of an Economic Free11 dom Zone. 

12 (2) RESCISSION.—A visa issued under this sec13 tion shall be rescinded if the visa holder resides or 

14 works outside of an Economic Freedom Zone or oth15 erwise fails to comply with the provisions of this sec16 tion. 

17 (3) OTHER VISAS.—An alien who has been 

18 issued a visa under this section may apply for any 

19 other visa for which the alien is eligible in order to 

20 pursue employment outside of an Economic Freedom 

21 Zone. 

22 (g) ADJUSTMENT OF STATUS.—The Secretary of 

23 Homeland Security may adjust the status of an alien who 

24 has been issued a visa under this section to that of an 


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1 alien lawfully admitted for permanent residence, without 

2 numerical limitation, if the alien— 

3 (1) has fully complied with the requirements set 

4 forth in this section for at least 5 years; 

5 (2) submits a completed application to the Sec6 retary; and 

7 (3) is not inadmissible to the United States 

8 based on any of the factors set forth in section 

9 212(a) of the Immigration and Nationality Act (8 

10 U.S.C. 1182(a)). 

11 SEC. 504. ECONOMIC FREEDOM ZONE EDUCATIONAL SAV12 INGS ACCOUNTS. 

13 (a) IN GENERAL.—Part VIII of subchapter F of 

14 chapter 1 of the Internal Revenue Code of 1986 is amend15 ed by adding at the end the following new section: 

16 ‘‘SEC. 530A. ECONOMIC FREEDOM ZONE EDUCATIONAL SAV17 INGS ACCOUNTS. 

18 ‘‘(a) IN GENERAL.—Except as provided in this sec19 tion, an Economic Freedom Zone educational savings ac20 count shall be treated for purposes of this title in the same 

21 manner as a Coverdell education savings account. 

22 ‘‘(b) DEFINITIONS.—For purposes of this section— 

23 ‘‘(1) ECONOMIC FREEDOM ZONE EDUCATIONAL

24 SAVINGS ACCOUNT.—The term ‘Economic Freedom 

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1 ated or organized in the United States exclusively 

2 for the purpose of paying the qualified education ex3 penses (as defined in section 530(b)(2)) of an indi4 vidual who is the designated beneficiary of the trust 

5 (and designated as an Economic Freedom Zone edu6 cational saving account at the time created or orga7 nized) and who is a qualified individual at the time 

8 such trust is established, but only if the written gov9 erning instrument creating the trust meets the fol10 lowing requirements: 

11 ‘‘(A) No contribution will be accepted— 

12 ‘‘(i) unless it is in cash, 

13 ‘‘(ii) after the date on which such ben14 eficiary attains age 25, or 

15 ‘‘(iii) except in the case of rollover 

16 contributions, if such contribution would 

17 result in aggregate contributions for the 

18 taxable year exceeding $10,000. 

19 ‘‘(B) No contribution shall be accepted at 

20 any time in which the designated beneficiary is 

21 not a qualified individual. 

22 ‘‘(C) The trust meets the requirements of 

23 subparagraphs (B), (C), (D), and (E) of section 

24 530(b)(1). 


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1 The age limitations in subparagraph (A)(ii), sub2 paragraph (E) of section 530(b)(1), and paragraphs 

3 (5) and (6) of section 530(d), shall not apply to any 

4 designated beneficiary with special needs (as deter5 mined under regulations prescribed by the Sec6 retary). 

7 ‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali8 fied individual’ means any individual whose principal 

9 residence (within the meaning of section 121) is lo10 cated in an Economic Freedom Zone (as defined in 

11 section 1400V–6). 

12 ‘‘(c) DEDUCTION FOR CONTRIBUTIONS.— 

13 ‘‘(1) IN GENERAL.—There shall be allowed as a 

14 deduction under part VII of subchapter B of this 

15 chapter an amount equal to the aggregate amount of 

16 contributions made by the taxpayer to any Economic 

17 Freedom Zone educational savings account during 

18 the taxable year. 

19 ‘‘(2) LIMITATION.—The amount of the deduc20 tion allowed under paragraph (1) for any taxpayer 

21 for any taxable year shall not exceed $40,000. 

22 ‘‘(3) NO DEDUCTION FOR ROLLOVER CON23 TRIBUTIONS.—No deduction shall be allowed under 

24 paragraph (1) for any rollover contribution described 

25 in section 530(d)(5). 


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1 ‘‘(d) OTHER RULES.— 

2 ‘‘(1) NO INCOME LIMIT.—In the case of an 

3 Economic Freedom Zone educational savings ac4 count, subsection (c) of section 530 shall not apply. 

5 ‘‘(2) CHANGE IN BENEFICIARIES.—Notwith6 standing paragraph (6) of section 530(b), a change 

7 in the beneficiary of an Economic Freedom Zone 

8 education savings account shall be treated as a dis9 tribution unless the new beneficiary is a qualified in10 dividual.’’. 

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

12 for part VIII of subchapter F of chapter 1 of such Code 

13 is amended by adding at the end the following new item: 

‘‘Sec. 530A. Economic Freedom Zone educational savings accounts.’’. 

14 TITLE VI—COMMUNITY 

15 ASSISTANCE AND REBUILDING 

16 SEC. 601. NONAPPLICATION OF DAVIS-BACON. 

17 The wage rate requirements of subchapter IV of 

18 chapter 31 of title 40, United States Code (commonly re19 ferred to as the ‘‘Davis-Bacon Act’’), shall not apply with 

20 respect to any area designated as an Economic Freedom 

21 Zone under this Act. 

22 SEC. 602. ECONOMIC FREEDOM ZONE CHARITABLE TAX 

23 CREDIT. 

24 (a) IN GENERAL.—Section 170 of the Internal Rev25 enue Code of 1986 is amended by redesignating subsection 


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1 (p) as subsection (q) and by inserting after subsection (o) 

2 the following new subsection: 

3 ‘‘(o) ELECTION TO TREAT CONTRIBUTIONS FOR

4 ECONOMIC FREEDOM ZONE CHARITIES AS A CREDIT.— 

5 ‘‘(1) IN GENERAL.—In the case of an indi6 vidual, at the election of the taxpayer, so much of 

7 the deduction allowed under subsection (a) (deter8 mined without regard to this subsection) which is at9 tributable to Economic Freedom Zone charitable 

10 contributions— 

11 ‘‘(A) shall be allowed as a credit against 

12 the tax imposed by this chapter for the taxable 

13 year, and 

14 ‘‘(B) shall not be allowed as a deduction 

15 for such taxable year under subsection (a). Any 

16 amount allowable as a credit under this sub17 section shall be treated as a credit allowed 

18 under subpart A of part IV of subchapter A for 

19 purposes of this title. 

20 ‘‘(2) AMOUNT ATTRIBUTABLE TO ECONOMIC

21 FREEDOM ZONE CHARITABLE CONTRIBUTIONS.—For 

22 purposes of paragraph (1)— 

23 ‘‘(A) IN GENERAL.—In any case in which 

24 the total charitable contributions of a taxpayer 

25 for a taxable year exceed the contribution base, 


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1 the amount of Economic Freedom Zone chari2 table contributions taken into account under 

3 paragraph (1) shall be the amount which bears 

4 the same ratio to the total charitable contribu5 tions made by the taxpayer during such taxable 

6 year as the amount of the deduction allowed 

7 under subsection (a) (determined without re8 gard to this subsection and after application of 

9 subsection (b)) bears to the total charitable con10 tributions made by the taxpayer for such tax11 able year. 

12 ‘‘(B) CARRYOVERS.—In the case of any 

13 contribution carried from a preceding taxable 

14 year under subsection (d), such amount shall be 

15 treated as attributable to an Economic Free16 dom Zone charitable contribution in the amount 

17 that bears the same ratio to the total amount 

18 carried from preceding taxable years under sub19 section (d) as the amount of Economic Free20 dom Zone charitable contributions not allowed 

21 as a deduction under subsection (a) (other than 

22 by reason of this subsection for the preceding 5 

23 taxable years) bears to total amount carried 

24 from preceding taxable years under subsection 

25 (d). 


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1 ‘‘(3) ECONOMIC FREEDOM ZONE CHARITABLE

2 CONTRIBUTION.—The term ‘Economic Freedom 

3 Zone charitable contribution’ means any contribu4 tion to a corporation, trust, or community chest 

5 fund, or foundation described in subsection (c)(2), 

6 but only if— 

7 ‘‘(A) such entity is created or organized 

8 exclusively for— 

9 ‘‘(i) religious purposes, 

10 ‘‘(ii) educational purposes, or 

11 ‘‘(iii) any of the following charitable 

12 purposes: providing educational scholar13 ships, providing shelters for homeless indi14 viduals, or setting up or maintaining food 

15 banks, 

16 ‘‘(B) the primary mission of such entity is 

17 serving individuals in an Economic Freedom 

18 Zone, 

19 ‘‘(C) the entity maintains accountability to 

20 residents of such Economic Freedom Zone 

21 through their representation on any governing 

22 board of the entity or any advisory board to the 

23 entity, and 

24 ‘‘(D) the entity is certified by the Sec25 retary for purposes of this subsection. 


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1 Such term shall not include any contribution made 

2 to an entity described in the preceding sentence 

3 after the date in which the designation of the Eco4 nomic Freedom Zone serviced by such entity lapses. 

5 ‘‘(4) ECONOMIC FREEDOM ZONE.—The term 

6 ‘Economic Freedom Zone’ means any area which is 

7 an Economic Freedom Zone under title II of the 

8 Economic Freedom Zone Act.’’. 

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

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

Æ 


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