I

103D CONGRESS

1ST SESSION H. R. 3648

To amend the Internal Revenue Code of 1986 to provide investment incentives

for any corporation with a majority of its manufacturing operations

in the United States.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 22, 1993

Mr. HUNTER (for himself, Mr. EVERETT, Ms. KAPTUR, and Mr. TRAFICANT)

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 provide

investment incentives for any corporation with a majority

of its manufacturing operations 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Jobs Friendly America

5 Act’’.
2

•HR 3648 IH

1 SEC. 2. ACCELERATED DEPRECIATION FOR EQUIPMENT

2 USED TO MANUFACTURE OR DEVELOP PROD3 UCTS IN THE UNITED STATES.

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

5 168(e)(3) of the Internal Revenue Code of 1986 (relating

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

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

8 of clause (ii) and inserting ‘‘, and’’, and by adding at the

9 end the following new clause:

10 ‘‘(iii) any tool of production of a

11 qualifying corporation (as defined in sub12 section (i)(14)) used by such corporation

13 to manufacture or develop products in the

14 United States.’’

15 (b) QUALIFYING CORPORATION.—Subsection (i) of

16 section 168 of such Code is amended by adding at the

17 end the following new paragraph:

18 ‘‘(14) QUALIFYING CORPORATION.—

19 ‘‘(A) IN GENERAL.—The term ‘qualifying

20 corporation’ means any corporation having a

21 majority of its manufacturing equipment in the

22 United States.

23 ‘‘(B) CONTROLLED GROUPS.—For pur24 poses of subparagraph (A), all corporations

25 which are members of the same controlled

26 group of corporations shall be treated as 1 cor-
3

•HR 3648 IH

1 poration. For purposes of the preceding sen2 tence, the term ‘controlled group of corpora3 tions’ has the meaning given such term by sec4 tion 1563(a); except that—

5 ‘‘(i) ‘more than 10 percent’ shall be

6 substituted for ‘at least 80 percent’ each

7 place it appears in section 1563(a)(1), and

8 ‘‘(ii) section 1563(b)(2) shall be ap9 plied without regard to subparagraph (C)

10 thereof.’’

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

12 this section shall apply to property placed in service after

13 December 31, 1993.

14 SEC. 3. REDUCTION IN CORPORATE CAPITAL GAINS RATE.

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

16 Revenue Code of 1986 (relating to alternative tax for cor17 porations) is amended by redesignating subsection (b) as

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

19 the following:

20 ‘‘(a) GENERAL RULE.—If for any taxable year a

21 qualifying corporation (as defined in section 168(i)(14))

22 has a net capital gain, then, in lieu of the tax imposed

23 by section 11, 511, or 831(a) (whichever applies), there

24 is hereby imposed a tax (if such tax is less than the tax
4

•HR 3648 IH

1 imposed by such section) which shall consist of the sum

2 of—

3 ‘‘(1) a tax computed on the taxable income re4 duced by the net capital gain, at the same rates and

5 in the same manner as if this subsection had not

6 been enacted, plus

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

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

9 year which includes the date of the enactment of this para10 graph, the amount of the net capital gain for purposes

11 of subsection (a) shall not exceed the net capital gain de12 termined by only taking into account gains and losses

13 properly taken into account for the portion of the taxable

14 year after such date.’’

15 (b) TECHNICAL AMENDMENTS.—

16 (1) Clause (iii) of section 852(b)(3)(D) of such

17 Code is amended by striking ‘‘65 percent’’ and in18 serting ‘‘85 percent’’.

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

20 of such Code are each amended by striking ‘‘35 per21 cent’’ and inserting ‘‘15 percent’’.

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

23 this section shall apply to sales and exchanges occurring

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

25 ending after such date.
5

•HR 3648 IH

1 SEC. 4. 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-
6

•HR 3648 IH

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.
7

•HR 3648 IH

1 SEC. 5. REPEAL OF DEFERRAL ON FOREIGN EARNINGS.

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

3 956A(c)(1) of the Internal Revenue Code of 1986 is

4 amended to read as follows:

5 ‘‘(A) the average of the amounts of—

6 ‘‘(i) passive assets, and

7 ‘‘(ii) post-1993 foreign investments,

8 held by such corporation as of the close of each

9 quarter of such taxable year, over.’’

10 (b) POST-1993 FOREIGN INVESTMENT.—Subsection

11 (c) of section 956A of such Code is amended by redesig12 nating paragraph (3) as paragraph (4) and by inserting

13 after paragraph (2) the following new paragraph:

14 ‘‘(3) POST-1993 FOREIGN INVESTMENT.—For

15 purposes of this subsection, the term ‘post-1993 for16 eign investment’ means any asset (other than United

17 States property as defined in section 956) acquired

18 by the controlled foreign corporation after December

19 31, 1993.’’

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

21 this section shall apply to taxable years of controlled for22 eign corporations ending after December 31, 1993.

Æ