I 

114TH CONGRESS 

1ST SESSION H. R. 2970 

To amend the Internal Revenue Code of 1986 to reduce the rate of tax 

on domestic manufacturing income to 20 percent. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 8, 2015 

Mr. KIND (for himself, Mr. NEAL, Mr. RANGEL, Mr. PASCRELL, Mr. LARSON

of Connecticut, Mr. MCDERMOTT, Mr. DANNY K. DAVIS of Illinois, and 

Mr. LEVIN) 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 reduce 

the rate of tax on domestic manufacturing income to 

20 percent. 

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; FINDINGS. 

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

5 ‘‘Rebuilding American Manufacturing Act of 2015’’. 

6 (b) FINDINGS.—Congress finds the following: 

7 (1) American manufacturing is vital to our 

8 economy, and those who produce American goods 

9 and hire American workers should be a priority. 


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1 (2) Manufacturing is an essential source of in2 novation that is critical to our continued prosperity 

3 in an increasingly competitive global economy. 

4 (3) Approximately 1.2 million Americans are 

5 employed by the manufacturing industry. 

6 (4) The manufacturing industry provides stable 

7 jobs with sustainable wages to Americans in every 

8 State. 

9 (5) Manufacturing jobs provide, on average, 

10 wages that are above the national average and pro11 vide a gateway to the middle class. 

12 (6) The effective tax rate of domestic manufac13 turers ranges from 27 to 31 percent, depending on 

14 location and the size of equipment used in produc15 tion. 

16 (7) Tax reform must make the United States 

17 more competitive, boost economic growth, and foster 

18 the creation of sustainable American jobs. 

19 (8) Tax reform should particularly focus on 

20 those companies that grow, build, and create goods 

21 in the United States. 

22 (9) The tax rate of domestic manufacturers 

23 should reflect the industry’s contributions of employ24 ment, growth, innovation, and competition in the 

25 United States. 


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1 SEC. 2. 20-PERCENT INCOME TAX RATE FOR DOMESTIC 

2 MANUFACTURING INCOME. 

3 (a) IN GENERAL.—Part VI of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 is amended 

5 by adding at the end the following new section: 

6 ‘‘SEC. 200. DOMESTIC MANUFACTURING INCOME. 

7 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 

8 allowed as a deduction an amount equal to 50.5 percent 

9 (43 percent in the case of a C corporation) of the lesser 

10 of— 

11 ‘‘(1) the domestic manufacturing income of the 

12 taxpayer for the taxable year, or 

13 ‘‘(2) taxable income (determined without regard 

14 to this section and section 199) for the taxable year. 

15 ‘‘(b) LIMITATION BASED ON DOMESTIC INVEST16 MENT.—For purposes of this section— 

17 ‘‘(1) IN GENERAL.—The amount of the deduc18 tion allowable under subsection (a) for any taxable 

19 year shall not exceed 25 percent of the taxpayer’s 

20 qualifying domestic investment for the taxable year. 

21 ‘‘(2) QUALIFYING DOMESTIC INVESTMENT

22 AMOUNT.—The term ‘qualifying domestic invest23 ment’ means, with respect to any taxpayer for any 

24 taxable year, the sum of— 

25 ‘‘(A) the W–2 wages of such taxpayer for 

26 such taxable year, 


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1 ‘‘(B) the sum of the deductions allowable 

2 under sections 167, 169, 179, and 179D to 

3 such taxpayer for such taxable year, plus 

4 ‘‘(C) the deduction allowable under section 

5 174 to such taxpayer for such taxable year. 

6 ‘‘(3) W–2 WAGES.—The term ‘W–2 wages’ 

7 means, with respect to any person for any taxable 

8 year, the sum of the amounts described in para9 graphs (3) and (8) of section 6051(a) paid by such 

10 person with respect to employment of employees by 

11 such person during the calendar year ending during 

12 such taxable year. Such term shall not include any 

13 amount which is not properly included in a return 

14 filed with the Social Security Administration on or 

15 before the 60th day after the due date (including ex16 tensions) for such return. 

17 ‘‘(4) LIMITATION TO AMOUNTS ATTRIBUTABLE

18 TO DOMESTIC PRODUCTION.—The term ‘qualifying 

19 domestic investment’ shall not include any amount 

20 which is not properly allocable to domestic manufac21 turing gross receipts for purposes of subsection (c) 

22 (and shall include any amount which is so allocable 

23 under subsection (c)(4)). 

24 ‘‘(5) ACQUISITIONS AND DISPOSITIONS.—The 

25 Secretary shall provide for the application of this 


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1 subsection in cases where the taxpayer acquires, or 

2 disposes of, the major portion of a trade or business 

3 or the major portion of a separate unit of a trade 

4 or business during the taxable year. 

5 ‘‘(c) DOMESTIC MANUFACTURING INCOME.—For 

6 purposes of this section— 

7 ‘‘(1) IN GENERAL.—The term ‘domestic manu8 facturing income’ for any taxable year means an 

9 amount equal to the excess (if any) of— 

10 ‘‘(A) the taxpayer’s domestic manufac11 turing gross receipts for such taxable year, over 

12 ‘‘(B) the sum of— 

13 ‘‘(i) the cost of goods sold that are al14 locable to such receipts, and 

15 ‘‘(ii) other expenses, losses, or deduc16 tions (other than the deduction allowed 

17 under this section), which are properly al18 locable to such receipts. 

19 ‘‘(2) ALLOCATION METHOD.—The Secretary 

20 shall prescribe rules for the proper allocation of 

21 items described in paragraph (1) for purposes of de22 termining domestic manufacturing income. Such 

23 rules shall provide for the proper allocation of items 

24 whether or not such items are directly allocable to 

25 domestic manufacturing gross receipts. 


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1 ‘‘(3) SPECIAL RULES FOR DETERMINING

2 COSTS.— 

3 ‘‘(A) IN GENERAL.—For purposes of deter4 mining costs under clause (i) of paragraph 

5 (1)(B), any item or service brought into the 

6 United States shall be treated as acquired by 

7 purchase, and its cost shall be treated as not 

8 less than its value immediately after it entered 

9 the United States. A similar rule shall apply in 

10 determining the adjusted basis of leased or 

11 rented property where the lease or rental gives 

12 rise to domestic manufacturing gross receipts. 

13 ‘‘(B) EXPORTS FOR FURTHER MANUFAC14 TURE.—In the case of any property described 

15 in subparagraph (A) that had been exported by 

16 the taxpayer for further manufacture, the in17 crease in cost or adjusted basis under subpara18 graph (A) shall not exceed the difference be19 tween the value of the property when exported 

20 and the value of the property when brought 

21 back into the United States after the further 

22 manufacture. 

23 ‘‘(4) TREATMENT OF CERTAIN ACCELERATED

24 DEPRECIATION DEDUCTIONS.—In the case of prop25 erty placed in service after December 31, 2007, and 


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1 before the first taxable year of the taxpayer begin2 ning after December 31, 2014, the deduction under 

3 section 168 with respect to such property which is 

4 treated as properly allocable to domestic manufac5 turing gross receipts of the taxpayer for any taxable 

6 year shall be determined without regard to section 

7 168(k)(1). 

8 ‘‘(5) TREATMENT OF DEFERRED COMPENSA9 TION UNDER NONQUALIFIED PLANS.—In the case of 

10 compensation paid or incurred by the taxpayer which 

11 is deferred under a nonqualified deferred compensa12 tion plan (as defined in section 409A(d)(1)), the 

13 amount under paragraph (1)(B)(ii) shall be deter14 mined as though the deduction for such compensa15 tion is allowed for the taxable year in which the 

16 services for which such compensation was paid or in17 curred are performed. This paragraph shall not 

18 apply with respect to compensation paid or incurred 

19 for services performed in taxable years beginning be20 fore the first taxable year of the taxpayer beginning 

21 after December 31, 2014. 

22 ‘‘(d) DOMESTIC MANUFACTURING GROSS RE23 CEIPTS.—For purposes of this section— 

24 ‘‘(1) IN GENERAL.—The term ‘domestic manu25 facturing gross receipts’ means the gross receipts of 


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1 the taxpayer which are derived from any lease, rent2 al, license, sale, exchange, or other disposition of 

3 qualified property which was manufactured, pro4 duced, or grown by the taxpayer in whole or in sig5 nificant part within the United States. Such term 

6 shall not include gross receipts of the taxpayer which 

7 are derived from the sale of food and beverages pre8 pared by the taxpayer at a retail establishment. 

9 ‘‘(2) SPECIAL RULE FOR CERTAIN GOVERN10 MENT CONTRACTS.—Gross receipts derived from the 

11 manufacture or production of any property shall not 

12 fail to be treated as meeting the requirements of 

13 paragraph (1) solely because title or risk of loss with 

14 respect to such property is held by the Federal Gov15 ernment if— 

16 ‘‘(A) such property is manufactured or 

17 produced by the taxpayer pursuant to a con18 tract with the Federal Government, and 

19 ‘‘(B) the Federal Acquisition Regulation 

20 requires that title or risk of loss with respect to 

21 such property be transferred to the Federal 

22 Government before the manufacture or produc23 tion of such property is complete. 

24 ‘‘(3) QUALIFIED PROPERTY.—The term ‘quali25 fied property’ means— 


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1 ‘‘(A) any tangible personal property other 

2 than— 

3 ‘‘(i) oil, gas, and primary products 

4 thereof (within the meaning of section 

5 199(d)(9)(C)), 

6 ‘‘(ii) property with respect to which 

7 section 613 applies, 

8 ‘‘(iii) property described in paragraph 

9 (3) or (4) of section 168(f), and 

10 ‘‘(iv) electricity and potable water, 

11 and 

12 ‘‘(B) any computer software other than 

13 video games rated M, AO, RP, or any similar 

14 rating as determined by the Secretary, by the 

15 Entertainment Software Rating Board. 

16 ‘‘(4) PARTNERSHIPS OWNED BY EXPANDED AF17 FILIATED GROUPS.—For purposes of this subsection, 

18 if all of the interests in the capital and profits of a 

19 partnership are owned by members of a single ex20 panded affiliated group at all times during the tax21 able year of such partnership, the partnership and 

22 all members of such group shall be treated as a sin23 gle taxpayer during such period. 

24 ‘‘(5) RELATED PERSONS.— 


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1 ‘‘(A) IN GENERAL.—The term ‘domestic 

2 manufacturing gross receipts’ shall not include 

3 any gross receipts of the taxpayer derived from 

4 property leased, licensed, or rented by the tax5 payer for use by any related person. 

6 ‘‘(B) RELATED PERSON.—For purposes of 

7 subparagraph (A), a person shall be treated as 

8 related to another person if such persons are 

9 treated as a single employer under subsection 

10 (a) or (b) of section 52 or subsection (m) or (o) 

11 of section 414, except that determinations 

12 under subsections (a) and (b) of section 52 

13 shall be made without regard to section 

14 1563(b). 

15 ‘‘(e) SPECIAL RULES.— 

16 ‘‘(1) ELECTIVE APPLICATION OF DEDUCTION.— 

17 Except as otherwise provided by the Secretary, the 

18 taxpayer may elect not to take any item of income 

19 into account as domestic manufacturing gross re20 ceipts for purposes of this section. 

21 ‘‘(2) COORDINATION WITH SECTION 199.—If a 

22 deduction is allowed under this section with respect 

23 to any taxpayer for any taxable year, any gross re24 ceipts of the taxpayer which are taken into account 

25 under this section for such taxable year (and any 


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1 items properly allocable thereto under subsections 

2 (b) or (c)) shall not be taken into account under sec3 tion 199 for such taxable year. 

4 ‘‘(3) APPLICATION OF SECTION TO PASS-THRU

5 ENTITIES.— 

6 ‘‘(A) PARTNERSHIPS AND S CORPORA7 TIONS.—In the case of a partnership or S cor8 poration— 

9 ‘‘(i) this section shall be applied at the 

10 partner or shareholder level, 

11 ‘‘(ii) each partner or shareholder shall 

12 take into account such person’s allocable 

13 share of each item described in subpara14 graph (A) or (B) of subsection (c)(1) (de15 termined without regard to whether the 

16 items described in such subparagraph (A) 

17 exceed the items described in such sub18 paragraph (B)), and 

19 ‘‘(iii) each partner or shareholder 

20 shall be treated for purposes of subsection 

21 (b) as having an amount of each item 

22 taken into account in determining quali23 fying domestic investment of the partner24 ship or S corporation for the taxable year 

25 equal to such person’s allocable share of 


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1 such item (as determined under regula2 tions prescribed by the Secretary). 

3 ‘‘(B) TRUST AND ESTATES.—In the case 

4 of a trust or estate— 

5 ‘‘(i) the items referred to in subpara6 graph (A)(ii) (as determined therein) and 

7 the qualifying domestic investment of the 

8 trust or estate for the taxable year, shall 

9 be apportioned between the beneficiaries 

10 and the fiduciary (and among the bene11 ficiaries) under regulations prescribed by 

12 the Secretary, and 

13 ‘‘(ii) for purposes of paragraph (4), 

14 adjusted gross income of the trust or es15 tate shall be determined as provided in sec16 tion 67(e) with the adjustments described 

17 in such paragraph. 

18 ‘‘(C) REGULATIONS.—The Secretary may 

19 prescribe rules requiring or restricting the allo20 cation of items and qualifying domestic invest21 ment under this paragraph and may prescribe 

22 such reporting requirements as the Secretary 

23 determines appropriate. 

24 ‘‘(4) APPLICATION TO INDIVIDUALS.—In the 

25 case of an individual, subsection (a)(2) shall be apVerDate Sep 11 2014 03:51 Jul 09, 2015 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2970.IH H2970

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1 plied by substituting ‘adjusted gross income’ for 

2 ‘taxable income’. For purposes of the preceding sen3 tence, adjusted gross income shall be determined— 

4 ‘‘(A) after application of sections 86, 135, 

5 137, 219, 221, 222, and 469, and 

6 ‘‘(B) without regard to this section and 

7 section 199. 

8 ‘‘(5) APPLICATION OF OTHER RULES.—Rules 

9 similar to the rules of paragraphs (3), (4), (5), (6), 

10 (7), and (10) of section 199(d) shall apply for pur11 poses of this section.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 56(d)(1)(A) of such Code is amend14 ed by striking ‘‘deduction under section 199’’ both 

15 places it appears and inserting ‘‘deductions under 

16 sections 199 and 200’’. 

17 (2) Section 56(g)(4)(C) of such Code is amend18 ed by adding at the end the following new clause: 

19 ‘‘(vii) DEDUCTION FOR DOMESTIC

20 BUSINESS INCOME.—Clause (i) shall not 

21 apply to any amount allowable as a deduc22 tion under section 200.’’. 

23 (3) The following provisions of such Code are 

24 each amended by inserting ‘‘200,’’ after ‘‘199,’’. 

25 (A) Section 86(b)(2)(A). 


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1 (B) Section 135(c)(4)(A). 

2 (C) Section 137(b)(3)(A). 

3 (D) Section 219(g)(3)(A)(ii). 

4 (E) Section 221(b)(2)(C)(i). 

5 (F) Section 222 (b)(2)(C)(i). 

6 (G) Section 246(b)(1). 

7 (H) Section 469(i)(3)(F)(iii). 

8 (4) Section 163(j)(6)(A)(i) of such Code is 

9 amended by striking ‘‘and’’ at the end of subclause 

10 (III) and by inserting after subclause (IV) the fol11 lowing new subclause: 

12 ‘‘(V) any deduction allowable 

13 under section 200, and’’. 

14 (5) Section 170(b)(2)(C) of such Code is 

15 amended by striking ‘‘and’’ at the end of clause (iv), 

16 by striking the period at the end of clause (v) and 

17 inserting ‘‘, and’’, and by inserting after clause (v) 

18 the following new clause: 

19 ‘‘(vi) section 200.’’. 

20 (6) Section 172(d) of such Code is amended by 

21 adding at the end the following new paragraph: 

22 ‘‘(8) DOMESTIC BUSINESS INCOME.—The de23 duction under section 200 shall not be allowed.’’. 

24 (7) Section 199(d)(2)(A) of such Code is 

25 amended by inserting ‘‘200,’’ after ‘‘137,’’. 


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1 (8) Section 613(a) of such Code is amended by 

2 striking ‘‘deduction under section 199’’ and insert3 ing ‘‘deductions under sections 199 and 200’’. 

4 (9) Section 613A(d)(1) of such Code is amend5 ed by redesignating subparagraphs (C), (D), and 

6 (E) as subparagraphs (D), (E), and (F), respec7 tively, and by inserting after subparagraph (B) the 

8 following new subparagraph: 

9 ‘‘(C) any deduction allowable under section 

10 200,’’. 

11 (10) Section 1402(a) of such Code is amended 

12 by striking ‘‘and’’ at the end of paragraph (16), by 

13 redesignating paragraph (17) as paragraph (18), 

14 and by inserting after paragraph (16) the following 

15 new paragraph: 

16 ‘‘(17) the deduction provided by section 200 

17 shall not be allowed; and’’. 

18 (11) The table of sections for part VI of sub19 chapter B of chapter 1 of such Code is amended by 

20 adding at the end the following new item: 

‘‘Sec. 200. Domestic manufacturing income.’’. 

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

22 this section shall apply to taxable years beginning after 

23 December 31, 2014. 

Æ 


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