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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 827 Introduced in Senate (IS)]

  1st Session
                                 S. 827

   To amend the Internal Revenue Code of 1986 to limit an employer's 
deduction for health care costs of its employees if the employer fails 
    to honor its commitment to provide health care to its retirees.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                 May 18 (legislative day, May 15), 1995

 Mr. Pressler introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
   To amend the Internal Revenue Code of 1986 to limit an employer's 
deduction for health care costs of its employees if the employer fails 
    to honor its commitment to provide health care to its retirees.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. REDUCTION IN HEALTH CARE DEDUCTION OF EMPLOYERS FAILING TO 
              HONOR COMMITMENT TO PROVIDING HEALTH CARE TO RETIREES.

    (a) In General.--Section 162 of the Internal Revenue Code of 1986 
(relating to deduction for trade or business expenses) is amended by 
redesignating subsection (o) as subsection (p) and by inserting after 
subsection (n) the following new subsection:
    ``(o) Reduction in Certain Health Care Deductions of Employees.--
            ``(1) In general.--Notwithstanding any other provision of 
        this chapter, if--
                    ``(A) an employer provided medical care to its 
                retired employees and their spouses and dependents 
                during the 10-year period ending on December 31, 1993, 
                and
                    ``(B) the employer does not provide that medical 
                care for any period after December 31, 1993,
        the amount allowable as a deduction under this chapter for 
        expenses incurred in providing medical care to officers and 
        employees of the employer (and their spouses and dependents) 
        during the period described in subparagraph (B) shall not 
        exceed 25 percent of the amount of the deduction without regard 
        to this subsection.
            ``(2) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Medical care.--The term `medical care' has 
                the meaning given such term by section 213(d)(1).
                    ``(B) Failure to provide medical care.--For 
                purposes of paragraph (1)(B), an employer shall be 
                treated as failing to provide medical care for any 
                period if there is a substantial reduction in the level 
                of medical care provided during the period from the 
                level provided on December 31, 1993.
                    ``(C) Predecessors.--For purposes of paragraph 
                (1)(A), an employer shall be treated as having provided 
                any medical care which any predecessor of the employer 
                provided.
                    ``(D) Controlled groups.--All employers who are 
                treated as one employer under subsection (a) or (b) of 
                section 52 shall be treated as one employer for 
                purposes of this subsection.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to periods beginning on and after January 1, 1994, in taxable years 
ending after such date.
                                 <all>
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