I 

112TH CONGRESS 

1ST SESSION H. R. 1163 

To provide Federal contracting preferences for, and a reduction in the rate 

of income tax imposed on, Patriot corporations, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2011 

Ms. SCHAKOWSKY (for herself, Ms. BALDWIN, Mr. ELLISON, Mr. HINCHEY, 

Mr. MCGOVERN, Ms. WOOLSEY, Ms. KAPTUR, and Ms. SUTTON) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committee on Oversight and Government Reform, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide Federal contracting preferences for, and a reduction in the rate of income tax imposed on, Patriot corporations, and for other purposes. 

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 ‘‘Patriot Corporations 

5 of America Act of 2011’’. 

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1 SEC. 2. FEDERAL CONTRACTING PREFERENCE FOR PA2 TRIOT CORPORATIONS. 

3 After December 31, 2011, in the evaluation of bids 

4 or proposals for a contract for the procurement of goods 

5 or services, the Federal Government shall provide a pref6 erence to any entity that is a Patriot corporation (as de7 fined in section 11(e) of the Internal Revenue Code of 

8 1986, as added by section 3 of this Act), unless the award 

9 of the contract to such entity would jeopardize the na10 tional security interests of the United States. 

11 SEC. 3. REDUCTION IN RATE OF INCOME TAX FOR PATRIOT 

12 CORPORATIONS. 

13 (a) IN GENERAL.—Section 11 of the Internal Rev14 enue Code of 1986 is amended by adding at the end the 

15 following new subsection: 

16 ‘‘(e) PATRIOT CORPORATIONS.— 

17 ‘‘(1) RATE REDUCTION FOR PATRIOT CORPORA18 TIONS.—In the case of a Patriot corporation, the 

19 amount of the tax imposed under subsection (a) (de20 termined without regard to this paragraph) shall be 

21 reduced (but not below zero) by an amount equal to 

22 5 percent of the taxable income of such corporation. 

23 ‘‘(2) PATRIOT CORPORATION DEFINED.—For 

24 purposes of this subsection— 

25 ‘‘(A) IN GENERAL.—The term ‘Patriot cor26 poration’ means, with respect to any taxable 

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1 year, any corporation which is certified by the 

2 Secretary as meeting the requirements of sub3 paragraph (B) for such taxable and the pre4 ceding taxable year. 

5 ‘‘(B) REQUIREMENTS.—A corporation 

6 meets the requirements of this subparagraph, 

7 with respect to any taxable year, if such cor8 poration— 

9 ‘‘(i) produces in the United States at 

10 least 90 percent of the goods and services 

11 sold by such corporation during such tax12 able year, 

13 ‘‘(ii) does not provide compensation to 

14 any management personnel of such cor15 poration at a level of compensation which 

16 exceeds 10,000 percent of the level of com17 pensation of the full-time employee of such 

18 corporation with the lowest level of com19 pensation during such taxable year, 

20 ‘‘(iii) conducts at least 50 percent of 

21 the research and development conducted by 

22 such corporation during such taxable year 

23 (determined on the basis of cost) in the 

24 United States, 

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1 ‘‘(iv) has contributed at least 5 per2 cent of wages paid by the corporation dur3 ing the taxable year to a portable pension 

4 fund for the benefit of employees of the 

5 corporation, 

6 ‘‘(v) has paid at least 70 percent of 

7 the cost of a standardized health insurance 

8 plan for the benefit of employees of the 

9 corporation during such taxable year, 

10 ‘‘(vi) has maintained at all times dur11 ing such taxable year neutrality in em12 ployee organizing drives and has in effect 

13 a policy to that effect, 

14 ‘‘(vii) provides full differential salary 

15 and insurance benefits for all National 

16 Guard and Reserve employees who are 

17 called to active duty, 

18 ‘‘(viii) has not been (at any time dur19 ing such taxable year) in violation of ap20 propriate Federal regulations including 

21 those related to the environment, work22 place safety, labor relations, and consumer 

23 protections, as determined by the Sec24 retary, and 

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1 ‘‘(ix) has not been in violation of any 

2 other regulations specified by the Sec3 retary. 

4 ‘‘(C) CERTIFICATION PROCESS.—Not later 

5 than 90 days after the date of the enactment of 

6 this subsection, the Secretary shall establish an 

7 application and certification process to annually 

8 certify corporations as Patriot corporations. 

9 Such certifications shall be made at such time 

10 and on the basis of such materials as the Sec11 retary determines appropriate.’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2011. 

15 (c) CERTIFICATION ALLOWED FOR YEAR PRECEDING

16 EFFECTIVE DATE OF RATE REDUCTION.—For purposes 

17 of section 11(e) of the Internal Revenue Code of 1986, 

18 as added by this section, the Secretary may certify a cor19 poration as a Patriot corporation for the last taxable year 

20 of the corporation beginning on or before December 31, 

21 2011, if the corporation meets the requirements of para22 graph (2)(B) of such section for such taxable year. 

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1 SEC. 4. TAX AVOIDANCE FOREIGN CORPORATIONS SUB2 JECT TO UNITED STATES INCOME TAX. 

3 (a) IN GENERAL.—Paragraph (4) of section 7701(a) 

4 of the Internal Revenue Code of 1986 (defining domestic) 

5 is amended to read as follows: 

6 ‘‘(4) DOMESTIC.— 

7 ‘‘(A) IN GENERAL.—Except as provided in 

8 subparagraph (B), the term ‘domestic’ when ap9 plied to a corporation or partnership means cre10 ated or organized in the United States or under 

11 the law of the United States or of any State 

12 unless, in the case of a partnership, the Sec13 retary provides otherwise by regulations. 

14 ‘‘(B) TAX AVOIDANCE FOREIGN CORPORA15 TIONS TREATED AS DOMESTIC.—Any corpora16 tion which would (but for this subparagraph) be 

17 treated as a foreign corporation shall be treated 

18 as a domestic corporation if the Secretary de19 termines that such corporation was created or 

20 organized as a foreign corporation (instead of 

21 as a domestic corporation) principally for the 

22 purpose of avoiding being treated as a domestic 

23 corporation under this title.’’. 

24 (b) EFFECTIVE DATES.—The amendment made by 

25 this section shall apply to taxable years beginning after 

26 the date of the enactment of this Act. 

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1 SEC. 5. REDUCTION IN BENEFIT OF RATE REDUCTION FOR 

2 FAMILIES WITH INCOMES OVER $1,000,000. 

3 (a) GENERAL RULE.—Section 1 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(j) REDUCTION IN BENEFIT OF RATE REDUCTION

7 FOR FAMILIES WITH INCOMES OVER $1,000,000.— 

8 ‘‘(1) IN GENERAL.—If the adjusted gross in9 come of a taxpayer exceeds the threshold amount, 

10 the tax imposed by this section (determined without 

11 regard to this subsection) shall be increased by an 

12 amount equal to 4.6 percent of so much of the ad13 justed gross income as exceeds the threshold 

14 amount. 

15 ‘‘(2) THRESHOLD AMOUNTS.—For purposes of 

16 this subsection, the term ‘threshold amount’ 

17 means— 

18 ‘‘(A) $1,000,000 in the case of a joint re19 turn, and 

20 ‘‘(B) $500,000 in the case of any other re21 turn. 

22 ‘‘(3) SPECIAL RULE.—For purposes of section 

23 55, the amount of the regular tax shall be deter24 mined without regard to this subsection.’’. 

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2010. 

4 (c) APPLICATION OF EGTRRA SUNSET.—The 

5 amendment made by this section shall be subject to title 

6 IX of the Economic Growth and Tax Relief Reconciliation 

7 Act of 2001 to the same extent and in the same manner 

8 as section 101 of such Act. 

9 (d) SECTION 15 NOT TO APPLY.—The amendment 

10 made by subsection (a) shall not be treated as a change 

11 in a rate of tax for purposes of section 15 of the Internal 

12 Revenue Code of 1986. 

Æ 

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