I 

109TH CONGRESS 

2D SESSION H. R. 5378 

To amend the Internal Revenue Code of 1986 to reduce by 50 percent 

certain tax benefits allowable to profitable large corporations which make 

certain workforce reductions. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 11, 2006 

Ms. MCKINNEY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on International Relations and Financial Services, 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 amend the Internal Revenue Code of 1986 to reduce 

by 50 percent certain tax benefits allowable to profitable 

large corporations which make certain workforce reductions. 

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 ‘‘Corporate Welfare Re5 duction and Job Preservation Act of 2006’’. 

6 SEC. 2. CONGRESSIONAL FINDINGS. 

7 The Congress finds the following: 


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1 (1) Corporations are subject to a tax rate of up 

2 to 34 percent or 35 percent. 

3 (2) Over the past several years, one of the most 

4 serious problems affecting the middle-class has been 

5 corporate downsizing. Many large, wealthy, and 

6 profitable corporations have reduced the number of 

7 their American employees by transferring those jobs 

8 to foreign countries or have reduced the number of 

9 their employees in order to realize an immediate 

10 short-term profit or increase in stock value. 

11 SEC. 3. REDUCTION OF TAX BENEFITS FOR PROFITABLE 

12 LARGE CORPORATIONS WHICH REDUCE 

13 WORKFORCE. 

14 (a) IN GENERAL.—Subchapter C of chapter 1 of the 

15 Internal Revenue Code of 1986 (relating to corporate dis16 tributions and adjustments) is amended by adding at the 

17 end the following new part: 

18 ‘‘PART VII—REDUCTION OF TAX BENEFITS FOR 

19 PROFITABLE LARGE CORPORATIONS WHICH 

20 REDUCE WORKFORCE 

‘‘Sec. 386. Reduction of tax benefits for profitable large corporations which reduce workforce. 


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1 ‘‘SEC. 386. REDUCTION OF TAX BENEFITS FOR PROFITABLE 

2 LARGE CORPORATIONS WHICH REDUCE 

3 WORKFORCE. 

4 ‘‘(a) IN GENERAL.—For any taxable year, if any 

5 profitable large corporation reduces by 15 percent or more 

6 the number of employees who perform any task or func7 tion at any facility in the United States, the amount of 

8 each facility-related tax benefit shall be reduced by 50 per9 cent. 

10 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur11 poses of this section— 

12 ‘‘(1) FACILITY-RELATED TAX BENEFIT.— 

13 ‘‘(A) IN GENERAL.—The term ‘facility-re14 lated tax benefit’ means— 

15 ‘‘(i) any tax benefit to the extent at16 tributable to a facility described in sub17 section (a), or 

18 ‘‘(ii) to the extent that a tax benefit 

19 is not attributable to any facility, a pro 

20 rata portion of such tax benefit (as deter21 mined under regulations prescribed by the 

22 Secretary). 

23 ‘‘(B) EXCEPTION.—Such term shall not in24 clude— 

25 ‘‘(i) any exclusion from gross income 

26 under section 127 or 129 or any other deVerDate Aug 31 2005 23:48 May 13, 2006 Jkt 049196 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5378.IH H5378

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1 duction for the cost of employee health 

2 care, child care, job training, or retraining, 

3 or 

4 ‘‘(ii) any other tax benefit (other than 

5 wages) which the Secretary determines by 

6 regulation to be a tax benefit for costs in7 curred primarily for the benefit of employ8 ees rather than the employer. 

9 ‘‘(2) LARGE CORPORATION.—The term ‘large 

10 corporation’ means a corporation or partnership 

11 which is not a small-business concern (within the 

12 meaning of section 3 of the Small Business Act, as 

13 in effect on the date of the enactment of this sec14 tion). 

15 ‘‘(3) PROFITABLE.—Any large corporation shall 

16 be treated as profitable, for any taxable year, if the 

17 sum of taxable income (if any) for the 5-taxable-year 

18 period ending with the preceding taxable year (or, if 

19 shorter, the period consisting of all preceding taxable 

20 years of such large corporation) equals or exceeds 

21 the sum of the net operating losses (if any) attrib22 utable to such period. 

23 ‘‘(4) RELATED PERSONS.— 

24 ‘‘(A) IN GENERAL.—All related persons 

25 shall be treated as one person. 


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1 ‘‘(B) RELATED PERSONS DEFINED.—The 

2 term ‘related persons’ means— 

3 ‘‘(i) persons bearing a relationship de4 scribed in section 267 or 707(b), and 

5 ‘‘(ii) persons treated as a single em6 ployer under subsection (a) or (b) of sec7 tion 52. 

8 ‘‘(5) TAX BENEFIT.—The term ‘tax benefit’ 

9 means a credit, deduction, or exclusion allowable 

10 under this title.’’ 

11 (b) TRANSMISSION OF DATA BY SECRETARY OF

12 LABOR.—The Secretary of Labor shall transmit to the 

13 Secretary of the Treasury, not less than annually, a list 

14 of corporations and partnerships described in section 

15 386(a) of the Internal Revenue Code of 1986 (as added 

16 by this section). 

17 (c) CLERICAL AMENDMENT.—The table of parts for 

18 subchapter C of chapter 1 of such Code is amended by 

19 adding at the end the following new item: 

‘‘PART VII. REDUCTION OF TAX BENEFITS FOR PROFITABLE LARGE

CORPORATIONS WHICH REDUCE WORKFORCE’’ 

20 (d) EFFECTIVE DATE.—This section and the amend21 ments made by this section shall apply to taxable years 

22 beginning after December 31, 2006. 


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1 SEC. 4. ACCELERATION OF LOANS MADE BY CERTAIN GOV2 ERNMENT ENTITIES AS PENALTY AGAINST 

3 PROFITABLE LARGE CORPORATIONS WHICH 

4 REDUCE WORKFORCE. 

5 (a) OPIC LOANS.—Section 235 of the Foreign As6 sistance Act of 1961 (22 U.S.C. 2195) is amended by add7 ing at the end the following: 

8 ‘‘(g) LIMITATIONS ON ASSISTANCE TO PROFITABLE

9 LARGE CORPORATIONS THAT REDUCE WORKFORCE.— 

10 ‘‘(1) IN GENERAL.—If a facility-related tax ben11 efit of an entity for a taxable year is reduced by rea12 son of section 386(a) of the Internal Revenue Code 

13 of 1986, then— 

14 ‘‘(A) the entity shall immediately repay to 

15 the Corporation the amount of any loan made 

16 by the Corporation to the entity under section 

17 234; 

18 ‘‘(B) any insurance policy provided by the 

19 Corporation to the entity under such section is 

20 rescinded; and 

21 ‘‘(C) until the Secretary of the Treasury 

22 determines that the activity on the basis of 

23 which the facility-related tax benefit of the enti24 ty was so reduced has ceased, the Corporation 

25 may not, during the immediately succeeding 

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1 pate in an extension of credit, or provide any 

2 insurance, directly to the entity under such sec3 tion. 

4 ‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.— 

5 Interest shall accrue on any amount required by 

6 paragraph (1)(A) to be repaid to the Corporation at 

7 a rate of 10 percent per month.’’. 

8 (b) EXPORT-IMPORT BANK LOANS.—Section 2 of the 

9 Export-Import Bank Act of 1945 (12 U.S.C. 635) is 

10 amended by adding at the end the following: 

11 ‘‘(g) LIMITATIONS ON ASSISTANCE TO PROFITABLE

12 LARGE CORPORATIONS THAT REDUCE WORKFORCE.— 

13 ‘‘(1) IN GENERAL.—If a facility-related tax ben14 efit of an entity for a taxable year is reduced by rea15 son of section 386(a) of the Internal Revenue Code 

16 of 1986, then— 

17 ‘‘(A) the entity shall immediately repay to 

18 the Bank the amount of any loan made by the 

19 Bank to the entity; 

20 ‘‘(B) any insurance policy provided by the 

21 Bank to the entity is rescinded; and 

22 ‘‘(C) until the Secretary of the Treasury 

23 determines that the activity on the basis of 

24 which the facility-related tax benefit of the enti25 ty was so reduced has ceased, the Bank may 


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1 not, during the immediately succeeding taxable 

2 year of the entity, extend credit, participate in 

3 an extension of credit, or provide any insurance, 

4 directly to the entity. 

5 ‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.— 

6 Interest shall accrue on any amount required by 

7 paragraph (1)(A) to be repaid to the Bank at a rate 

8 of 10 percent per month.’’. 

Æ 


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