I 

114TH CONGRESS 

2D SESSION H. R. 5158 

To amend the Internal Revenue Code of 1986 to provide a conditional 10 

percent rate of tax for certain businesses. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 29, 2016 

Mr. MCKINLEY 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 

a conditional 10 percent rate of tax for certain businesses. 

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 ‘‘Make America Com5 petitive Act of 2016’’. 

6 SEC. 2. ELECTED 10-PERCENT RATE. 

7 (a) IN GENERAL.— 

8 (1) CORPORATE RATE.—Section 11(b) of the 

9 Internal Revenue Code of 1986 is amended by add10 ing at the end the following new paragraph: 


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1 ‘‘(3) MAKING AMERICA COMPETITIVE AGAIN

2 RATE.—Notwithstanding paragraphs (1) and (2), 

3 the amount of the tax imposed by subsection (a) on 

4 the taxable income of a corporation which has in ef5 fect for the taxable year an election under section 5 

6 of the Make America Competitive Again Act shall be 

7 determined at a rate of 10 percent.’’. 

8 (2) INDIVIDUAL RATE.—Section 1 of such Code 

9 is amended by adding at the end the following new 

10 subsection: 

11 ‘‘(j) MAKING AMERICA COMPETITIVE AGAIN RATE.— 

12 ‘‘(1) IN GENERAL.—If a taxpayer has qualified 

13 business income for any taxable year, the tax im14 posed by this section for such taxable year shall not 

15 exceed the sum of— 

16 ‘‘(A) a tax computed at the rates and in 

17 the same manner as if this subsection had not 

18 been enacted on taxable income reduced by the 

19 portion of such taxable income that is attrib20 utable to qualified business income, plus 

21 ‘‘(B) 10 percent of the portion of taxable 

22 income that is attributable qualified business 

23 income. 

24 ‘‘(2) QUALIFIED BUSINESS INCOME.—For pur25 poses of this section, the term ‘qualified business inVerDate Sep 11 2014 23:10 May 05, 2016 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5158.IH H5158

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1 come’ means income of the individual that is derived 

2 from a partnership, S corporation, or sole propri3 etorship which has in effect for the taxable year an 

4 election under section 5 of the Make America Com5 petitive Again Act. 

6 ‘‘(3) PORTION OF TAXABLE INCOME ATTRIB7 UTABLE.—For purposes of this subsection, the por8 tion of taxable income that is attributable to quali9 fied business income shall be an amount that bears 

10 the same ratio to taxable income as— 

11 ‘‘(A) qualified business income (reduced by 

12 any deductions properly allocable thereto), 

13 bears to 

14 ‘‘(B) gross income (reduced by deductions 

15 properly allocable thereto). 

16 For purposes of the preceding sentence, the Sec17 retary shall by regulation prescribe methods for the 

18 proper allocation of deductions.’’. 

19 (b) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2015. 

22 SEC. 3. ELECTED REPATRIATION OF FOREIGN EARNINGS 

23 IN UNITED STATES. 

24 (a) IN GENERAL.—Section 965(a)(1) of the Internal 

25 Revenue Code of 1986 is amended by inserting ‘‘, which 


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1 has in effect for the taxable year an election under section 

2 5 of the Make America Competitive Again Act,’’ after 

3 ‘‘which is a United States shareholder’’. 

4 (b) REPATRIATION SUBJECT TO 5-PERCENT TAX

5 RATE.—Section 965(a)(1) of such Code is amended by 

6 striking ‘‘85 percent’’ and inserting ‘‘85.7 percent’’. 

7 (c) PERMANENT EXTENSION TO ELECT REPATRI8 ATION.—Section 965(f) of such Code is amended to read 

9 as follows: 

10 ‘‘(f) ELECTION.—The taxpayer may elect to apply 

11 this section to any taxable year only if made on or before 

12 the due date (including extensions) for filing the return 

13 of tax for such taxable year.’’. 

14 (d) REPATRIATION INCLUDES CURRENT AND ACCU15 MULATED FOREIGN EARNINGS.—Section 965(b)(1) of 

16 such Code is amended to read as follows: 

17 ‘‘(1) IN GENERAL.—The amount of dividends 

18 taken into account under subsection (a) shall not ex19 ceed the sum of the current and accumulated earn20 ings and profits described in section 959(c)(3) for 

21 the year a deduction is claimed under subsection (a), 

22 without diminution by reason of any distributions 

23 made during the election year, for all controlled for24 eign corporations of the United States shareholder.’’. 

25 (e) CONFORMING AMENDMENTS.— 


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1 (1) Section 965(b) of such Code is amended by 

2 striking paragraphs (2) and (4) and by redesig3 nating paragraph (3) as paragraph (2). 

4 (2) Section 965(c) of such Code is amended by 

5 striking paragraphs (1) and (2) and by redesig6 nating paragraphs (3), (4), and (5) as paragraphs 

7 (1), (2), and (3), respectively. 

8 (3) Section 965(c)(3) of such Code, as redesig9 nated by subparagraph (B), is amended to read as 

10 follows: 

11 ‘‘(3) CONTROLLED GROUPS.—All United States 

12 shareholders which are members of an affiliated 

13 group filing a consolidated return under section 

14 1501 shall be treated as one United States share15 holder.’’. 

16 (4) The heading for section 965 of such Code 

17 is amended by striking ‘‘TEMPORARY’’. 

18 (5) The table of sections for subpart F of part 

19 III of subchapter N of chapter 1 of such Code is 

20 amended by striking ‘‘Temporary dividends’’ and in21 serting ‘‘Dividends’’. 

22 (f) TRANSFERS TO HIGHWAY TRUST FUND.—Section 

23 9503(f) of such Code is amended by redesignating para24 graph (10) as paragraph (11) and by inserting after para25 graph (9) the following new paragraph: 


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1 ‘‘(10) TRANSFER OF REVENUES FROM REPA2 TRIATION HOLIDAY.—There is hereby appropriated 

3 to the Highway Account (as defined in subsection 

4 (e)(5)(B)) in the Highway Trust Fund such 

5 amounts as the Secretary from time to time esti6 mates are equal to the amount of revenue received 

7 in the Treasury after the date of the enactment of 

8 this paragraph from income taxes imposed on divi9 dends which are taken into account under section 

10 965.’’. 

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2015. 

14 SEC. 4. ELECTED WAIVER OF CERTAIN TAX EXPENDITURES. 

15 (a) DOMESTIC PRODUCTIONS ACTIVITIES DEDUC16 TION.— 

17 (1) IN GENERAL.—Section 199 of the Internal 

18 Revenue Code of 1986 is amended by adding at the 

19 end the following new subsection: 

20 ‘‘(e) WAIVER IN CASE OF MAKE AMERICA COMPETI21 TIVE AGAIN ELECTION.—Subsection (a) shall not apply 

22 to a taxpayer for any taxable year for which such taxpayer 

23 has in effect an election under section 5 of the Make 

24 America Competitive Again Act.’’. 


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1 (2) EFFECTIVE DATE.—The amendment made 

2 by this subsection shall apply to taxable years begin3 ning after December 31, 2015. 

4 (b) LIKE-KIND EXCHANGES.— 

5 (1) IN GENERAL.—Section 1031 of such Code 

6 is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(j) WAIVER IN CASE OF MAKE AMERICA COMPETI9 TIVE AGAIN ELECTION.—Subsection (a) shall not apply 

10 to any exchange during any taxable year for which the 

11 taxpayer has in effect an election under section 5 of the 

12 Make America Competitive Again Act.’’. 

13 (2) EFFECTIVE DATE.—The amendment made 

14 by this section shall apply to taxable years beginning 

15 after December 31, 2015. 

16 (c) INSTALLMENT SALES.— 

17 (1) IN GENERAL.—Section 453 of the Internal 

18 Revenue Code of 1986 is amended by adding at the 

19 end the following new subsection: 

20 ‘‘(m) WAIVER IN CASE OF MAKE AMERICA COMPETI21 TIVE AGAIN ELECTION.— 

22 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

23 apply with respect to any taxable year for which the 

24 taxpayer has in effect an election under section 5 of 

25 the Make America Competitive Again Act. 


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1 ‘‘(2) PRIOR DISPOSITIONS.—If the taxpayer 

2 makes an election under such section 5 for a taxable 

3 year for which income from a disposition of property 

4 in a prior taxable year would (but for this sub5 section) be taken into account under the installment 

6 method, the remaining unrecognized income from 

7 such disposition shall be recognized by the taxpayer 

8 in the year of such election.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by this section shall apply to taxable years beginning 

11 after December 31, 2015. 

12 SEC. 5. MAKE AMERICA COMPETITIVE AGAIN ELECTION. 

13 (a) IN GENERAL.—An eligible employer shall be 

14 treated as having in effect an election under this section 

15 for a taxable year if such employer elects the application 

16 of this section (at such time and in such form and manner 

17 as the Secretary of the Treasury shall by regulation pre18 scribe) and meets the requirements of paragraphs (1) 

19 through (4) of subsection (b). 

20 (b) REQUIREMENTS FOR ELECTION.— 

21 (1) HEALTH INSURANCE.— 

22 (A) IN GENERAL.—The requirements of 

23 this paragraph shall be treated as met for a 

24 taxable year if the employer offers to each full25 time employee (and any dependents) the opporVerDate Sep 11 2014 23:10 May 05, 2016 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5158.IH H5158

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1 tunity to enroll in a group health plan or group 

2 health insurance coverage for all months ending 

3 during the taxable year, unless the required 

4 contribution (as defined in section 

5 5000A(e)(1)(B) of the Internal Revenue Code 

6 of 1986) of any such employee with respect to 

7 such plan exceeds 9.5 percent of the taxpayer’s 

8 modified adjusted gross income. 

9 (B) MODIFIED ADJUSTED GROSS IN10 COME.—The term ‘‘modified adjusted gross in11 come’’ means adjusted gross income increased 

12 by— 

13 (i) any amount excluded from gross 

14 income under section 911, 

15 (ii) any amount of interest received or 

16 accrued by the taxpayer during the taxable 

17 year which is exempt from tax, and 

18 (iii) an amount equal to the portion of 

19 the taxpayer’s social security benefits (as 

20 defined in section 86(d) of such Code) 

21 which is not included in gross income 

22 under section 86 for the taxable year. 

23 (2) DEFINED CONTRIBUTION PLAN.— 

24 (A) IN GENERAL.—The requirements of 

25 this paragraph shall be treated as met for a 


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1 taxable year if the employer offers to all its full2 time employees a defined contribution plan 

3 (within the meaning of section 414(i) of the In4 ternal Revenue Code of 1986) under which the 

5 employer makes matching contributions on be6 half of each employee in an amount not less 

7 that 50 percent of so much of elective contribu8 tions of the employee as do not exceed 6 per9 cent of compensation. 

10 (B) AGE AND SERVICE EXCEPTION.—In 

11 the case of an employer that maintains a quali12 fied plan or arrangement which excludes em13 ployees who have not satisfied the minimum age 

14 and service requirements for participation in 

15 the plan, such employee who has not satisfied 

16 such requirements. 

17 (3) PAY INCREASES.— 

18 (A) IN GENERAL.—The requirements of 

19 this paragraph shall be treated as met if the av20 erage increase in wages paid by the employer to 

21 each applicable employee for the calendar year 

22 ending with or within the taxable year, com23 pared with wages paid by the employer to each 

24 such applicable employee for the preceding cal25 endar year, is at least 3 percent. 


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1 (B) APPLICABLE EMPLOYEE.—For pur2 poses of this paragraph, the term ‘‘applicable 

3 employee’’ means, with respect to any employer, 

4 a full-time employee who is not in the group 

5 consisting of the top 10 percent of employees 

6 when ranked on the basis of compensation paid 

7 during such year. 

8 (C) WAGES.—For purposes of this para9 graph, the term ‘‘wages’’ shall have the mean10 ing given such term by section 3121 of the In11 ternal Revenue Code of 1986 (determined with12 out regard to any dollar limitation contained in 

13 such section). 

14 (D) SPECIAL RULES.— 

15 (i) COMMISSIONED EMPLOYEES.—In 

16 the case of any employee who is paid solely 

17 on a commission basis, the employer shall 

18 be treated as meeting the requirements of 

19 subparagraph (A) only if the employer 

20 pays the employee (on a noncommission 

21 basis) an amount equal to 3 percent of 

22 such employees wages for the preceding 

23 calendar year. 

24 (ii) NEW EMPLOYEES.—An employer 

25 shall not be treated as meeting the requireVerDate Sep 11 2014 22:40 May 11, 2016 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5158.IH H5158

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1 ments of subparagraph (A) with respect to 

2 any employee who was not employed by the 

3 employer during the preceding calendar 

4 year unless the employee’s increase in 

5 wages paid by the employer for the cal6 endar year is at least $2,500. 

7 (iii) COST-OF-LIVING ADJUSTMENT.— 

8 In the case of calendar years beginning 

9 after December 31, 2017, the $2,500 

10 amount under clause (ii) shall be increased 

11 by an amount equal to— 

12 (I) such dollar amount, multi13 plied by 

14 (II) the cost-of-living adjustment 

15 determined under section 1(f)(3) for 

16 the calendar year, determined by sub17 stituting ‘‘calendar year 2016’’ for 

18 ‘‘calendar year 1992’’ in subpara19 graph (B) thereof. 

20 (4) DEFINED BENEFIT PLAN; ADDITIONAL SO21 CIAL SECURITY CONTRIBUTIONS.— 

22 (A) IN GENERAL.—The requirements of 

23 this paragraph shall be treated as met for a 

24 taxable year if, on behalf of each full-time em25 ployee to whom the employer does not offer a 


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1 defined benefit plan (within the meaning of sec2 tion 414(j) of the Internal Revenue Code of 

3 1986), the employer makes contributions to the 

4 Secretary of the Treasury in an amount equal 

5 to 4.5 percent of the wages (as defined in sec6 tion 3121(a) of such Code) paid by the em7 ployer with respect to employment (as defined 

8 in section 3121(b) of such Code) during the cal9 endar year. Such contributions shall be made at 

10 the same time and in the same manner as the 

11 tax imposed on the employer under section 

12 3111 of such Code. 

13 (B) SPECIAL RULE FOR HIGHLY COM14 PENSATED EMPLOYEES.—In the case of an em15 ployee whose wages (as defined in section 

16 3121(a) of such Code, determined without re17 gard to any dollar limitation contained in such 

18 section) paid by the employer with respect to 

19 employment (as defined in section 3121(b) of 

20 such Code) exceed $500,000 for the calendar 

21 year, the employer shall make contributions to 

22 the Secretary of the Treasury in an amount 

23 equal to 4.5 percent of such excess, of which— 

24 (i) 2.5 percent of such excess shall be 

25 treated for purposes of section 6 of this 


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1 Act as a contribution made under subpara2 graph (A), and 

3 (ii) 2.0 percent of such excess shall be 

4 transferred to the Federal Old-Age and 

5 Survivors Insurance Trust Fund without 

6 any corresponding increase in the primary 

7 insurance amount of such individual. 

8 (C) INDEPENDENT CONTRACTORS.—In the 

9 case of an individual who receives remuneration 

10 from another person for services provided, other 

11 than as an employee, on more than 130 days 

12 during the calendar year, for purposes of sub13 paragraph (A), for such calendar year such 

14 other person shall treat such individual as an 

15 employee and such remuneration shall be treat16 ed as wages paid with respect to employment. 

17 (c) DEFINITIONS AND SPECIAL RULE.—For pur18 poses of this section— 

19 (1) ELIGIBLE EMPLOYER.—The term ‘‘eligible 

20 employer’’ means, with respect to any taxable year, 

21 an employer which has at least 5 full-time employees 

22 for the taxable year. 

23 (2) FULL-TIME EMPLOYEE.—The term ‘‘full24 time employee’’ means, with respect to any month, 


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1 an employee who is employed on average at least 30 

2 hours of service per week. 

3 (3) UNITED STATES EMPLOYEES ONLY.—Sub4 section (b) shall be applied without regard to any 

5 employees whose essential job function is outside the 

6 United States. 

7 (4) CONTROLLED GROUPS.—All employees who 

8 are treated as employed by a single employer under 

9 subsection (b), (c), (m), or (o) of section 414 shall 

10 be treated as employed by a single employer. 

11 (5) COLLECTIVE BARGAINING EMPLOYEES EX12 CLUDED.—The employer may exclude from the re13 quirements and determinations made under this sec14 tion employees subject to a collective bargaining 

15 agreement. 

16 SEC. 6. ADDITIONAL SOCIAL SECURITY ACCOUNT FUND. 

17 (a) IN GENERAL.—There is established in the Treas18 ury of the United States a fund to be known as the ‘‘Addi19 tional Social Security Account Fund’’. 

20 (b) AMOUNTS HELD BY FUND.—Such Fund shall 

21 consist of amounts equivalent to the sum of all amounts 

22 paid under section 5(b)(4)(A) of the Make America Com23 petitive Again Act (and any net investment earnings at24 tributable thereto), less any transfer under subsection (c) 

25 or any distribution permitted under this section. 


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1 (c) TRANSFER OF ELECTED AMOUNTS TO TRUST

2 FUND.—The Secretary of the Treasury shall transfer 

3 from such Fund to the Federal Old-Age and Survivors In4 surance Trust Fund any amounts paid under section 

5 5(b)(4)(A) with respect to which the individual on whose 

6 behalf such amount were paid has elected to be so trans7 ferred and treated under section 215(j) of the Social Secu8 rity Act (42 U.S.C. 415(j)), as added by this Act. Any 

9 such election shall be made at such time and in such form 

10 and manner as the Secretary shall prescribe and shall be 

11 irrevocable. 

12 (d) MANAGEMENT OF FUND AND ACCOUNTS.— 

13 (1) IN GENERAL.—The Secretary shall establish 

14 an Additional Social Security Account program, 

15 under which— 

16 (A) amounts in the Fund (and earnings at17 tributable thereto) shall be separately accounted 

18 for and held for the exclusive benefit of each in19 dividual on whose behalf such amounts were 

20 contributed, and 

21 (B) distributions may be made by such in22 dividuals under rules prescribed by the Sec23 retary similar to the rules applicable to a quali24 fied cash or deferred arrangements (within the 


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1 meaning of section 401(k) of the Internal Rev2 enue Code of 1986). 

3 (e) TAX TREATMENT OF FUND.— 

4 (1) IN GENERAL.—For purposes of the Internal 

5 Revenue Code of 1986, the Additional Social Secu6 rity Account Fund shall be treated as a trust de7 scribed in section 401(a) of such Code which is ex8 empt from taxation under section 501(a) of such 

9 Code, and any distribution from the Fund under the 

10 Additional Social Security Account program shall be 

11 treated in the same manner as a distribution from 

12 such a trust. 

13 (2) NO DISTRIBUTIONS DURING FIRST 10 YEARS

14 OF FUND.—No distributions may be made from the 

15 Fund earlier than 10 years after the date of the en16 actment of this Act. 

17 (3) ROLLOVERS PROHIBITED.—An eligible roll18 over distribution (as defined in section 402(c)(4) of 

19 such Code) shall not include any amount distributed 

20 from the Additional Social Security Account. 

21 (f) INVESTMENT OF FUND.—The Secretary shall ap22 point a Board, which shall provide for the investment of 

23 amounts which are held on behalf of individuals in the Ad24 ditional Social Security Account Fund. The Board shall 

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1 ments of such amounts by such individuals in conservative 

2 and age appropriate options. 

3 (g) TRANSFER AT DEATH.—Individuals may des4 ignate one or more beneficiaries (under such rules as the 

5 Secretary shall prescribe) to provide for disposition at 

6 death of any remaining amounts in the Fund held on such 

7 individual’s behalf. 

8 SEC. 7. INCREASE OF PRIMARY INSURANCE AMOUNT AS A 

9 RESULT OF CERTAIN EMPLOYER CONTRIBU10 TIONS. 

11 Section 215 of the Social Security Act (42 U.S.C. 

12 415) is amended by adding at the end the following: 

13 ‘‘(j)(1) In the case of an individual on whose behalf 

14 of contributions have been made under section 5(b)(4)(A) 

15 of the Make America Competitive Act of 2016, and who 

16 has made an election under section 6(c) of such Act with 

17 respect to such contributions, the primary insurance 

18 amount of such individual otherwise determined under this 

19 section (without regard to this subsection) shall be com20 puted or recomputed, for months beginning after each 

21 such contribution, by increasing such primary insurance 

22 amount as specified under paragraph (2). 


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1 ‘‘(2) The increase specified under this paragraph 

2 shall be determined under regulations issued by the Com3 missioner of Social Security.’’. 

Æ 


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