I

106TH CONGRESS

1ST SESSION H. R. 1967

To amend the Internal Revenue Code of 1986 to provide tax incentives

and job training grants for communities affected by the migration of

businesses and jobs to Canada or Mexico as a result of the North

American Free Trade Agreement.

IN THE HOUSE OF REPRESENTATIVES

MAY 26, 1999

Mr. SHOWS (for himself, Mr. THOMPSON of Mississippi, Mr. BARCIA, Mr.

BISHOP, Mr. BONIOR, Mr. BOUCHER, Mr. BROWN of Ohio, Mr. BOYD,

Mrs. CLAYTON, Ms. CARSON, Mr. CRAMER, Ms. DANNER, Mr. DUNCAN,

Mr. EVANS, Mr. GONZALEZ, Mr. GOODE, Mr. GREEN of Texas, Mr.

HALL of Texas, Mr. HAYES, Mr. HILLIARD, Mr. HINCHEY, Mr.

HINOJOSA, Mr. HOLDEN, Mr. JOHN, Ms. KAPTUR, Mr. KLECZKA, Mr.

KUCINICH, Mr. LATOURETTE, Ms. LEE, Mr. LEWIS of Kentucky, Mr.

MCGOVERN, Mr. MCHUGH, Mr. MCINTYRE, Mrs. NAPOLITANO, Mr. NEY,

Mr. NORWOOD, Mr. PICKERING, Mr. REYES, Mr. RILEY, Ms. ROYBALALLARD, Ms. SANCHEZ, Mr. SANDLIN, Mr. TAYLOR of Mississppi, Mrs.

THURMAN, Mr. WHITFIELD, Mr. WISE, and Mr. WU) introduced the following bill; which was referred to the Committee on Ways and Means,

and in addition to the Committee on Education and the Workforce, 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 provide

tax incentives and job training grants for communities

affected by the migration of businesses and jobs to Canada or Mexico as a result of the North American Free

Trade Agreement.
2

•HR 1967 IH

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 ‘‘NAFTA Impact Relief

5 Act’’.

6 SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR

7 NAFTA-IMPACTED COMMUNITIES.

8 (a) IN GENERAL.—Chapter 1 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the

10 following new subchapter:

11 ‘‘Subchapter X—NAFTA-Impacted

12 Communities

‘‘Sec. 1400E. Designation of NAFTA-impacted communities.

‘‘Sec. 1400F. NAFTA-impacted community employment credit.

‘‘Sec. 1400G. Increase in expensing under section 179.

‘‘Sec. 1400H. NAFTA-impacted community business defined.

13 ‘‘SEC. 1400E. DESIGNATION OF NAFTA-IMPACTED COMMU14 NITIES.

15 ‘‘(a) DESIGNATION.—

16 ‘‘(1) NAFTA-IMPACTED COMMUNITY.—For

17 purposes of this title, the term ‘NAFTA-impacted

18 community’ means any area—

19 ‘‘(A) which is nominated by one or more

20 local governments and the State or States in

21 which it is located for designation as a commu22 nity impacted by the North American Free
3

•HR 1967 IH

1 Trade Agreement (hereinafter in this section re2 ferred to as a ‘nominated area’), and

3 ‘‘(B) which the Secretary of Commerce

4 designates as a NAFTA-impacted community,

5 after consultation with—

6 ‘‘(i) in the case of an area in a rural

7 area, the Secretary of Agriculture;

8 ‘‘(ii) in the case of an area in an

9 urban area, the Secretary of Housing and

10 Urban Development; and

11 ‘‘(iii) in the case of an area on an In12 dian reservation, the Secretary of the Inte13 rior.

14 ‘‘(2) NUMBER OF DESIGNATIONS.—The Sec15 retary of Commerce may designate not more than

16 35 nominated areas as NAFTA-impacted commu17 nities.

18 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

19 OF LOSS OF JOBS RESULTING FROM NAFTA,

20 ETC.—Except as otherwise provided in this section,

21 the nominated areas designated as NAFTA-im22 pacted communities under this subsection shall be

23 those nominated areas with the highest average

24 ranking with respect to the criteria described in sub25 section (c)(3). For purposes of the preceding sen-
4

•HR 1967 IH

1 tence, an area shall be ranked within each such cri2 terion on the basis of the amount by which the area

3 exceeds such criterion, with the area which exceeds

4 such criterion by the greatest amount given the

5 highest ranking.

6 ‘‘(4) LIMITATION ON DESIGNATIONS.—

7 ‘‘(A) PUBLICATION OF REGULATIONS.—

8 The Secretary of Commerce shall prescribe by

9 regulation no later than 4 months after the

10 date of the enactment of this section, after con11 sultation with the officials described in para12 graph (1)(B)—

13 ‘‘(i) the procedures for nominating an

14 area under paragraph (1)(A),

15 ‘‘(ii) the parameters relating to the

16 size and population characteristics of a

17 NAFTA-impacted community, and

18 ‘‘(iii) the manner in which nominated

19 areas will be evaluated based on the cri20 teria specified in subsection (c).

21 ‘‘(B) PROCEDURAL RULES.—The Secretary

22 of Commerce shall not make any designation of

23 a nominated area as a NAFTA-impacted com24 munity under paragraph (2) unless—
5

•HR 1967 IH

1 ‘‘(i) a nomination regarding such area

2 is submitted in such a manner and in such

3 form, and contains such information, as

4 the Secretary of Commerce shall by regula5 tion prescribe, and

6 ‘‘(ii) the Secretary of Commerce de7 termines that any information furnished is

8 reasonably accurate.

9 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES10 ERVATIONS.—For purposes of this subchapter, in

11 the case of a nominated area on an Indian reserva12 tion, the reservation governing body (as determined

13 by the Secretary of the Interior) shall be treated as

14 being both the State and local governments with re15 spect to such area.

16 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF17 FECT.—

18 ‘‘(1) IN GENERAL.—Any designation of an area

19 as a NAFTA-impacted community shall remain in

20 effect during the period beginning on the date of the

21 designation and ending on the earliest of—

22 ‘‘(A) December 31, 2006,

23 ‘‘(B) the termination date designated by

24 the State and local governments in their nomi25 nation, or
6

•HR 1967 IH

1 ‘‘(C) the date the Secretary of Commerce

2 revokes such designation.

3 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec4 retary of Commerce may revoke the designation

5 under this section of an area if the Secretary deter6 mines that the loss of jobs and other affects of

7 NAFTA on the area have been substantially allevi8 ated. Such determination shall include, at a min9 imum, a finding that the unemployment rate in the

10 area is equal to or lower than the national unem11 ployment rate, and a finding that new businesses are

12 being attracted to the area.

13 ‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—

14 ‘‘(1) IN GENERAL.—The Secretary of Com15 merce may designate a nominated area as a

16 NAFTA-impacted community under subsection (a)

17 only if the area meets the requirements of para18 graphs (2) and (3) of this subsection.

19 ‘‘(2) AREA REQUIREMENTS.—For purposes of

20 paragraph (1), a nominated area meets the require21 ments of this paragraph if—

22 ‘‘(A) the area is within the jurisdiction of

23 one or more local governments,

24 ‘‘(B) the boundary of the area is contin25 uous, and
7

•HR 1967 IH

1 ‘‘(C) the area does not include an em2 powerment zone (as defined in section 1393(b))

3 other than such a zone designated under section

4 1391(g).

5 ‘‘(3) ELIGIBILITY REQUIREMENTS.—

6 ‘‘(A) IN GENERAL.—For purposes of para7 graph (1), a nominated area meets the require8 ments of this paragraph if the State and the

9 local governments in which it is located certify

10 (and the Secretary of Commerce, after such re11 view of Department of Labor data and other

12 appropriate supporting data as he deems appro13 priate, accepts such certification) that—

14 ‘‘(i) the unemployment rate in the

15 area, as determined by the most recent

16 available data, was at least 1 percentage

17 point above the national unemployment

18 rate for the period to which such data re19 late, and

20 ‘‘(ii) in the case of—

21 ‘‘(I) a rural area, at least 300

22 workers who live or work in the area

23 have been certified as eligible to apply

24 for NAFTA transitional adjustment

25 assistance under subchapter D of
8

•HR 1967 IH

1 chapter 2 of title II of the Trade Act

2 of 1974 (19 U.S.C. 2341 et seq.), and

3 ‘‘(II) an urban area, at least 500

4 workers have been so certified.

5 ‘‘(B) RURAL AREA DEFINED.—For pur6 poses of this section, the term ‘rural area’

7 means an area—

8 ‘‘(i) which is within a local govern9 ment jurisdiction or jurisdictions with a

10 population of less than 10,000,

11 ‘‘(ii) which is outside of a metropoli12 tan statistical area (within the meaning of

13 section 143(k)(2)(B)), or

14 ‘‘(iii) which is determined by the Sec15 retary of Commerce, after consultation

16 with the Secretary of Agriculture, to be a

17 rural area.

18 ‘‘(C) URBAN AREA DEFINED.—For pur19 poses of this section, the term ‘urban area’

20 means any area that is not a rural area.

21 ‘‘(d) COORDINATION WITH TREATMENT OF ENTER22 PRISE COMMUNITIES.—For purposes of this title, if there

23 are in effect with respect to the same area both—

24 ‘‘(1) a designation as a NAFTA-impacted com25 munity, and
9

•HR 1967 IH

1 ‘‘(2) a designation as an enterprise community,

2 both of such designations shall be given full effect with

3 respect to such area.

4 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this subchapter, rules similar to the rules of para6 graphs (5) and (7) of section 1393 shall apply.

7 ‘‘SEC. 1400F. NAFTA-IMPACTED COMMUNITY EMPLOYMENT

8 CREDIT.

9 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

10 38, the amount of the NAFTA-impacted community em11 ployment credit determined under this section with respect

12 to any employer for any taxable year is 8.5 percent of the

13 qualified NAFTA-impacted community wages paid or in14 curred during the calendar year which ends with or within

15 such taxable year.

16 ‘‘(b) QUALIFIED NAFTA-IMPACTED COMMUNITY

17 WAGES.—

18 ‘‘(1) IN GENERAL.—For purposes of this sec19 tion, the term ‘qualified NAFTA-impacted commu20 nity wages’ means any wages paid or incurred by an

21 employer for services performed by an employee

22 while such employee is a qualified NAFTA-impacted

23 community employee.

24 ‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR

25 TAKEN INTO ACCOUNT.—With respect to each quali-
10

•HR 1967 IH

1 fied NAFTA-impacted community employee, the

2 amount of qualified NAFTA-impacted community

3 wages which may be taken into account for a cal4 endar year shall not exceed $15,000.

5 ‘‘(3) COORDINATION WITH WORK OPPORTUNITY

6 CREDIT.—

7 ‘‘(A) IN GENERAL.—The term ‘qualified

8 NAFTA-impacted community wages’ shall not

9 include wages taken into account in deter10 mining the credit under section 51.

11 ‘‘(B) COORDINATION WITH PARAGRAPH

12 (2).—The $15,000 amount in paragraph (2)

13 shall be reduced for any calendar year by the

14 amount of wages paid or incurred during such

15 year which are taken into account in deter16 mining the credit under section 51.

17 ‘‘(c) QUALIFIED NAFTA-IMPACTED COMMUNITY

18 EMPLOYEE.—For purposes of this section—

19 ‘‘(1) IN GENERAL.—Except as otherwise pro20 vided in this subsection, the term ‘qualified NAFTA21 impacted community employee’ means, with respect

22 to any period, any employee of an employer if—

23 ‘‘(A) substantially all of the services per24 formed during such period by such employee for

25 such employer are performed within a NAFTA-
11

•HR 1967 IH

1 impacted community in a trade or business of

2 the employer, and

3 ‘‘(B) the principal place of abode of such

4 employee while performing such services is

5 within such NAFTA-impacted community.

6 ‘‘(2) OTHER RULES.—Rules similar to the rules

7 of paragraphs (2) and (3) of section 1396(d) shall

8 apply.

9 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—

10 For purposes of this section, the rules of section 1397

11 shall apply.

12 ‘‘SEC. 1400G. INCREASE IN EXPENSING UNDER SECTION 179.

13 ‘‘(a) GENERAL RULE.—In the case of a NAFTA-im14 pacted community business (as defined in section 1400H),

15 for purposes of section 179—

16 ‘‘(1) the limitation under section 179(b)(1)

17 shall be increased by the lesser of—

18 ‘‘(A) $10,000, or

19 ‘‘(B) the cost of section 179 property

20 which is qualified NAFTA-impacted property

21 placed in service during the taxable year, and

22 ‘‘(2) the amount taken into account under sec23 tion 179(b)(2) with respect to any section 179 prop24 erty which is qualified NAFTA-impacted property

25 shall be 50 percent of the cost thereof.
12

•HR 1967 IH

1 ‘‘(b) RECAPTURE.—Rules similar to the rules under

2 section 179(d)(10) shall apply with respect to any quali3 fied NAFTA-impacted property which ceases to be used

4 in a NAFTA-impacted community by a NAFTA-impacted

5 community business.

6 ‘‘(c) QUALIFIED NAFTA-IMPACTED PROPERTY.—

7 For purposes of this section—

8 ‘‘(1) IN GENERAL.—The term ‘qualified

9 NAFTA-impacted property’ means section 179 prop10 erty (as defined in section 179(d)) if—

11 ‘‘(A) such property was acquired by the

12 taxpayer after December 31, 1999, and before

13 January 1, 2007, and

14 ‘‘(B) such property would be qualified zone

15 property (as defined in section 1397C) if ref16 erences to NAFTA-impacted communities were

17 substituted for references to empowerment

18 zones in section 1397C.

19 ‘‘(2) CERTAIN RULES TO APPLY.—The rules of

20 subsections (a)(2) and (b) of section 1397C shall

21 apply for purposes of this section.

22 ‘‘SEC. 1400H. NAFTA-IMPACTED COMMUNITY BUSINESS

23 DEFINED.

24 ‘‘For purposes of this part, the term ‘NAFTA-im25 pacted community business’ means any entity or propri-
13

•HR 1967 IH

1 etorship which would be a qualified business entity or

2 qualified proprietorship under section 1397B if references

3 to NAFTA-impacted communities were substituted for

4 references to empowerment zones in such section.

5 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

6 (1) NAFTA-IMPACTED COMMUNITY EMPLOY7 MENT CREDIT PART OF GENERAL BUSINESS CRED8 IT.—

9 (A) Subsection (b) of section 38 of such

10 Code (relating to current year business credit)

11 is amended by striking ‘‘plus’’ at the end of

12 paragraph (11), by striking the period at the

13 end of paragraph (12) and inserting ‘‘, plus’’,

14 and by adding at the end the following new

15 paragraph:

16 ‘‘(13) the NAFTA-impacted community employ17 ment credit determined under section 1400F(a).’’.

18 (B) Subsection (d) of section 39 of such

19 Code (relating to carryback and carryforward of

20 unused credits) is amended by adding at the

21 end the following new paragraph:

22 ‘‘(9) NO CARRYBACK OF SECTION 1400F CREDIT

23 BEFORE EFFECTIVE DATE.—No portion of the un24 used business credit for any taxable year which is

25 attributable to the credit determined under section
14

•HR 1967 IH

1 1400F (relating to NAFTA-impacted community

2 employment credit) may be carried to any taxable

3 year ending before January 1, 2000.’’.

4 (2) DENIAL OF DEDUCTION FOR PORTION OF

5 WAGES EQUAL TO NAFTA-IMPACTED COMMUNITY

6 EMPLOYMENT CREDIT.—

7 (A) Subsection (a) of section 280C (relat8 ing to rule for employment credits) is amended

9 by striking ‘‘and 1396(a)’’ and inserting

10 ‘‘1396(a), and 1400F(a)’’.

11 (B) Subsection (c) of section 196 (relating

12 to deduction for certain unused business cred13 its) is amended by striking ‘‘and’’ at the end of

14 paragraph (7), by striking the period at the end

15 of paragraph (8) and inserting ‘‘, and’’, and by

16 adding at the end the following new paragraph:

17 ‘‘(9) the NAFTA-impacted community employ18 ment credit determined under section 1400F(a)’’.

19 (3) CARRYOVERS.—Subsection (c) of section

20 381 (relating to carryovers in certain corporate ac21 quisitions) is amended by adding at the end the fol22 lowing new paragraph:

23 ‘‘(27) NAFTA-IMPACTED COMMUNITY PROVI24 SIONS.—The acquiring corporation shall take into

25 account (to the extent proper to carry out the pur-
15

•HR 1967 IH

1 poses of this section and subchapter X, and under

2 such regulations as may be prescribed by the Sec3 retary) the items required to be taken into account

4 for purposes of subchapter X in respect of the dis5 tributor or transferor corporation.’’.

6 (c) CLERICAL AMENDMENTS.—The table of sub7 chapters for chapter 1 is amended by adding at the end

8 the following new item:

‘‘Subchapter X. NAFTA-Impacted Communities.’’

9 SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR

10 NAFTA-IMPACTED COMMUNITIES.

11 (a) IN GENERAL.—The Secretary of Labor shall pro12 vide grants to States that contain NAFTA-impacted com13 munities, as designated under section 1400E of the Inter14 nal Revenue Code of 1986 (as added by section 2(a) of

15 this Act), for the purpose of providing sub-grants to non16 profit organizations and community or junior colleges in

17 order to provide short-term job training courses, courses

18 in entrepreneurism and self-employment, and other related

19 job training assistance that will promote the economic self20 sufficiency of individuals located in NAFTA-impacted

21 communities.

22 (b) MAXIMUM AMOUNT OF GRANT.—The total

23 amount provided under a grant to a State under sub24 section (a) for a fiscal year may not exceed the product

25 of—
16

•HR 1967 IH

1 (1) $1,000,000; and

2 (2) the number of NAFTA-impacted commu3 nities located in the State.

4 (c) AUTHORIZATION OF APPROPRIATIONS.—

5 (1) IN GENERAL.—There are authorized to be

6 appropriated to carry out this section $35,000,000

7 for each of the fiscal years 2000 through 2006.

8 (2) AVAILABILITY.—Amounts appropriated pur9 suant to the authorization of appropriations under

10 paragraph (1) are authorized to remain available

11 until expended.

Æ