II 

110TH CONGRESS 

1ST SESSION S. 592 

To amend the Internal Revenue Code of 1986 to provide for a manufacturer’s 

jobs credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 14, 2007 

Ms. COLLINS 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 provide 

for a manufacturer’s jobs credit, 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; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Growing Our Manufacturing Employment Act’’ or the 

6 ‘‘GoMe Act’’. 

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment 

10 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 SEC. 2. MANUFACTURER’S JOBS CREDIT. 

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 (relating to business-related cred6 its) is amended by adding at the end the following: 

7 ‘‘SEC. 45O. MANUFACTURER’S JOBS CREDIT. 

8 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

9 in the case of an eligible taxpayer, the manufacturer’s jobs 

10 credit determined under this section is an amount equal 

11 to the lesser of the following: 

12 ‘‘(1) The excess of the W–2 wages paid by the 

13 taxpayer during the taxable year over the W–2 

14 wages paid by the taxpayer during the preceding 

15 taxable year. 

16 ‘‘(2) The W–2 wages paid by the taxpayer dur17 ing the taxable year to any employee who is an eligi18 ble TAA recipient (as defined in section 35(c)(2)) or 

19 an eligible alternative TAA recipient (as defined in 

20 section 35(c)(3)) for any month during such taxable 

21 year. 

22 ‘‘(3) 31.7 percent of the W–2 wages paid by the 

23 taxpayer during the taxable year. 

24 ‘‘(b) LIMITATION.—The amount of credit determined 

25 under subsection (a) shall be reduced by an amount which 


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1 bears the same ratio to the amount of the credit (deter2 mined without regard to this subsection) as— 

3 ‘‘(1) the excess of the W–2 wages paid by the 

4 taxpayer to employees outside the United States 

5 during the taxable year over such wages paid during 

6 the most recent taxable year ending before the date 

7 of the enactment of this section, bears to 

8 ‘‘(2) the excess of the W–2 wages paid by the 

9 taxpayer to employees within the United States dur10 ing the taxable year over such wages paid during 

11 such most recent taxable year. 

12 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec13 tion, the term ‘eligible taxpayer’ means any taxpayer— 

14 ‘‘(1) which has domestic production gross re15 ceipts for the taxable year and the preceding taxable 

16 year, and 

17 ‘‘(2) which is not treated at any time during 

18 the taxable year as an inverted domestic corporation 

19 under section 7874. 

20 ‘‘(d) DEFINITIONS.—For purposes of this section, 

21 W–2 wages and domestic production gross receipts shall 

22 be determined in the same manner as under section 199. 

23 ‘‘(e) CERTAIN RULES MADE APPLICABLE.—For pur24 poses of this section, rules similar to the rules of section 

25 52 shall apply. 


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1 ‘‘(f) TERMINATION.—This section shall not apply to 

2 any taxable year beginning after December 31, 2009.’’. 

3 (b) CREDIT TO BE PART OF GENERAL BUSINESS

4 CREDIT.—Section 38(b) (relating to current year business 

5 credit) is amended by striking ‘‘plus’’ at the end of para6 graph (30), by striking the period at the end of paragraph 

7 (31) and inserting ‘‘, plus’’, and by adding at the end the 

8 following: 

9 ‘‘(32) the manufacturer’s jobs credit determined 

10 under section 45O.’’. 

11 (c) CLERICAL AMENDMENT.—The table of sections 

12 for subpart D of part IV of subchapter A of chapter 1 

13 is amended by adding at the end the following: 

‘‘Sec. 45O. Manufacturer’s jobs credit’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2007. 

17 SEC. 3. EXTENSION OF RESEARCH CREDIT. 

18 (a) IN GENERAL.—Section 41(h)(1)(B) is amended 

19 by striking ‘‘2007’’ and inserting ‘‘2012’’. 

20 (b) CONFORMING AMENDMENT.—Section 

21 45C(b)(1)(D) is amended by striking ‘‘2007’’ and insert22 ing ‘‘2012’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to amounts paid or incurred after 

25 December 31, 2007. 


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1 SEC. 4. CLARIFICATION OF ECONOMIC SUBSTANCE DOC2 TRINE. 

3 (a) IN GENERAL.—Section 7701 is amended by re4 designating subsection (p) as subsection (q) and by insert5 ing after subsection (o) the following new subsection: 

6 ‘‘(p) CLARIFICATION OF ECONOMIC SUBSTANCE

7 DOCTRINE; ETC.— 

8 ‘‘(1) GENERAL RULES.— 

9 ‘‘(A) IN GENERAL.—In any case in which 

10 a court determines that the economic substance 

11 doctrine is relevant for purposes of this title to 

12 a transaction (or series of transactions), such 

13 transaction (or series of transactions) shall have 

14 economic substance only if the requirements of 

15 this paragraph are met. 

16 ‘‘(B) DEFINITION OF ECONOMIC SUB17 STANCE.—For purposes of subparagraph (A)— 

18 ‘‘(i) IN GENERAL.—A transaction has 

19 economic substance only if— 

20 ‘‘(I) the transaction changes in a 

21 meaningful way (apart from Federal 

22 tax effects) the taxpayer’s economic 

23 position, and 

24 ‘‘(II) the taxpayer has a substan25 tial nontax purpose for entering into 

26 such transaction and the transaction 


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1 is a reasonable means of accom2 plishing such purpose. 

3 In applying subclause (II), a purpose of 

4 achieving a financial accounting benefit 

5 shall not be taken into account in deter6 mining whether a transaction has a sub7 stantial nontax purpose if the origin of 

8 such financial accounting benefit is a re9 duction of income tax. 

10 ‘‘(ii) SPECIAL RULE WHERE TAX11 PAYER RELIES ON PROFIT POTENTIAL.—A 

12 transaction shall not be treated as having 

13 economic substance by reason of having a 

14 potential for profit unless— 

15 ‘‘(I) the present value of the rea16 sonably expected pre-tax profit from 

17 the transaction is substantial in rela18 tion to the present value of the ex19 pected net tax benefits that would be 

20 allowed if the transaction were re21 spected, and 

22 ‘‘(II) the reasonably expected 

23 pre-tax profit from the transaction ex24 ceeds a risk-free rate of return. 


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1 ‘‘(C) TREATMENT OF FEES AND FOREIGN

2 TAXES.—Fees and other transaction expenses 

3 and foreign taxes shall be taken into account as 

4 expenses in determining pre-tax profit under 

5 subparagraph (B)(ii). 

6 ‘‘(2) SPECIAL RULES FOR TRANSACTIONS WITH

7 TAX-INDIFFERENT PARTIES.— 

8 ‘‘(A) SPECIAL RULES FOR FINANCING

9 TRANSACTIONS.—The form of a transaction 

10 which is in substance the borrowing of money 

11 or the acquisition of financial capital directly or 

12 indirectly from a tax-indifferent party shall not 

13 be respected if the present value of the deduc14 tions to be claimed with respect to the trans15 action is substantially in excess of the present 

16 value of the anticipated economic returns of the 

17 person lending the money or providing the fi18 nancial capital. A public offering shall be treat19 ed as a borrowing, or an acquisition of financial 

20 capital, from a tax-indifferent party if it is rea21 sonably expected that at least 50 percent of the 

22 offering will be placed with tax-indifferent par23 ties. 

24 ‘‘(B) ARTIFICIAL INCOME SHIFTING AND

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1 action with a tax-indifferent party shall not be 

2 respected if— 

3 ‘‘(i) it results in an allocation of in4 come or gain to the tax-indifferent party in 

5 excess of such party’s economic income or 

6 gain, or 

7 ‘‘(ii) it results in a basis adjustment 

8 or shifting of basis on account of over9 stating the income or gain of the tax-indif10 ferent party. 

11 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

12 purposes of this subsection— 

13 ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.— 

14 The term ‘economic substance doctrine’ means 

15 the common law doctrine under which tax bene16 fits under subtitle A with respect to a trans17 action are not allowable if the transaction does 

18 not have economic substance or lacks a business 

19 purpose. 

20 ‘‘(B) TAX-INDIFFERENT PARTY.—The 

21 term ‘tax-indifferent party’ means any person 

22 or entity not subject to tax imposed by subtitle 

23 A. A person shall be treated as a tax-indifferent 

24 party with respect to a transaction if the items 

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1 action have no substantial impact on such per2 son’s liability under subtitle A. 

3 ‘‘(C) EXCEPTION FOR PERSONAL TRANS4 ACTIONS OF INDIVIDUALS.—In the case of an 

5 individual, this subsection shall apply only to 

6 transactions entered into in connection with a 

7 trade or business or an activity engaged in for 

8 the production of income. 

9 ‘‘(D) TREATMENT OF LESSORS.—In apply10 ing paragraph (1)(B)(ii) to the lessor of tan11 gible property subject to a lease— 

12 ‘‘(i) the expected net tax benefits with 

13 respect to the leased property shall not in14 clude the benefits of— 

15 ‘‘(I) depreciation, 

16 ‘‘(II) any tax credit, or 

17 ‘‘(III) any other deduction as 

18 provided in guidance by the Secretary, 

19 and 

20 ‘‘(ii) subclause (II) of paragraph 

21 (1)(B)(ii) shall be disregarded in deter22 mining whether any of such benefits are al23 lowable. 

24 ‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF25 FECTED.—Except as specifically provided in this 


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1 subsection, the provisions of this subsection shall not 

2 be construed as altering or supplanting any other 

3 rule of law, and the requirements of this subsection 

4 shall be construed as being in addition to any such 

5 other rule of law. 

6 ‘‘(5) REGULATIONS.—The Secretary shall pre7 scribe such regulations as may be necessary or ap8 propriate to carry out the purposes of this sub9 section. Such regulations may include exemptions 

10 from the application of this subsection.’’. 

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

12 this section shall apply to transactions entered into after 

13 the date of the enactment of this Act. 

Æ 


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