I 

111TH CONGRESS 

2D SESSION H. R. 5029 

To amend the Internal Revenue Code of 1986 to allow the private sector 

to create robust levels of economic growth. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 15, 2010 

Mr. JORDAN of Ohio (for himself and Mr. CHAFFETZ) introduced the following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committees on Financial Services and Appropriations, 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 allow the 

private sector to create robust levels of economic growth. 

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 ‘‘Economic Freedom 

5 Act of 2010’’. 


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1 SEC. 2. ZERO PERCENT CAPITAL GAINS RATE FOR INDIVID2 UALS AND CORPORATIONS. 

3 (a) ZERO PERCENT CAPITAL GAINS RATE FOR INDI4 VIDUALS.— 

5 (1) IN GENERAL.—Paragraph (1) of section 

6 1(h) of the Internal Revenue Code of 1986 is 

7 amended by striking subparagraph (C), by redesig8 nating subparagraphs (D) and (E) and subpara9 graphs (C) and (D), respectively, and by amending 

10 subparagraph (B) to read as follows: 

11 ‘‘(B) 0 percent of the adjusted net capital 

12 gain (or, if less, taxable income);’’. 

13 (2) ALTERNATIVE MINIMUM TAX.—Paragraph 

14 (3) of section 55(b) is amended by striking subpara15 graph (C), by redesignating subparagraph (D) as 

16 subparagraph (C), and by amending subparagraph 

17 (B) to read as follows: 

18 ‘‘(B) 0 percent of the adjusted net capital 

19 gain (or, if less, taxable excess), plus’’. 

20 (3) REPEAL OF SUNSET OF REDUCTION IN CAP21 ITAL GAINS RATES FOR INDIVIDUALS.—Section 303 

22 of the Jobs and Growth Tax Relief Reconciliation 

23 Act of 2003 shall not apply to section 301 of such 

24 Act. 

25 (b) ZERO PERCENT CAPITAL GAINS RATE FOR COR26 PORATIONS.— 


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1 (1) IN GENERAL.—Section 1201 of the Internal 

2 Revenue Code of 1986 is amended by redesignating 

3 subsection (b) as subsection (c), and by striking sub4 section (a) and inserting the following new sub5 sections: 

6 ‘‘(a) GENERAL RULE.—If for any taxable year a cor7 poration has a net capital gain, then, in lieu of the tax 

8 imposed by sections 11, 511, 821(a) or (c), and 831(a), 

9 there is hereby imposed a tax (if such tax is less than 

10 the tax imposed by such sections) which shall consist of 

11 the sum of— 

12 ‘‘(1) a tax computed on the taxable income re13 duced by the amount of the net capital gain, at the 

14 rates and in the manner as if this subsection had 

15 not been enacted, 

16 ‘‘(2) 0 percent of the adjusted net capital gain 

17 (or, if less, taxable income), 

18 ‘‘(3) 25 percent of the excess (if any) of— 

19 ‘‘(A) the unrecaptured section 1250 gain 

20 (or, if less, the net capital gain (determined 

21 without regard to subsection (b)(2)), over 

22 ‘‘(B) the excess (if any) of— 

23 ‘‘(i) the sum of the amount on which 

24 tax is determined under paragraph (1) 

25 plus the net capital gain, over 


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1 ‘‘(ii) taxable income, plus 

2 ‘‘(4) 28 percent of the amount of taxable in3 come in excess of the sum of the amounts on which 

4 tax is determined under the preceding paragraphs of 

5 this subsection. 

6 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section— 

8 ‘‘(1) IN GENERAL.—The terms ‘adjusted net 

9 capital gain’ and ‘unrecaptured section 1250 gain’ 

10 shall have the respective meanings given such terms 

11 in section 1(h). 

12 ‘‘(2) DIVIDENDS TAXED AT NET CAPITAL

13 GAIN.—Except as otherwise provided in this section, 

14 the term ‘net capital gain’ has the meaning given 

15 such term in section 1(h)(11).’’. 

16 (2) ALTERNATIVE MINIMUM TAX.—Section 

17 55(b) of such Code is amended by adding at the end 

18 the following new paragraph: 

19 ‘‘(4) MAXIMUM RATE OF TAX ON NET CAPITAL

20 GAIN OF CORPORATIONS.—The amount determined 

21 under paragraph (1)(B)(i) shall not exceed the sum 

22 of— 

23 ‘‘(A) the amount determined under such 

24 paragraph computed at the rates and in the 

25 same manner as if this paragraph had not been 


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1 enacted on the taxable excess reduced by the 

2 net capital gain, plus 

3 ‘‘(B) the amount determined under section 

4 1201.’’. 

5 (3) TECHNICAL AMENDMENTS.— 

6 (A) Section 1202(a) of such Code is 

7 amended by striking ‘‘50 percent’’ and inserting 

8 ‘‘100 percent’’. 

9 (B) Section 1445(e)(1) of such Code is 

10 amended by striking ‘‘35 percent (or, to the ex11 tent provided in regulations, 15 percent)’’ and 

12 inserting ‘‘0 percent’’. 

13 (C) Section 1445(e)(2) of such Code is 

14 amended by striking ‘‘35 percent’’ and inserting 

15 ‘‘0 percent’’. 

16 (D) Section 7518(g)(6)(A) of such Code is 

17 amended by striking ‘‘15 percent (34 percent in 

18 the case of a corporation)’’ and inserting ‘‘0 

19 percent’’. 

20 (E) Section 607(h)(6)(A) of the Merchant 

21 Marine Act, 1936 is amended by striking ‘‘15 

22 percent (34 percent in the case of a corpora23 tion)’’ and inserting ‘‘0 percent’’. 

24 (c) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section 

3 shall apply to taxable years beginning after Decem4 ber 31, 2009. 

5 (2) WITHHOLDING.—The amendments made by 

6 subparagraphs (A) and (B) of subsection (b)(3) 

7 shall take apply to dispositions and distributions 

8 after the date of the enactment of this Act. 

9 SEC. 3. REDUCTION IN CORPORATE INCOME TAX RATES. 

10 (a) IN GENERAL.—Subsection (b) of section 11 of the 

11 Internal Revenue Code of 1986 is amended to read as fol12 lows: 

13 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im14 posed by subsection (a) shall be 12.5 percent of taxable 

15 income.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Section 55(b)(1)(B)(i) of such Code is 

18 amended by striking ‘‘20 percent’’ and inserting 

19 ‘‘12.5 percent’’. 

20 (2) Section 280C(c)(3)(B)(ii)(II) of such Code 

21 is amended by striking ‘‘maximum rate of tax under 

22 section 11(b)(1)’’ and inserting ‘‘rate of tax under 

23 section 11(b)’’. 


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1 (3) Section 832(b)(1) of such Code is amended 

2 by striking ‘‘rates provided in section 11(b)’’ and in3 serting ‘‘rate provided in section 11(b)’’. 

4 (4) Sections 244(a)(2)(B), 247(a)(2)(B), 

5 527(b)(1), 835(e), 852(b)(1), 857(b)(4)(A), 

6 860G(c)(1), 904(b)(3)(E)(ii)(II), and 1375(a) of 

7 such Code is amended by striking ‘‘highest rate of 

8 tax’’ and inserting ‘‘rate of tax’’. 

9 (5) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 

10 860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 

11 1446(b)(2)(B), and 7874(e)(1)(B) of such Code are 

12 each amended by striking ‘‘highest rate of tax speci13 fied in section 11(b)(1)’’ and inserting ‘‘rate of tax 

14 specified in section 11(b)’’. 

15 (6) Section 904(b)(3)(D)(ii) of such Code is 

16 amended by striking ‘‘(determined without regard to 

17 the last sentence of section 11(b)(1))’’. 

18 (7) Section 962 of such Code is amended by 

19 striking subsection (c) and by redesignating sub20 section (d) as subsection (c). 

21 (8) Section 1201(a) of such Code is amended— 

22 (A) by striking ‘‘35 percent (determined 

23 without regard to the last 2 sentences of section 

24 11(b)(1))’’ and inserting ‘‘15 percent’’, and 


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1 (B) by striking ‘‘35 percent’’ in paragraph 

2 (2) and inserting ‘‘15 percent’’. 

3 (9) Section 1561(a) of such Code is amended— 

4 (A) by striking paragraph (1) and by re5 designating paragraphs (2), (3), and (4) as 

6 paragraphs (1), (2), and (3), respectively, 

7 (B) by striking ‘‘The amounts specified in 

8 paragraph (1), the’’ and inserting ‘‘The’’, 

9 (C) by striking ‘‘paragraph (2)’’ and in10 serting ‘‘paragraph (1)’’, 

11 (D) by striking ‘‘paragraph (3)’’ both 

12 places it appears and inserting ‘‘paragraph 

13 (2)’’, 

14 (E) by striking ‘‘paragraph (4)’’ and in15 serting ‘‘paragraph (3)’’, and 

16 (F) by striking the fourth sentence. 

17 (10) Subsection (b) of section 1561 of such 

18 Code is amended to read as follows: 

19 ‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a cor20 poration has a short taxable year which does not include 

21 a December 31 and is a component member of a controlled 

22 group of corporations with respect to such taxable year, 

23 then for purposes of this subtitle, the amount to be used 

24 in computing the accumulated earnings credit under sec25 tion 535(c)(2) and (3) of such corporation for such taxable 


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1 year shall be the amount specified in subsection (a)(1) di2 vided by the number of corporations which are component 

3 members of such group on the last day of such taxable 

4 year. For purposes of the preceding sentence, section 

5 1563(b) shall be applied as if such last day were sub6 stituted for December 31.’’. 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2009. 

10 SEC. 4. ESTATE TAX REPEAL MADE PERMANENT. 

11 Section 901 of the Economic Growth and Tax Relief 

12 Reconciliation Act of 2001 shall not apply to title V of 

13 such Act. 

14 SEC. 5. ELECTION TO EXPENSE BUSINESS ASSETS. 

15 (a) IN GENERAL.—Section 179 of the Internal Rev16 enue Code of 1986 is amended to read as follows: 

17 ‘‘SEC. 179. ELECTION TO EXPENSE CERTAIN DEPRECIABLE 

18 BUSINESS ASSETS. 

19 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

20 elect to treat the cost of any property to which this section 

21 applies as an expense which is not chargeable to capital 

22 account. Any cost so treated shall be allowed as a deduc23 tion for the taxable year in which such property is placed 

24 in service. 

25 ‘‘(b) PROPERTY TO WHICH SECTION APPLIES.— 


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1 ‘‘(1) IN GENERAL.—This section shall apply to 

2 property— 

3 ‘‘(A) which is— 

4 ‘‘(i) tangible property (to which sec5 tion 168 applies), or 

6 ‘‘(ii) computer software (as defined in 

7 section 197(e)(3)(B)) which is described in 

8 section 197(e)(3)(A)(i), to which section 

9 167 applies, 

10 ‘‘(B) which is section 1245 property (as 

11 defined in section 1245(a)(3)) or 1250 property 

12 (as defined in section 1250(c)), and 

13 ‘‘(C) which is acquired by purchase for use 

14 in the active conduct of a trade or business. 

15 Such term shall not include any property described 

16 in section 50(b) and shall not include air condi17 tioning or heating units. 

18 ‘‘(2) PURCHASE DEFINED.—For purposes of 

19 paragraph (1), the term ‘purchase’ means any acqui20 sition of property, but only if— 

21 ‘‘(A) the property is not acquired from a 

22 person whose relationship to the person acquir23 ing it would result in the disallowance of losses 

24 under section 267 or 707(b) (but, in applying 

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1 tion, paragraph (4) of section 267(c) shall be 

2 treated as providing that the family of an indi3 vidual shall include only his spouse, ancestors, 

4 and lineal descendants), 

5 ‘‘(B) the property is not acquired by one 

6 component member of a controlled group from 

7 another component member of the same con8 trolled group, and 

9 ‘‘(C) the basis of the property in the hands 

10 of the person acquiring it is not determined— 

11 ‘‘(i) in whole or in part by reference 

12 to the adjusted basis of such property in 

13 the hands of the person from whom ac14 quired, or 

15 ‘‘(ii) under section 1014(a) (relating 

16 to property acquired from a decedent). 

17 ‘‘(3) COST.—For purposes of this section, the 

18 cost of property does not include so much of the 

19 basis of such property as is determined by reference 

20 to the basis of other property held at any time by 

21 the person acquiring such property. 

22 ‘‘(4) CONTROLLED GROUP DEFINED.—For pur23 poses of this section, the term ‘controlled group’ has 

24 the meaning assigned to it by section 1563(a), ex25 cept that, for such purposes, the phrase ‘more than 


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1 50 percent’ shall be substituted for the phrase ‘at 

2 least 80 percent’ each place it appears in section 

3 1563(a)(1). 

4 ‘‘(5) COORDINATION WITH SECTION 38.—No 

5 credit shall be allowed under section 38 with respect 

6 to any amount for which a deduction is allowed 

7 under subsection (a). 

8 ‘‘(6) RECAPTURE IN CERTAIN CASES.—The 

9 Secretary shall, by regulations, provide for recap10 turing the benefit under any deduction allowable 

11 under subsection (a) with respect to any property 

12 which is not used predominantly in a trade or busi13 ness at any time. 

14 ‘‘(c) ELECTION.— 

15 ‘‘(1) IN GENERAL.—An election under this sec16 tion for any taxable year shall— 

17 ‘‘(A) specify the items of property to which 

18 the election applies, and 

19 ‘‘(B) be made on the taxpayer’s return of 

20 the tax imposed by this chapter for the taxable 

21 year. 

22 Such election shall be made in such manner as the 

23 Secretary may by regulations prescribe. 

24 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

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1 tained in any such election, may not be revoked ex2 cept with the consent of the Secretary.’’. 

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

4 this section shall apply to property placed in service after 

5 the date of the enactment of this Act. 

6 SEC. 6. PAYROLL TAX DECREASE FOR 2010. 

7 (a) EMPLOYEES.—Section 3101 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(d) REDUCTION IN TAX RATE FOR 2010.—In the 

11 case of wages received during calendar year 2010— 

12 ‘‘(1) subsection (a) shall be applied by sub13 stituting ‘3.1 percent’ for ‘6.2 percent’ in the table 

14 contained therein, and 

15 ‘‘(2) subsection (b) shall be applied by sub16 stituting ‘0.725 percent’ for ‘1.45 percent’ in para17 graph (6) thereof.’’. 

18 (b) EMPLOYERS.—Section 3111 of such Code is 

19 amended by adding at the end the following new sub20 section: 

21 ‘‘(d) REDUCTION IN TAX RATE FOR 2010.—In the 

22 case of wages paid during calendar year 2010— 

23 ‘‘(1) subsection (a) shall be applied by sub24 stituting ‘3.1 percent’ for ‘6.2 percent’ in the table 

25 contained therein, and 


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1 ‘‘(2) subsection (b) shall be applied by sub2 stituting ‘0.725 percent’ for ‘1.45 percent’ in para3 graph (6) thereof.’’. 

4 (c) SELF-EMPLOYMENT.—Section 1401 of such Code 

5 is amended by adding at the end the following new sub6 section: 

7 ‘‘(d) REDUCTION IN TAX RATE FOR 2010.—In the 

8 case of a taxable year beginning in 2010— 

9 ‘‘(1) subsection (a) shall be applied by sub10 stituting ‘6.2 percent’ for ‘12.4 percent’ in the table 

11 contained therein, and 

12 ‘‘(2) subsection (b) shall be applied by sub13 stituting ‘1.45 percent’ for ‘2.90 percent’ in para14 graph (6) thereof.’’. 

15 (d) EFFECTIVE DATE.— 

16 (1) IN GENERAL.—Except as provided by para17 graph (2), the amendments made by this section 

18 shall apply with respect to remuneration paid after 

19 December 31, 2009. 

20 (2) SELF-EMPLOYMENT.—The amendment 

21 made by subsection (c) shall apply to taxable years 

22 beginning after December 31, 2009. 

23 SEC. 7. RESCISSION AND REPEAL IN ARRA. 

24 (a) RESCISSION.—Of the discretionary appropria25 tions made available in division A of the American RecovVerDate Nov 24 2008 02:27 Apr 17, 2010 Jkt 089200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H5029.IH H5029

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1 ery and Reinvestment Act of 2009 (Public Law 111–5), 

2 all unobligated balances are rescinded. 

3 (b) REPEAL.—Subtitles B and C of title II and titles 

4 III through VII of division B of the American Recovery 

5 and Reinvestment Act of 2009 (Public Law 111–5) are 

6 repealed. 

7 SEC. 8. TERMINATION OF TARP AUTHORITY. 

8 Section 120 of the Emergency Economic Stabilization 

9 Act of 2008 (12 U.S.C. 5230) is amended to read as fol10 lows: 

11 ‘‘SEC. 120. TERMINATION OF AUTHORITY. 

12 ‘‘The authorities provided under sections 101(a), ex13 cluding section 101(a)(3), and 102 shall terminate on the 

14 date of the enactment of the Economic Freedom Act of 

15 2010.’’. 

16 SEC. 9. REQUIRING THE SALE OF STOCK AND WARRANTS 

17 RECEIVED UNDER TARP. 

18 Not later than the end of the 1-year period beginning 

19 on the date of the enactment of this Act, the Secretary 

20 of the Treasury shall sell all stock and warrants acquired 

21 by the Secretary under the Troubled Asset Relief Program 

22 under title I of the Emergency Economic Stabilization Act 

23 of 2008 (12 U.S.C. 5211 et seq.). 

Æ 


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