I

104TH CONGRESS

1ST SESSION H. R. 430

To establish The National Dividend Plan by reforming the budget process,

and by amending the Internal Revenue Code of 1986 to eliminate the

double tax on dividends, to allocate corporate income tax revenues for

payments to qualified registered voters, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1995

Mr. TAUZIN introduced the following bill; which was referred to the Committee

on Ways and Means and, in addition, to the Committee on Rules, 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 establish The National Dividend Plan by reforming the

budget process, and by amending the Internal Revenue

Code of 1986 to eliminate the double tax on dividends,

to allocate corporate income tax revenues for payments

to qualified registered voters, 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.

4 This Act may be cited as the ‘‘National Dividend

5 Act of 1995’’.
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1 SEC. 2. NATIONAL DIVIDEND PAYMENT TO REGISTERED

2 VOTERS.

3 (a) PAYMENTS FOR DISBURSEMENTS TO REG4 ISTERED VOTERS OF EACH STATE.—

5 (1) IN GENERAL.—The Secretary shall pay dur6 ing each calendar year after the Base Year to the

7 chief financial officer of each State an amount equal

8 to the National Dividend Payment for the imme9 diately preceding calendar year multiplied by the

10 number (provided to the Secretary by such officer)

11 of individuals who are qualified registered voters of

12 such State for such preceding year.

13 (2) SEMIANNUAL INSTALLMENTS.—One-half of

14 the amount payable under paragraph (1) to the chief

15 financial officer of any State during the 3 calendar

16 years immediately following the Base Year shall be

17 paid to such officer at the beginning of the second

18 and fourth calendar quarters of such year.

19 (3) QUARTERLY INSTALLMENTS.—One-fourth

20 of the amount payable under paragraph (1) to the

21 chief financial officer of any State during any cal22 endar year subsequent to the third calendar year im23 mediately following the Base Year shall be paid to

24 such officer at the beginning of each calendar quar25 ter of such year.
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1 (b) AMOUNT OF NATIONAL DIVIDEND PAYMENT.—

2 The National Dividend Payment for any calendar year

3 shall be an amount equal to—

4 (1) the excess of—

5 (A) the sum of—

6 (i) the aggregate amount transferred

7 under section 3(b)(3) to the National Divi8 dend Payment Trust Fund during the fis9 cal year ending during such calendar year,

10 plus

11 (ii) any interest credited during such

12 fiscal year to the Trust Fund under section

13 3(c)(2)(B)(iii), over

14 (B) the sum of—

15 (i) the amount transferred out of the

16 Trust Fund during such fiscal year under

17 section 3(b)(4), plus

18 (ii) the deficit adjustment amount for

19 such fiscal year calculated pursuant to sec20 tion 6 of this Act,

21 divided by

22 (2) the number of individuals who are qualified

23 registered voters for such calendar year as deter24 mined on the basis of reports submitted not later

25 than November 30 of such calendar year by the
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1 chief financial officer of each State to the Secretary

2 (in such manner as the Secretary may by regulations

3 prescribe).

4 (c) METHOD OF DISBURSEMENTS TO QUALIFIED

5 REGISTERED VOTERS.—

6 (1) IN GENERAL.—The National Dividend Pay7 ment for any calendar year shall be paid to each

8 qualified registered voter of a State by an incor9 porated bank which is selected (in accordance with

10 paragraph (2)) for such year by the chief financial

11 officer of such State as the disbursing agent of such

12 State.

13 (2) SELECTION OF DISBURSING AGENT.—Any

14 incorporated bank may be selected as the disbursing

15 agent of any State under paragraph (1) by the chief

16 financial officer of such State if—

17 (A) such bank is determined by such offi18 cer to be operating within such State,

19 (B) such bank submits a sealed bid to such

20 officer in which such bank—

21 (i) specifies an amount which it

22 agrees to pay such State as consideration

23 for each year for which it pays National

24 Dividend Payments to qualified registered

25 voters of such State,
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1 (ii) specifies procedures which it

2 agrees to follow in making such payments,

3 and

4 (iii) agrees to limit the investment of

5 any funds received for the purpose of mak6 ing such payments to interest-bearing obli7 gations of the United States or to obliga8 tions guaranteed as to both principal and

9 interest by the United States,

10 and

11 (C) such officer approves such bid, taking

12 into account with respect to all such bids—

13 (i) the amount of such consideration,

14 (ii) any previous experience of such

15 bank in making such payments, and

16 (iii) the ability and reliability of such

17 bank to make such payments.

18 (3) TRANSFER OF FUNDS TO DISBURSING

19 AGENT.—Funds received under subsection (a) by the

20 chief financial officer of any State shall be trans21 ferred by such officer to the disbursing agent for

22 such State not less than 10 days after the date such

23 officer receives such funds.

24 (4) PAYMENT BY DISBURSING AGENT.—A Na25 tional Dividend Payment shall be paid by the dis-
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1 bursing agent of each State to each qualified reg2 istered voter of such State who is included on a list

3 provided to such agent by the chief financial officer

4 of such State. Such payment shall be in the form of

5 a negotiable instrument—

6 (A) which is drawn on an account of such

7 agent,

8 (B) which is made payable to such voter,

9 and

10 (C) which states, on the endorsement side

11 of such instrument, that—

12 (i) such instrument must be nego13 tiated within the 90-day period which be14 gins on the date such instrument is drawn,

15 (ii) each qualified registered voter is

16 entitled to only 1 National Dividend Pay17 ment for each calendar year, and

18 (iii) any individual who negotiates any

19 such instrument and who is not entitled to

20 the payment made by such instrument is

21 subject under Federal law to fine, or im22 prisonment, or both.

23 (5) NATIONAL DIVIDEND PAYMENT INSTALL24 MENTS.—
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1 (A) SEMIANNUAL INSTALLMENTS.—One2 half of the amount of the National Dividend

3 Payment payable during the 3 calendar years

4 immediately following the Base Year to any

5 qualified registered voter shall be paid to such

6 voter at the close of the second and fourth cal7 endar quarters of such year.

8 (B) QUARTERLY INSTALLMENTS.—One9 fourth of the National Dividend Payment pay10 able to any qualified registered voter during any

11 calendar year subsequent to the third calendar

12 year following the Base Year shall be paid to

13 such voter at the close of each calendar quarter

14 of such year.

15 (d) QUALIFIED REGISTERED VOTER.—

16 (1) IN GENERAL.—For purposes of this section,

17 an individual is a qualified registered voter for any

18 calendar year if—

19 (A) such individual was entitled to vote in

20 the most recent Federal election before such

21 calendar year, and

22 (B) such individual certifies to the State or

23 local authority which supervises the voting of

24 such individual that, during such calendar year,
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1 he complies with all conditions of his entitle2 ment to vote.

3 (2) REGISTERED VOTERS.—In the case of any

4 individual who in any calendar year registers to vote

5 under State or local law, such registration shall be

6 treated as complying with the certification under

7 paragraph (1)(B) for such year.

8 (e) APPLICATIONS PERMITTED.—

9 (1) IN GENERAL.—The chief financial officer of

10 each State may require individuals to apply to re11 ceive any National Dividend Payment under this

12 Act.

13 (2) CRIMINAL PENALTY.—Any person who

14 knowingly makes any false statement or false rep15 resentation of a material fact in any application sub16 mitted pursuant to paragraph (1) or any certifi17 cation under subsection (d) shall be fined not more

18 than $10,000, or imprisoned not more than 10

19 years, or both for each such false statement or false

20 representation.

21 (f) PAYMENTS TO BE MADE FROM NATIONAL DIVI22 DEND PAYMENT TRUST FUND.—Amounts in the National

23 Dividend Payment Trust Fund shall be available, to such

24 extent and in such amounts as are provided in appropria25 tion Acts, for making the payments under this section.
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1 SEC. 3. ESTABLISHMENT OF NATIONAL DIVIDEND PAY2 MENT TRUST FUND.

3 (a) CREATION OF TRUST FUND.—There is hereby es4 tablished in the Treasury of the United States a trust fund

5 to be known as the National Dividend Payment Trust

6 Fund.

7 (b) TRANSFER OF AMOUNTS EQUIVALENT TO COR8 PORATE INCOME TAXES TO THE TRUST FUND.—

9 (1) IN GENERAL.—There are hereby authorized

10 to be appropriated to the Trust Fund amounts de11 termined by the Secretary to be equivalent to

12 amounts received in the Treasury in fiscal years

13 ending after the Base Year from the following taxes:

14 (A) the taxes imposed by sections 11,

15 511(a) and 1201(a) of the Code;

16 (B) the taxes imposed by subchapter L of

17 chapter 1 of the Code; and

18 (C) the tax imposed on a corporation by

19 section 55(a) of the Code.

20 (2) TRANSITION RULE.—In the case of the first

21 four fiscal years ending after the Base Year, the

22 amounts authorized to be appropriated to the Trust

23 Fund for such years shall be the following percent24 age of the amount determined under paragraph (1):

25 (A) 20 percent in the case of the first such

26 fiscal year;
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1 (B) 40 percent in the case of the second

2 such fiscal year;

3 (C) 60 percent in the case of the third

4 such fiscal year; and

5 (D) 80 percent in the case of the fourth

6 such fiscal year.

7 (3) METHOD OF TRANSFER.—The amounts ap8 propriated pursuant to paragraphs (1) and (2) shall

9 be transferred at least quarterly from the general

10 fund of the Treasury to the Trust Fund on the basis

11 of estimates made by the Secretary of the amounts

12 derived from the taxes described in paragraph (1).

13 Proper adjustments shall be made in the amounts

14 subsequently transferred to the extent such esti15 mates are in excess of or less than the amounts re16 quired to be transferred.

17 (4) TRANSFER FROM TRUST FUND FOR ADMIN18 ISTRATIVE EXPENSES.—The Secretary may from

19 time to time transfer from the Trust Fund—

20 (A) to the general fund of the Treasury

21 the amount estimated as the costs incurred by

22 the Department of the Treasury in the adminis23 tration of section 2, and
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1 (B) to the Board the amount estimated by

2 the Board as its costs in carrying out its duties

3 under this Act.

4 Proper adjustments shall be made in the amounts

5 subsequently transferred to the extent such esti6 mates are in excess of or less than the amounts re7 quired to be transferred.

8 (c) TRUST FUND BOARD.—

9 (1) IN GENERAL.—There is hereby established

10 a review board to be known as the National Divi11 dend Review Board which shall consist of 5 members

12 appointed by the President, by and with the advice

13 and consent of the Senate, from among individuals

14 who are not officers or employees of the Federal

15 Government.

16 (2) DUTIES.—

17 (A) REPORT.—It shall be the duty of the

18 Board to review the manner in which payments

19 under section 2 are made, to hold the Trust

20 Fund, and to report to the Congress each year

21 on such review and on the financial condition

22 and the results of the operations of the Trust

23 Fund during the preceding fiscal year and on

24 its expected condition and operation during the

25 next 5 fiscal years. Such report shall be printed
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1 as a House document of the session of the Con2 gress to which the report is made.

3 (B) INVESTMENT.—

4 (i) IN GENERAL.—The Board may in5 vest any amount of the Trust Fund which

6 the Board determines is not required to

7 meet current payments. Such investments

8 shall be made only in interest-bearing obli9 gations of the United States or in obliga10 tions guaranteed as to both principal and

11 interest by the United States. Such obliga12 tions may be acquired—

13 (I) on original issue at the issue

14 price, or

15 (II) by purchase of outstanding

16 obligations at the market price.

17 The purposes for which obligations of the

18 United States may be issued under the

19 Second Liberty Bond Act are hereby ex20 tended to authorize the issuance at par of

21 special obligations exclusively to the Trust

22 Fund. Such special obligations shall bear

23 interest at a rate equal to the average rate

24 of interest, computed as to the end of the

25 calendar month next preceding the date of
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1 such issue, borne by all marketable inter2 est-bearing obligations of the United

3 States then forming a part of the public

4 debt; except that if such average rate is

5 not a multiple of one-eighth of 1 percent,

6 the rate of interest of such special obliga7 tions shall be the multiple of one-eighth of

8 1 percent next lower than such average

9 rate. Such special obligations shall be is10 sued only if the Board determines that the

11 purchase of other interest-bearing obliga12 tions guaranteed as to both principal and

13 interest by the United States on original

14 issue or at the market price, is not in the

15 public interest.

16 (ii) SALE OF OBLIGATIONS.—Any ob17 ligations acquired by the Trust Fund (ex18 cept special obligations issued exclusively

19 to the Trust Fund) may be sold by the

20 Board at the market price, and such spe21 cial obligations may be redeemed at par

22 plus accrued interest.

23 (iii) INTEREST ON CERTAIN PRO24 CEEDS.—The interest on, and the proceeds

25 from the sale or redemption of, any obliga-
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1 tions held in the Trust Fund shall be cred2 ited to and form a part of the Trust Fund.

3 (3) TERM, PAY, AND TRAVEL EXPENSES OF

4 MEMBERS.—

5 (A) TERM.—Each member of the Board

6 shall be appointed for a term of 2 years; except

7 that any member appointed to fill a vacancy oc8 curring before the expiration of the term for

9 which his predecessor was appointed shall be

10 appointed only for the remainder of such term.

11 (B) PAY.—Members of the Board shall re12 ceive compensation at the rate of $100 for each

13 day they are engaged in the performance of

14 their duties as members of the Board.

15 (C) TRAVEL EXPENSES.—While away from

16 their homes or regular places of business in

17 performance of services for the Board, members

18 of the Board shall be allowed travel expenses,

19 including a per diem in lieu of subsistence, in

20 the same manner as persons employed intermit21 tently in the Government service are allowed ex22 penses under section 5703 of title 5 of the

23 United States Code.

24 (d) RESTRICTION ON THE USE OF THE TRUST

25 FUND.—Except as provided in subsection (b)(4), amounts
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1 in the Trust Fund shall be available only for purposes of

2 making payments under section 2.

3 SEC. 4. ELIMINATION OF DOUBLE TAX ON DIVIDENDS.

4 (a) DIVIDENDS RECEIVED BY INDIVIDUALS.—

5 (1) IN GENERAL.—Part III of subchapter B of

6 chapter 1 of the Code (relating to items specifically

7 excluded from gross income) is amended by inserting

8 after section 115 the following new section:

9 ‘‘SEC. 116. EXCLUSION OF DIVIDENDS RECEIVED BY INDI10 VIDUALS.

11 ‘‘(a) EXCLUSION.—Gross income does not include

12 amounts received by an individual as dividends from do13 mestic corporations.

14 ‘‘(b) NATIONAL DIVIDEND PAYMENT.—For purposes

15 of subsection (a), amounts received by an individual as

16 national dividend payments under the National Dividend

17 Act of 1993 shall be treated as dividends from domestic

18 corporations.’’

19 (2) TECHNICAL, CONFORMING, AND CLERICAL

20 AMENDMENTS.—

21 (A) The table of sections for part III of

22 subchapter B of chapter 1 of the Code is

23 amended by inserting after the item relating to

24 section 115 the following new item:

‘‘Sec. 116. Exclusion of dividends received by individuals.’’
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1 (B) Subsection (g) of section 301 of the

2 Code (relating to special rules for distributions

3 of property by corporations) is amended by in4 serting after paragraph (3) the following new

5 paragraph (4):

6 ‘‘(4) For exclusion from gross income of divi7 dends received by individuals, see section 116.’’

8 (C) Subsection (a) of section 643 of the

9 Code (relating to certain definitions with re10 spect to the taxation of estates, trusts and

11 beneficiaries) is amended by inserting after

12 paragraph (6) the following new paragraph (7):

13 ‘‘(7) DIVIDENDS.—There shall be included the

14 amount of any dividends excluded from gross income

15 pursuant to section 116 (relating to exclusion of

16 dividends).’’

17 (b) DIVIDENDS RECEIVED BY CORPORATIONS.—

18 (1) IN GENERAL.—Subsection (a) of section

19 243 of the Code (relating to dividends received by

20 corporations) is amended to read as follows:

21 ‘‘(a) GENERAL RULE.—In the case of a corporation,

22 there shall be allowed as a deduction an amount equal to

23 100 percent of the amount received as dividends from a

24 domestic corporation which is subject to taxation under

25 this chapter.’’
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1 (2) DIVIDENDS ON CERTAIN PREFERRED

2 STOCK.—Section 244 of the Code (relating to divi3 dends received on certain preferred stock) is amend4 ed to read as follows:

5 ‘‘SEC. 244. DIVIDENDS RECEIVED ON CERTAIN PREFERRED

6 STOCK.

7 ‘‘In the case of a corporation, there shall be allowed

8 as a deduction an amount computed as follows:

9 ‘‘(1) First determine the amount received as

10 dividends on the preferred stock of a public utility

11 which is subject to taxation under this chapter and

12 with respect to which the deduction provided in sec13 tion 247 for dividends paid is allowable.

14 ‘‘(2) Then multiply the amount determined

15 under paragraph (1) by the fraction—

16 ‘‘(A) the numerator of which is 14 percent,

17 and

18 ‘‘(B) the denominator of which is that per19 centage which equals the highest rate of tax

20 specified in section 11(b).

21 ‘‘(3) Finally ascertain the amount which is 100

22 percent of the excess of—

23 ‘‘(A) the amount determined under para24 graph (1), over
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1 ‘‘(B) the amount determined under para2 graph (2).’’

3 (3) TECHNICAL, CONFORMING AND CLERICAL

4 AMENDMENTS.—

5 (A) Section 243 of the Code (relating to

6 dividends received by corporations) is amended

7 by striking out subsections (b) and (c) and by

8 redesignating subsections (d) and (e) as sub9 sections (b) and (c), respectively.

10 (B) Subsection (b) of section 246 of the

11 Code (relating to rules applying to deductions

12 for dividends received) is amended—

13 (i) in paragraph (1) by striking out

14 ‘‘243(a)(1), 244(a)’’ each time it appears

15 and inserting in lieu thereof ‘‘243, 244’’

16 and by striking out ‘‘the percentage deter17 mined under paragraph (3) of’’, and

18 (ii) by striking out paragraph (3).

19 (C)(i) Subparagraph (A) of section

20 805(a)(4) of the Code (relating to dividends re21 ceived by life insurance companies) is amended

22 by striking out all that follows ‘‘subparagraph

23 (B))’’ and insert in lieu thereof a period.

24 (ii) Subparagraph (B) of section 805(a)(4)

25 of the Code is amended—
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1 (I) by striking out ‘‘243(a)(1),

2 244(a)’’ each place it appears and insert3 ing in lieu thereof ‘‘243, 244’’,

4 (II) by striking out ‘‘the percentage

5 determined under section 246(b)(3) of’’,

6 and

7 (III) by striking out ‘‘(and such limi8 tation shall be applied as provided in sec9 tion 246(b)(3))’’.

10 (iii) Paragraph (4) of section 805(a) of the

11 Code is amended by striking out subparagraphs

12 (C), (D), and (E) and inserting in lieu thereof

13 the following:

14 ‘‘(C) DISTRIBUTIONS OUT OF TAX EXEMPT

15 INTEREST.—No deduction shall be allowed by

16 reason of this paragraph with respect to any

17 dividend to the extent the dividend is a distribu18 tion out of tax-exempt interest.’’

19 (D) Subparagraph (C) of section 861(a)(2)

20 of the Code (relating to income from sources

21 within the United States) is amended by strik22 ing out ‘‘243(e)’’ and inserting in lieu thereof

23 ‘‘243(c)’’.

24 (E) Subparagraph (B) of section

25 1504(c)(2) of the Code (relating to definition of
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1 includible insurance companies) is amended by

2 striking out clause (i) and by redesignating

3 clauses (ii) and (iii) as clauses (i) and (ii), re4 spectively.

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

6 this section shall apply to taxable years ending after the

7 date of the enactment of this Act.

8 SEC. 5. LIMITATION ON CORPORATE INCOME TAXES AND

9 ON NEW FEDERAL SPENDING.

10 (a) LIMITATION ON CORPORATE INCOME TAXES.—

11 Notwithstanding any other provision of law, the maximum

12 rate of tax imposed by section 11 of the Code shall not

13 be increased above 34 percent.

14 (b) LIMITATION ON FEDERAL SPENDING.—Section

15 301 of the Congressional Budget and Impoundment Con16 trol Act of 1974 is amended by inserting after subsection

17 (i) the following new subsection (j):

18 ‘‘(j) LIMITATION ON FEDERAL SPENDING.—

19 ‘‘(1) BUDGET RESOLUTIONS, ETC.—It shall not be

20 in order in either the House of Representatives or

21 the Senate to consider any concurrent resolution on

22 the budget for a fiscal year beginning after Septem23 ber 30, 1995 under this section or to consider any

24 amendment to such concurrent resolution or to con25 sider a conference report on such concurrent resolu-
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1 tion if the level of total budget outlays for such fis2 cal year in such concurrent resolution or amendment

3 or conference report exceeds the recommended level

4 of total budget outlays in the concurrent resolution

5 under this section for the fiscal year beginning Octo6 ber 1, 1995.

7 ‘‘(2) CONTINUING RESOLUTION.—For purposes

8 of paragraph (1), a joint resolution making appro9 priations of money out of the Treasury not otherwise

10 appropriated and out of other applicable revenues,

11 receipts and funds shall be treated as a concurrent

12 resolution on the budget.’’

13 SEC. 6. CALCULATION OF DEFICIT ADJUSTMENT AMOUNT.

14 The amount to be deducted under section

15 2(b)(1)(B)(ii) of this Act as the deficit adjustment in any

16 calendar year shall be the amount, if any, by which total

17 budget outlays exceed Federal revenues for the fiscal year

18 ending in such calendar year.

19 SEC. 7. DEFINITIONS.

20 For purposes of this Act—

21 (1) BASE YEAR.—The term ‘‘Base Year’’ means

22 the first calendar year after 1994 in which ends a

23 fiscal year in which total budget outlays do not ex24 ceed Federal revenues.
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1 (2) BOARD.—The term ‘‘Board’’ means the Na2 tional Dividend Review Board established by

3 section 3(c).

4 (3) FEDERAL ELECTION.—The term ‘‘Federal

5 election’’ means any general election in which Mem6 bers of (including any Delegate or Resident Commis7 sioner to) Congress are elected or in which the

8 President and Vice President are elected.

9 (4) CODE.—The term ‘‘Code’’ means the Inter10 nal Revenue Code of 1986.

11 (5) NATIONAL DIVIDEND PAYMENT.—The term

12 ‘‘National Dividend Payment’’ means the amount

13 determined under section 2(b).

14 (6) SECRETARY.—The term ‘‘Secretary’’ means

15 the Secretary of the Treasury or his delegate.

16 (7) STATE.—The term ‘‘State’’ includes the

17 District of Columbia, the Commonwealth of Puerto

18 Rico, and any territory or possession of the United

19 States.

20 (8) TRUST FUND.—The term ‘‘Trust Fund’’

21 means the National Dividend Payment Trust Fund

22 established by section 3(a).

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