I 

108TH CONGRESS 

2D SESSION H. R. 4307

To amend the Internal Revenue Code of 1986 to allow employers a credit 

against income tax for increasing employment. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 6, 2004

Mr. CHOCOLA (for himself, Mr. DAVIS of Tennessee, Mr. COLE, Mr. 

BEAUPREZ, Mr. HOSTETTLER, Mrs. WILSON of New Mexico, Mr. MILLER of Florida, Mr. FEENEY, Mr. CHABOT, Mr. WILSON of South Carolina, Mrs. MYRICK, Mr. JONES of North Carolina, Mrs. MUSGRAVE, Mr. 

GARRETT of New Jersey, Mr. SHADEGG, Mr. KLINE, Mr. FRANKS of Arizona, Ms. GINNY BROWN-WAITE of Florida, Mr. GREEN of Wisconsin, 

Mr. PENCE, Mr. DUNCAN, Mr. PEARCE, Mr. HASTINGS of Washington, 

Mr. CARTER, Mr. EHLERS, Mr. MURPHY, Mr. BARRETT of South Carolina, Mr. SENSENBRENNER, Ms. HART, Mr. DOOLITTLE, Mr. CANNON, 

Mr. TURNER of Ohio, Mr. BOYD, Mr. GOODE, Mr. MARIO DIAZ-BALART

of Florida, Mr. SOUDER, Mr. QUINN, and Mr. GERLACH) 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 allow employers a credit against income tax for increasing employment.

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 ‘‘Small Business Jobs 

5 Creation Act of 2004’’. 
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1 SEC. 2. CREDIT FOR INCREASING EMPLOYMENT. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 (relating to business related credits) is amended by 

5 adding at the end the following new section:

6 ‘‘SEC. 45G. CREDIT FOR INCREASING EMPLOYMENT. 

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

8 in the case of an eligible employer, the increased employ9 ment credit for any taxable year shall be an amount equal 

10 to 50 percent of the excess of—

11 ‘‘(1) the aggregate unemployment insurance 

12 wages paid during the calendar year ending during 

13 such taxable year, over 

14 ‘‘(2) 102 percent of the aggregate unemploy15 ment insurance wages paid during the preceding cal16 endar year. 

17 ‘‘(b) ELIGIBLE EMPLOYER.—For purposes of this 

18 section—

19 ‘‘(1) IN GENERAL.—The term ‘eligible em20 ployer’ means any employer having gross receipts for 

21 the taxable year of less than $25,000,000. 

22 ‘‘(2) GROSS RECEIPTS.—For purposes of this 

23 subsection, gross receipts for any taxable year shall 

24 be reduced by returns and allowances made during 

25 the taxable year. 
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1 ‘‘(c) MINIMUM PRECEDING YEAR WAGES.—For pur2 poses of determining the amount of the credit under sub3 section (a) with respect to any calendar year, the amount 

4 described in subsection (a)(2) shall be deemed to be not 

5 less than 50 percent of the amount of such wages paid 

6 during such preceding calendar year. 

7 ‘‘(d) TOTAL WAGES MUST INCREASE.—The amount 

8 of the credit determined under this section for any taxable 

9 year shall not exceed the amount which would be deter10 mined for such year under subsection (a) (without regard 

11 to subsection (b)) if—

12 ‘‘(1) the aggregate amounts taken into account 

13 as unemployment insurance wages were determined 

14 without any dollar limitation, and 

15 ‘‘(2) ‘105 percent’ were substituted for ‘102 

16 percent’ in subsection (a). 

17 ‘‘(e) $100,000 PER YEAR LIMITATION ON CREDIT.—

18 The amount of the credit determined under this section 

19 for any employer with respect to any calendar year shall 

20 not exceed $100,000. 

21 ‘‘(f) UNEMPLOYMENT INSURANCE WAGES.—For pur22 poses of this section, the term ‘unemployment insurance 

23 wages’ has the meaning given to the term ‘wages’ by sec24 tion 3306(b). 
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1 ‘‘(g) SPECIAL RULES.—Rules similar to the following 

2 rules shall apply for purposes of this section: 

3 ‘‘(1) Section 51(g) (relating to United States 

4 Employment Service to notify employers of avail5 ability of credit). 

6 ‘‘(2) Section 51(h)(1) (relating to special rules 

7 for agricultural labor and railway labor). 

8 ‘‘(3) Section 52 (relating to special rules for 

9 work opportunity credit). 

10 ‘‘(4) Section 41(f) (relating to adjustments for 

11 certain acquisitions, etc.). 

12 ‘‘(h) OTHER SPECIAL RULES.—

13 ‘‘(1) CHANGE IN STATUS FROM SELF-EM14 PLOYED TO EMPLOYEE.—If—

15 ‘‘(A) during any calendar year an indi16 vidual has net earnings from self-employment 

17 (as defined in section 1402(a)) which are attrib18 utable to a trade or business, and 

19 ‘‘(B) for any portion of the succeeding cal20 endar year such individual is an employee of 

21 such trade or business, 

22 then, for purposes of determining the credit allow23 able for a taxable year beginning in such succeeding 

24 calendar year, the employer’s aggregate unemploy25 ment insurance wages for the calendar year pre-
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1 ceding the calendar year referred to in subparagraph 

2 (A) shall be increased by an amount equal to so 

3 much of the net earnings referred to in subpara4 graph (A) as does not exceed $7,000. 

5 ‘‘(2) $50,000 LIMITATION IN THE CASE OF

6 MARRIED INDIVIDUALS FILING SEPARATE RE7 TURNS.—In the case of a husband or wife who files 

8 a separate return, the limitation under subsection 

9 (e) shall be $50,000 in lieu of $100,000. This sub10 section shall not apply if the spouse of the taxpayer 

11 has no interest in a trade or business for the taxable 

12 year of such spouse which ends within or with the 

13 taxpayer’s taxable year. 

14 ‘‘(i) TERMINATION.—This section shall not apply to 

15 any taxable year beginning after 2009.’’. 

16 (b) DENIAL OF DOUBLE BENEFIT.—Subsection (a) 

17 of section 280C of such Code is amended by inserting 

18 ‘‘45G(a),’’ after ‘‘45A(a),’’. 

19 (c) CREDIT TREATED AS BUSINESS CREDIT.—Sub20 section (b) of section 38 of such Code is amended by strik21 ing ‘‘plus’’ at the end of paragraph (14), by striking the 

22 period at the end of paragraph (15) and inserting ‘‘, plus’’, 

23 and by adding at the end the following: 

24 ‘‘(16) the increased employment credit deter25 mined under section 45G(a).’’. 
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1 (d) CLERICAL AMENDMENT.—The table of sections 

2 for subpart D of part IV of subchapter A of chapter I 

3 is amended by adding at the end the following:

‘‘Sec. 45G. Credit for increasing employment.’’.

4 (e) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxable years beginning after 

6 December 31, 2004.

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