Next Generation American Manufacturing Act of 2017

To amend the Internal Revenue Code of 1986 to allow a credit against tax for qualified manufacturing facility construction costs and to allow a credit against tax for qualified manufacturing facility construction costs. 1. Short title This Act may be cited as the Next Generation American Manufacturing Act of 2017 I Consumer Credit 101. Credit for retail purchase of certain domestic products (a) In general Subpart B of part IV of subchapter A of chapter 1 30E. Domestic manufacturing consumer credit (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for any taxable year an amount equal to the applicable percentage of the aggregate amount paid or incurred by the taxpayer for specified products during any portion such taxable year which is part of the eligible period. (b) Applicable percentage; eligible period For purposes of this section— (1) Applicable percentage The term applicable percentage (2) Eligible period The term eligible period (3) Separate application to each specified product Subsection (a) shall be applied separately with respect to each of the specified products designated under subsection (e). (c) Specified product For purposes of this section— (1) In general The term specified product (A) the original use of which commences with the taxpayer, and (B) which is acquired by the taxpayer for use or lease, but not for resale. (2) Designated domestic product The term designated domestic product (A) having been assembled in the United States, and (B) consisting at least 60 percent of components assembled or otherwise arising in the United States. (3) Designated product The term designated product (d) Application with other credits (1) Business credit treated as part of general business credit So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property used by the taxpayer in the conduct of a trade or business shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)). (2) Personal credit For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year. (e) Selection of designated products (1) In general The Secretary, in consultation with the Commission, shall designate 10 products for purposes of this section. (2) Eligible products A product shall not be eligible for designation under this section unless— (A) such product represents an advancement in science, technology, engineering, or math, and (B) the designation of such product has the potential to produce substantial long-term job opportunities in the United States. (3) Criteria for designation In making designations of products under this subsection, the Secretary shall take into consideration— (A) the number of jobs in the United States that the Secretary estimates will result (directly and indirectly) from the designation of such product, and (B) the speed with which such jobs are likely to be created. (4) Determination of credit percentage The Secretary, in consultation with the Commission, shall determine the applicable percentage which applies for purposes of subsection (a) with respect to each product designated under this subsection. Such percentage shall not be less than 5 percent and shall not be more than 20 percent. Such percentage shall be determined on the basis of the incentive needed with respect to each such product taking into account the market factors with respect to such product. (5) Determination of period during which credit allowed The Secretary, in consultation with the Commission, shall determine the eligible period which applies for purposes of subsection (a) with respect to each product designated under this subsection. Such period shall not be less than 5 years and shall not be more than 10 years. Such period shall be determined on the basis of the incentive needed with respect to each such product taking into account the market factors with respect to such product. (f) Other definitions and special rules For purposes of this section— (1) Commission The term Commission Next Generation American Manufacturing Act of 2017 (2) Reduction in basis For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (d)). (3) No double benefit The amount of any deduction or other credit allowable under this chapter with respect to any property shall be reduced by the amount of the credit allowed under subsection (a) for such property (determined without regard to subsection (d)). (4) Property used by tax-exempt entity In the case of property whose use is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such property to the person or entity using such property shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such property (determined without regard to subsection (d)). For purposes of subsection (d), property to which this paragraph applies shall be treated as property used by the taxpayer in the conduct of a trade or business. (5) Property used outside United States, etc., not qualified No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1). (6) Recapture The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of the property). (7) Election to not take credit No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such property. (g) Termination This section shall not apply to property acquired after the date which is 10 years after the date of the enactment of this section. . (b) Conforming amendments (1) Section 38(b) of such Code is amended by striking plus , plus (37) the portion of the domestic manufacturing consumer credit to which section 30E(d)(1) applies. . (2) Section 1016(a) of such Code is amended by striking and , and (38) to the extent provided in section 30E(f)(2). . (3) Section 6501(m) of such Code is amended by inserting 30E(f)(7), 30D(e)(4), (4) The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 30E. Domestic manufacturing consumer credit. . (c) CBO report The Congressional Budget Office shall, during the 3d, 5th, and 7th years after the effective date of the domestic manufacturing consumer credit (described in subsection (d)), report to Congress on the economic effects of such credit. Such report shall include the aggregate value of the domestic manufacturing consumer credits determined with respect to taxpayers under section 30E (d) Effective date The amendments made by this section shall apply to property acquired after the date which is 1 year after the date on which the 21st Century American Manufacturing Commission makes its recommendations to the Secretary of the Treasury under section 102(b) of this Act. 102. Establishment of 21st Century American Manufacturing Commission (a) In general There is established a commission to be known as the 21st Century American Manufacturing Commission. (b) Duties The Commission shall conduct research regarding appropriate products to make eligible for the tax credit provided by section 30E (c) Membership (1) In general The Commission shall be composed of 10 members who shall be appointed by the Secretary of the Treasury or his designee not later than 30 days after the enactment of this Act. (2) Selection In determining who to appoint to the Commission, the Secretary of the Treasury shall consider a geographically diverse group of individuals with experience in the areas of— (A) managing manufacturing companies, including businesses with fewer than 100 employees, (B) conducting manufacturing-related research and development, (C) commercialization of scientific innovation, (D) managing supply chain providers, (E) finance, and (F) analyzing manufacturing policy and economic competitiveness. (3) Political affiliation Not more than 5 members may be of the same political party. (4) Terms Each member shall be appointed for the life of the Commission. (5) Vacancies A vacancy in the Commission shall be filled in the manner in which the original appointment was made. (6) Pay of members (A) In general Members shall each be entitled to receive the daily equivalent of the maximum annual rate of basic pay for grade GS–11 of the General Schedule for each day (including travel time) during which they are engaged in the actual performance of duties vested in the Commission. (B) Travel expenses Each member shall receive travel expenses, including per diem in lieu of subsistence, in accordance with applicable provisions under subchapter I of chapter 57 (7) Prevention of conflicts of interest and nepotism (A) Agreement The Secretary of the Treasury shall not appoint any individual to be a member of the Commission unless such individual has first signed an agreement with the Secretary to prevent conflicts of interest and nepotism. Such agreement shall include a requirement that the individual comply with the provisions of subparagraph (B) and shall include such penalties for failure to so comply as the Secretary determines appropriate. (B) Requirements A member of the Commission shall not, during the 5-year period beginning on the effective date of the domestic manufacturing consumer credit (described in section 101(d)), hold, directly or indirectly, any interest in any person associated with any designated product, any component of any designated product, or any equipment to manufacture any such product or component. An interest held in any fund held by such member shall be taken into account under the preceding sentence unless such fund is a broad-based index fund. Any interest held by such member prior to the beginning of such 5-year period which is not (consistent with the requirements of this subparagraph) permitted to be held during such period, shall be disposed of prior to such period. (d) Chairperson The Chairperson of the Commission shall be designated by the Secretary of the Treasury (or his designee) at the time of appointment. (e) Staff Any staff of the Commission shall be appointed subject to the provisions of title 5, United States Code, governing appointments in the competitive service, and shall be paid in accordance with the provisions of chapter 51 and subchapter III of chapter 53 of that title relating to classification and General Schedule pay rates. (f) Termination (1) In general Except as provided in paragraph (2), the Commission shall terminate 30 days after making recommendations to the Secretary of the Treasury described in subsection (b). (2) Extension At the request of the Secretary of the Treasury or his designee, the Commission shall continue in existence for such period at the Secretary may request but not later than 1 year after making such recommendations. II Manufacturer Credit 201. Credit for manufacturing facility costs (a) In general Subpart D of part IV of subchapter A of chapter 1 45S. Manufacturing facility expenditures (a) General rule For purposes of section 38, in the case of an eligible business, the manufacturing facility expenditure credit for any taxable year is an amount equal to 25 percent of the qualified facility construction expenditures of the taxpayer for the taxable year. (b) Eligible business For purposes of this section— (1) In general The term eligible business (A) which is engaged in an active trade or business, (B) which is headquartered in the United States, (C) substantially all of the management or administrative activities of which are performed in the United States, (D) which has not (prior to placing into service the manufacturing facility designated for purposes of this section) placed in service a manufacturing facility, (E) which is a start-up company, and (F) with respect to which all debt obligations issued by, and equity interests in, have a rating of B minus (or its substantial equivalent) or higher from a credit rating agency registered with the Securities and Exchange Commission as a nationally recognized statistical rating organization (as defined in section 3(a) of the Securities Exchange Act of 1934). (2) Start-up company The term start-up company (A) which first has both gross receipts and qualified research expenses (as defined in section 41(b)) in a taxable year beginning after December 31, 2016, or (B) which both gross receipts and qualified research expenses (as so defined) in fewer than 3 taxable years beginning after December 31, 2016, and before January 1, 2022. (c) Qualified facility construction expenditures For purposes of this section— (1) In general The term qualified facility construction expenditures (A) for the construction of a facility (designated for purposes of this section by the taxpayer at such time and in such form and manner as the Secretary shall prescribe) in the United States to manufacture a qualified product (including amounts for professional services necessary for the planning of such construction), and (B) for the purchase of specialized equipment for use at such facility and required for the manufacture of such product. (2) Qualified product The term qualified product (d) Special rules For purposes of this section— (1) Recapture (A) In general If, as of the close of any taxable year, there is a recapture event with respect to any facility of the taxpayer with respect to which a credit was allowed under this section, then the tax of the taxpayer under this chapter for such taxable year shall be increased by an amount equal to the product of— (i) the applicable recapture percentage, and (ii) the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted if the qualified facility construction expenditures of the taxpayer described in subsection (c)(1) with respect to such facility had been zero. (B) Applicable recapture percentage (i) In general For purposes of this subsection, the applicable recapture percentage shall be determined in accordance with the following table: If the recapture event The applicable recapture percentage is: Year 1 100 Year 2 80 Year 3 60 Year 4 40 Year 5 20 Years 6 and thereafter 0. (ii) Years For purposes of clause (i), year 1 shall begin on the first day of the taxable year in which the facility with respect to which a credit was allowed under this subsection was placed in service. (C) Recapture event For purposes of this paragraph— (i) In general A recapture event occurs with respect to any facility if— (I) the taxpayer becomes insolvent, or (II) the taxpayer disposes of the facility to another person who, at this time of the disposition, is not an eligible business. (ii) Special rule for facilities not placed in service within 5 years In the case of a facility with respect to which a credit is allowed under this section which is not placed in service before the close of the 5th taxable year beginning after the first taxable year for which the credit was so allowed, a recapture event shall be treated as having occurred with respect to such facility in year 1. (2) Credit may be assigned The amount of qualified facility construction expenditures with respect to a facility which would (but for this paragraph) be taken into account under subsection (a) for any taxable year by any person (hereafter in this paragraph referred to as the initial taxpayer (A) may be taken into account by any other person to whom such expenditures are assigned by the initial taxpayer, and (B) shall not be taken to account by initial taxpayer. Any person to whom such expenditures are assigned under subparagraph (A) shall be treated for purposes of this title as the taxpayer with respect to such expenditures. (3) Controlled group All members of the same controlled group of corporations (within the meaning of section 52(a)) and all persons under common control (within the meaning of section 52(b)) shall be treated as 1 person for purposes of this section. (4) Predecessor Any reference in this section to a corporation or partnership shall include a reference to any predecessor of such corporation or partnership. (5) Denial of double benefit For purposes of this subtitle, if a credit is allowed under this section in connection with any expenditure for any property, the basis of such property shall be reduced by the amount of the credit so allowed. . (b) Denial of double benefit Section 280C of such Code is amended by adding at the end the following new subsection: (i) Manufacturing facility expenditures No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under section 45S for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45S(a). . (c) Credit To Be Part of General Business credit Section 38(b) of the such Code, as amended by this Act, is amended by striking plus , plus (38) manufacturing facility expenditure credit determined under section 45S(a). . (d) Conforming amendment Section 1016(a) of such Code, as amended by this Act, is amended by striking and , and (39) to the extent provided in section 45S(d)(2). . (e) Effective date The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act.

Summary: Next Generation American Manufacturing Act of 2017 This bill amends the Internal Revenue Code to allow a tax credit for the purchase (during a specified period of between 5 and 10 years based on the incentive needed with respect to each product) of new products certified as assembled in the United States and consisting of at least 60% of components assembled or otherwise arising in the United States. The bill also establishes the 21st Century American Manufacturing Commission to conduct research to designate products eligible for such tax credit. The bill allows certain start-up companies that are headquartered in the United States a tax credit for up to 25% of their costs for the construction of a manufacturing facility and for the purchase of specialized equipment for use at such facility. A "start-up company" is defined as any corporation or partnership that: (1) first has both gross receipts and qualified research expenses in a taxable year beginning after December 31, 2016; or (2) has both gross receipts and qualified research expenses in fewer than three taxable years beginning after December 31, 2016, and before January 1, 2022.