Economic Modernization Act

To amend the Internal Revenue Code of 1986 to encourage employers to hire individuals working in dying industries or occupations made obsolete by technology, and for other purposes. 1. Short title This Act may be cited as the Economic Modernization Act 2. Economic Transition Credit (a) In general Subpart D of part IV of subchapter A of chapter 1 Public Law 115–97 45T. Economic Transition Credit (a) In general For purposes of section 38, the amount of the economic transition credit determined under this section for the taxable year shall be equal to the sum of any applicable payroll taxes paid by an employer during the taxable year with respect to employment of any qualified employee. (b) Definitions For purposes of this section: (1) Applicable payroll taxes (A) In general The term applicable payroll taxes (i) section 3111 on wages paid by an employer with respect to employment of qualified employee during the applicable period, and (ii) section 3221(a) on compensation paid by an employer with respect to services rendered by a qualified employee during the applicable period. (B) Applicable period For purposes of subparagraph (A), the term applicable period (2) Declining field (A) In general The term declining field (B) Determination and publication The Secretary, in consultation with the Bureau of Labor Statistics of the Department of Labor, shall annually— (i) determine which occupations or fields of work satisfy the requirements described in subparagraph (A), and (ii) publish and make available on the website of the Department of the Treasury a complete list of such occupations and fields of work. (3) Qualified employee (A) In general The term qualified employee (i) is provided wages for employment by the employer (as such terms are defined in section 3121), provided that such employment is not in a declining field, (ii) is not a covered employee (as defined in section 162(m)(3)), and (iii) was employed in a declining field for any period during the 12-month period preceding the applicable period under paragraph (1)(B). (B) Nonqualifying rehires The term qualifying employee . (b) Credit part of general business credit Section 38(b) Public Law 115–97 plus , plus (38) the economic transition credit determined under section 45T(a). . (c) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 Sec. 45T. Economic Transition Credit. . (d) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 3. Enhancements to certain education tax benefits for professionals in short supply (a) In general (1) Publication For each calendar year beginning after the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Labor, shall publish and make available on the website of the Department of the Treasury a list of any occupation or field of work which qualifies as a short supply field for such calendar year. (2) Short supply field The term short supply field (A) requires— (i) theoretical and practical application of a body of highly specialized knowledge; and (ii) (I) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent); or (II) experience in the specialty equivalent to the completion of such degree; and (B) has an insufficient number of individuals who are citizens or residents of the United States and are qualified, willing, and able to satisfy the demand for labor in such occupation or field of work. (b) Enhancements to certain education tax benefits (1) In general (A) Educational assistance programs Paragraph (2) of section 127(a) (or, in the case of an individual employed in an occupation or field of work which has been designated as a short supply field for such calendar year pursuant to section 3(a) of the Economic Modernization Act (B) Interest on education loans Paragraph (1) of section 221(b) (or, in the case of a individual employed in an occupation or field of work which has been designated, pursuant to section 3(a) of the Economic Modernization Act (C) Qualified tuition and related expenses Paragraph (1) of section 222(b) (or, in the case of an individual employed in an occupation or field of work which has been designated, pursuant to section 3(a) of the Economic Modernization Act (2) Exclusion for certain employer payments of student loans (A) In general Paragraph (1) of section 127(c) and (B) in the case of an employee employed in an occupation or field of work which has been designated as a short supply field for a calendar year pursuant to section 3(a) of the Economic Modernization Act . (B) Conforming amendment; denial of double benefit Paragraph (1) of section 221(e) , or for which an exclusion is allowable under section 127 to the taxpayer's employer by reason of the payment by such employer of any indebtedness on a qualified education loan of the taxpayer (3) Effective date The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. 4. Deduction of qualified enterprise income (a) In general Part VI of subchapter B of chapter 1 182. Qualified enterprise income (a) In general In the case of a qualified taxpayer, there shall be allowed as a deduction an amount equal to any qualified enterprise income of such taxpayer. (b) Limitation The amount of the deduction allowed under subsection (a) for any taxable year shall not exceed an amount equal to 50 percent of the W–2 wages paid by the qualified taxpayer during such taxable year. (c) Definitions In this section: (1) Qualified enterprise income (A) In general The term qualified enterprise income (i) the gross receipts of the qualified taxpayer for the taxable year which are properly allocable to a qualified facility, over (ii) an amount equal to the sum of— (I) the cost of goods sold which are allocable to such receipts, and (II) any other expenses, losses or deductions (with the exception of the deduction allowed under this section) which are allocable to such receipts. (B) Limitation The term qualified enterprise income (C) Method of allocation The Secretary shall prescribe regulations for ensuring proper allocation of amounts under subparagraph (A). (2) Qualified facility (A) In general The term qualified facility (i) prior to 2000, was placed in service and used in the active conduct of a trade or business by a person other than the qualified taxpayer, (ii) after being acquired by the qualified taxpayer, has been substantially rehabilitated, (iii) during the 2-year period prior to commencement of rehabilitation by the qualified taxpayer, was not used in the active conduct of a trade or business, and (iv) is located within a State. (B) Substantial rehabilitation For purposes of this paragraph, a building shall be deemed to have been substantially rehabilitated only if— (i) not less than 50 percent of the existing external walls of such building are retained in place as external walls, (ii) not less than 75 percent of the existing internal structural framework of such building is retained in place, and (iii) the amount properly chargeable to the capital account for any addition to or improvement of the building is in excess of an amount equal to the greater of— (I) the adjusted basis of such building (and its structural components), or (II) $20,000. (3) Qualified taxpayer The term qualified taxpayer (4) State The term State (5) W– 2 (A) In general The term W–2 wages (B) Limitation to wages attributable to qualified enterprise income Such term shall not include any amount which is not properly allocable to qualified enterprise income for purposes of subsection (c)(1). (C) Return requirement Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return. . (b) Clerical amendment The table of sections for part VI of subchapter B of chapter 1 Sec. 182. Qualified Enterprise Income. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Economic Modernization Act This bill amends the Internal Revenue Code to allow additional tax credits and deductions to assist employees who work in declining or short-supply fields. A "declining field" has experienced a decline in the level of average employment of at least 8% over the most recent 3-year period. A "short-supply" field: (1) requires theoretical and practical application of a body of highly specialized knowledge and certain degrees or experience in the specialty; and (2) has an insufficient number of U.S. citizens or residents who are qualified, willing, and able to satisfy the demand for labor in the occupation or field of work. For employers, the bill allows an economic transition tax credit for payroll taxes paid over a three-year period with respect to employees who previously worked in a declining field. For individuals employed in short-supply fields, the bill: increases the limit for the exclusion from gross income for employer-provided educational assistance programs and expands the exclusion to include payments of education loans, increases the limit for the deduction for interest on education loans, and increases the limit for the deduction for qualified tuition and related expenses. The bill also allows a deduction for companies that rehabilitate certain abandoned buildings. The deduction is equal to a portion of the income attributable to the rehabilitated building and may not exceed 50% of the wages paid by the company.