194 
for military functions administered by the Department of 
Defense (other than the functions excluded by subsection 
(b)) for a fiscal year may not exceed— 
(1) in the case of fiscal year 2011, the aggre-
gate amount of funds appropriated or otherwise 
made available for military functions administered 
by the Department of Defense (other than the func-
tions excluded by subsection (b)) for fiscal year 
2008; and 
(2) in the case of fiscal years 2012 through 
2016, the aggregate amount of funds appropriated 
or otherwise made available for such functions for 
the previous fiscal year. 
(b) EXCLUSION OF MILITARY PERSONNEL PAY AND 
BENEFITS.—In determining the aggregate amount of 
funds appropriated or otherwise made available for mili-
tary functions administered by the Department of Defense 
for fiscal year 2008 or any subsequent fiscal year for pur-
poses of subsection (a), there shall be excluded all amounts 
appropriated or otherwise made available in general and 
supplemental appropriations Acts for— 
(1) military personnel, reserve personnel, and 
National Guard personnel accounts of the Depart-
ment of Defense, generally title I of the annual De-
partment of Defense appropriations Act; 
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(2) the Defense Health Program; and 
(3) drug interdiction and counter-drug activities 
of the Department of Defense, but only to the extent 
the amounts were transferred to personnel accounts 
referred to in paragraph (1). 
(c) USE OF SAVINGS.—All funds saved by the imple-
mentation of this section shall be used for deficit reduc-
tion. 
Subtitle C—Reduction in Military 
End Strength Level in Europe 
SEC. 2201. REDUCTION IN END STRENGTH LEVEL OF MEM-
BERS 
OF 
THE 
UNITED 
STATES 
ARMED 
FORCES ASSIGNED TO PERMANENT DUTY IN 
EUROPE 
AND 
CORRESPONDING 
GENERAL 
END STRENGTH REDUCTIONS. 
(a) EUROPEAN END STRENGTH LEVEL.—Effective 
September 30, 2012, the end strength level of members 
of the Armed Forces of the United States assigned to per-
manent duty ashore in Europe may not exceed a perma-
nent ceiling of 30,000 in any fiscal year. 
(b) EXCLUSION OF CERTAIN MEMBERS.—For pur-
poses of this section, the following members of the Armed 
Forces are excluded in calculating the end strength level 
of members of the Armed Forces of the United States as-
signed to permanent duty ashore in Europe: 
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(1) Members assigned to permanent duty 
ashore in Iceland, Greenland, and the Azores. 
(2) Members performing duties in Europe for 
more than 179 days under a military-to-military 
contact program under section 168 of title 10, 
United States Code. 
(c) EXCEPTIONS; WAIVER.—This section shall not 
apply in the event of a declaration of war or an armed 
attack on any European member nation of the North At-
lantic Treaty Organization. The President may waive op-
eration of this section if the President declares an emer-
gency and immediately informs the Congress of the waiver 
band the reasons therefor. 
(d) REPEAL OF SUPERCEDED END STRENGTH LIMI-
TATION.—Section 1002 of the Department of Defense Au-
thorization Act, 1985 (22 U.S.C. 1928 note) is repealed. 
SEC. 2202. CONFORMING CHANGES TO ARMED FORCES END 
STRENGTH LEVELS. 
(a) END STRENGTHS FOR ACTIVE FORCES FOR FIS-
CAL
YEAR
2012.—Notwithstanding section 401, the 
Armed Forces are authorized strengths for active duty 
personnel as of September 30, 2012, as follows: 
(1) The Army, 556,600. 
(2) The Navy, 325,239. 
(3) The Marine Corps, 202,000. 
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(4) The Air Force, 328,800. 
(b) CONTINUATION OF REDUCTIONS IN SUBSEQUENT 
FISCAL YEARS.—For each of fiscal years 2013 through 
2016, the end strength numbers shall be reduced by an 
additional 10,000 a year, as follows: 
(1) 5,400 a year from the Army. 
(2) 4,000 a year from the Air Force. 
(3) 500 a year from the Navy. 
(4) 100 a year from the Marine Corps. 
(c) REVISION IN PERMANENT ACTIVE DUTY END 
STRENGTH MINIMUM LEVELS.—Section 691(b) of title 
10, United States Code, as amended by section 402, is 
amended by striking paragraphs (1) through (4) and in-
serting the following new paragraphs: 
‘‘(1) For the Army, 535,000. 
‘‘(2) For the Navy, 323,239. 
‘‘(3) For the Marine Corps, 201,600. 
‘‘(4) For the Air Force, 312,800.’’. 
Subtitle D—V–22 Osprey Aircraft 
Program 
SEC. 2401. TERMINATION OF V–22 OSPREY AIRCRAFT PRO-
GRAM. 
Notwithstanding any other provision of law, none of 
the funds authorized to be appropriated or otherwise made 
available for fiscal year 2012 or any fiscal year thereafter 
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for the Department of Defense may be obligated or ex-
pended for the procurement of V–22 Osprey aircraft. 
Subtitle E—Fairness in Taxation 
SEC. 2501. INCREASED TAX RATES FOR TAXPAYERS WITH 
MORE THAN $1,000,000 TAXABLE INCOME. 
(a) IN GENERAL.— 
(1) MARRIED INDIVIDUALS FILING JOINT RE-
TURNS AND SURVIVING SPOUSES.—The table con-
tained in subsection (a) of section 1 of the Internal 
Revenue Code of 1986 is amended to read as fol-
lows: 
If taxable income is: 
The tax is: 
Not over $69,000 ..........................
15% of taxable income. 
Over 
$69,000 
but 
not 
over 
$139,350.
$10,350, plus 28% of the excess over 
$69,000. 
Over 
$139,350 
but 
not 
over 
$212,300.
$30,048, plus 31% of the excess over 
$139,350. 
Over 
$212,300 
but 
not 
over 
$379,150.
$52,662.50, plus 36% of the excess 
over $212,300. 
Over 
$379,150 
but 
not 
over 
$1,000,000.
$112,728.50, plus 39.6% of the ex-
cess over $379,150. 
Over $1,000,000 but not over 
$10,000,000.
$358,585.10, plus 45% of the excess 
over $1,000,000. 
Over $10,000,000 but not over 
$20,000,000.
$4,408,585.10, plus 46% of the ex-
cess over $10,000,000. 
Over $20,000,000 but not over 
$100,000,000.
$9,008,585.10, plus 47% of the ex-
cess over $20,000,000. 
Over $100,000,000 but not over 
$1,000,000,000.
$46,608,585.10, plus 48% of the ex-
cess over $100,000,000. 
Over $1,000,000,000 .....................
$478,608,585.10, plus 49% over the 
excess over $1,000,000,000. 
(2) HEADS OF HOUSEHOLD.—The table con-
tained in subsection (b) of section 1 of such Code is 
amended to read as follows: 
If taxable income is: 
The tax is: 
Not over $46,250 ..........................
15% of taxable income. 
Over 
$46,250 
but 
not 
over 
$119,400.
$6,937.50, plus 28% of the excess 
over $46,250. 
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section 1 of such Code is amended to read as fol-
lows: 
If taxable income is: 
The tax is: 
Not over $34,500 ..........................
plus 15% of taxable income. 
Over 
$34,500 
but 
not 
over 
$69,675.
$5,175, plus 28% of the excess over 
$34,500. 
Over 
$69,675 
but 
not 
over 
$106,150.
$15,024, plus 31% of the excess over 
$69,675. 
Over 
$106,150 
but 
not 
over 
$189,575.
$26,331.25, plus 35% of the excess 
over $106,150. 
Over 
$189,575 
but 
not 
over 
$500,000.
$55,530, plus 39.6% of the excess 
over $189,575. 
Over 
$500,000 
but 
not 
over 
$5,000,000.
$178,458.30, plus 45% of the excess 
over $500,000. 
Over $5,000,000 but not over 
$10,000,000.
$2,203,458.30, plus 46% of the ex-
cess over $5,000,000. 
Over $10,000,000 but not over 
$50,000,000.
$4,503,458.30, plus 47% of the ex-
cess over $10,000,000. 
Over $50,000,000 but not over 
$500,000,000.
$23,303,458.30, plus 48% of the ex-
cess over $50,000,000. 
Over $500,000,000 ........................
$239,303,458.30, plus 49% of the ex-
cess over $500,000,000. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 2502. RECAPTURE OF LOWER CAPITAL GAINS RATES 
FOR INDIVIDUALS SUBJECT TO ADDED RATE 
BRACKETS. 
(a) IN GENERAL.—Section 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new subsection: 
‘‘(j) SPECIAL RULE FOR CAPITAL GAINS IN CASE OF 
TAXABLE INCOME SUBJECT TO AT LEAST 45-PERCENT 
RATE BRACKET.—If for the taxable year a taxpayer has 
taxable income in excess of the minimum dollar amount 
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for the 45-percent rate bracket and has a net capital gain, 
then— 
‘‘(1) the tax imposed by this section for the tax-
able year with respect to such excess shall be deter-
mined without regard to subsection (h), and 
‘‘(2) the amount of net capital gain of the tax-
payer taken into account for the taxable year under 
subsection (h) shall be reduced by the lesser of— 
‘‘(A) such excess, or 
‘‘(B) the net capital gain for the taxable 
year. 
Any reduction in net capital gain under the pre-
ceding sentence shall be allocated between adjusted 
net capital gain, unrecaptured 1250 gain, and sec-
tion 1202 gain in amounts proportionate to the 
amounts of each such gain.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 1(h) of such Code is amended by striking ‘‘If a 
taxpayer has’’ and inserting ‘‘Except to the extent pro-
vided in subsection (j), if a taxpayer has’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
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Subtitle F—End Big Oil Tax 
Subsidies Act of 2011 
SEC. 2601. SHORT TITLE. 
This subtitle may be cited as the ‘‘End Big Oil Tax 
Subsidies Act of 2011’’. 
SEC. 2602. AMORTIZATION OF GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES. 
(a) IN GENERAL.—Subparagraph (A) of section 
167(h)(5) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘major integrated oil company’’ and insert-
ing ‘‘covered large oil company’’. 
(b) COVERED LARGE OIL COMPANY.—Paragraph (5) 
of section 167(h) of such Code is amended by redesig-
nating subparagraph (B) as subparagraph (C) and by in-
serting after subparagraph (A) the following new subpara-
graph: 
‘‘(B) COVERED
LARGE
OIL
COMPANY.— 
For purposes of this paragraph, the term ‘cov-
ered large oil company’ means a taxpayer 
which— 
‘‘(i) is a major integrated oil com-
pany, or 
‘‘(ii) has gross receipts in excess of 
$50,000,000 for the taxable year. 
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For purposes of clause (ii), all persons treated 
as a single employer under subsections (a) and 
(b) of section 52 shall be treated as 1 person.’’. 
(c) CONFORMING AMENDMENT.—The heading for 
paragraph (5) of section 167(h) of such Code is amended 
by inserting ‘‘AND OTHER LARGE TAXPAYERS’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2011. 
SEC. 2603. PRODUCING OIL AND GAS FROM MARGINAL 
WELLS. 
(a) IN GENERAL.—Section 45I of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) EXCEPTION
FOR TAXPAYER WHO IS NOT 
SMALL, INDEPENDENT OIL AND GAS COMPANY.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer which is not a small, inde-
pendent oil and gas company for the taxable year. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
paragraph (1), all persons treated as a single em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to credits determined for taxable 
years beginning after December 31, 2011. 
SEC. 2604. ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Section 43 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) EXCEPTION
FOR TAXPAYER WHO IS NOT 
SMALL, INDEPENDENT OIL AND GAS COMPANY.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer which is not a small, inde-
pendent oil and gas company for the taxable year. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
paragraph (1), all persons treated as a single em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2011. 
SEC. 2605. INTANGIBLE DRILLING AND DEVELOPMENT 
COSTS IN THE CASE OF OIL AND GAS WELLS. 
(a) IN GENERAL.—Subsection (c) of section 263 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new sentence: ‘‘This subsection 
shall not apply to amounts paid or incurred by a taxpayer 
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in any taxable year in which such taxpayer is not a small, 
independent oil and gas company, determined by deeming 
all persons treated as a single employer under subsections 
(a) and (b) of section 52 as 1 person.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2011. 
SEC. 2606. PERCENTAGE DEPLETION. 
(a) IN GENERAL.—Section 613A of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) EXCEPTION
FOR TAXPAYER WHO IS NOT 
SMALL, INDEPENDENT OIL AND GAS COMPANY.— 
‘‘(1) IN
GENERAL.—This section and section 
611 shall not apply to any taxpayer which is not a 
small, independent oil and gas company for the tax-
able year. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
paragraph (1), all persons treated as a single em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
(b) CONFORMING AMENDMENT.—Section 613A(c)(1) 
of such Code is amended by striking ‘‘subsection (d)’’ and 
inserting ‘‘subsections (d) and (f)’’. 
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(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 2607. TERTIARY INJECTANTS. 
(a) IN GENERAL.—Section 193 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(d) EXCEPTION
FOR TAXPAYER WHO IS NOT 
SMALL, INDEPENDENT OIL AND GAS COMPANY.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer which is not a small, inde-
pendent oil and gas company for the taxable year. 
‘‘(2) EXCEPTION FOR QUALIFIED CARBON DI-
OXIDE
DISPOSED
IN
SECURE
GEOLOGICAL
STOR-
AGE.—Paragraph (1) shall not apply in the case of 
any qualified tertiary injectant expense paid or in-
curred for any tertiary injectant is qualified carbon 
dioxide (as defined in section 45Q(b)) which is dis-
posed of by the taxpayer in secure geological storage 
(as defined by section 45Q(d)). 
‘‘(3) AGGREGATION
RULE.—For purposes of 
paragraph (1), all persons treated as a single em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenses incurred after Decem-
ber 31, 2011. 
SEC. 2608. PASSIVE ACTIVITY LOSSES AND CREDITS LIM-
ITED. 
(a) IN GENERAL.—Paragraph (3) of section 469(c) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following: 
‘‘(C) EXCEPTION FOR TAXPAYER WHO IS 
NOT SMALL, INDEPENDENT OIL AND GAS COM-
PANY.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall not apply to any taxpayer which is 
not a small, independent oil and gas com-
pany for the taxable year. 
‘‘(ii) AGGREGATION RULE.—For pur-
poses of clause (i), all persons treated as 
a single employer under subsections (a) 
and (b) of section 52 shall be treated as 1 
person.’’. 
SEC. 2609. INCOME ATTRIBUTABLE TO DOMESTIC PRODUC-
TION ACTIVITIES. 
(a) IN GENERAL.—Section 199 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
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‘‘(e) EXCEPTION
FOR TAXPAYER WHO IS NOT 
SMALL, INDEPENDENT OIL AND GAS COMPANY.—Sub-
section (a) shall not apply to the income derived from the 
production, transportation, or distribution of oil, natural 
gas, or any primary product (within the meaning of sub-
section (d)(9)) thereof by any taxpayer which for the tax-
able year is an oil and gas company which is not a small, 
independent oil and gas company.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 2610. PROHIBITION ON USING LAST-IN, FIRST-OUT AC-
COUNTING FOR MAJOR INTEGRATED OIL 
COMPANIES. 
(a) IN GENERAL.—Section 472 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(h) MAJOR INTEGRATED OIL COMPANIES.—Not-
withstanding any other provision of this section, a major 
integrated oil company (as defined in section 167(h)) may 
not use the method provided in subsection (b) in 
inventorying of any goods.’’. 
(b) EFFECTIVE DATE AND SPECIAL RULE.— 
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(1) IN
GENERAL.—The amendment made by 
subsection (a) shall apply to taxable years beginning 
after December 31, 2011. 
(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of any taxpayer required by the amendment 
made by this section to change its method of ac-
counting for its first taxable year beginning after the 
date of the enactment of this subtitle— 
(A) such change shall be treated as initi-
ated by the taxpayer, 
(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury, and 
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer 
under section 481 of the Internal Revenue Code 
of 1986 shall be taken into account ratably over 
a period (not greater than 8 taxable years) be-
ginning with such first taxable year. 
SEC. 2611. MODIFICATIONS OF FOREIGN TAX CREDIT 
RULES APPLICABLE TO DUAL CAPACITY TAX-
PAYERS. 
(a) IN GENERAL.—Section 901 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(n) as subsection (o) and by inserting after subsection (m) 
the following new subsection: 
‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued by a dual capacity taxpayer to a foreign 
country or possession of the United States for any 
period with respect to combined foreign oil and gas 
income (as defined in section 907(b)(1)) shall not be 
considered a tax to the extent such amount exceeds 
the amount (determined in accordance with regula-
tions) which would have been required to be paid if 
the taxpayer were not a dual capacity taxpayer. 
‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
‘‘(A) is subject to a levy of such country or 
possession, and 
‘‘(B) receives (or will receive) directly or 
indirectly a specific economic benefit (as deter-
mined in accordance with regulations) from 
such country or possession.’’. 
(b) EFFECTIVE DATE.— 
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(1) IN GENERAL.—The amendments made by 
this section shall apply to taxes paid or accrued in 
taxable years beginning after December 31, 2011. 
(2) 
CONTRARY
TREATY
OBLIGATIONS 
UPHELD.—The amendments made by this section 
shall not apply to the extent contrary to any treaty 
obligation of the United States. 
Subtitle G—Superfund 
Reinvestment Act 
SEC. 2701. SHORT TITLE. 
This subtitle may be cited as the ‘‘Superfund Rein-
vestment Act’’. 
SEC. 2702. USE OF HAZARDOUS SUBSTANCE SUPERFUND 
FOR CLEANUP. 
(a) AVAILABILITY OF AMOUNTS.—Section 111 of the 
Comprehensive Environmental Response, Compensation, 
and Liability Act of 1980 (42 U.S.C. 9611) is amended— 
(1) in subsection (a) by striking ‘‘For the pur-
poses specified’’ and all that follows through ‘‘for 
the following purposes:’’ and inserting the following: 
‘‘The amount in the Hazardous Substance Super-
fund established under section 9507 of the Internal 
Revenue Code of 1986 shall be available, without 
further appropriation, to be used for the purposes 
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specified in this section. The President shall use 
such amount for the following purposes:’’; and 
(2) in subsection (c)— 
(A) by striking ‘‘Subject to such amounts 
as are provided in appropriations Acts, the’’ 
each place it appears and inserting ‘‘The’’; and 
(B) in paragraph (12) by striking ‘‘to the 
extent that such costs’’ and all that follows 
through ‘‘and 1994’’. 
(b) AMENDMENT
TO
THE
INTERNAL
REVENUE 
CODE.—Section 9507 of the Internal Revenue Code of 
1986 is amended— 
(1) by striking ‘‘appropriated to’’ in subsection 
(a)(1) and inserting ‘‘made available for’’, 
(2) by striking ‘‘appropriated’’ in subsection (b) 
and inserting ‘‘transferred’’, 
(3) by striking ‘‘, as provided in appropriations 
Acts,’’ in subsection (c)(1), and 
(4) by striking ‘‘1995’’ in subsection (d)(3)(B) 
and inserting ‘‘2021’’. 
SEC. 2703. BUDGETARY TREATMENT OF HAZARDOUS SUB-
STANCE SUPERFUND. 
Notwithstanding any other provision of law, the re-
ceipts and disbursements of the Hazardous Substance 
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Superfund established in section 9507 of the Internal Rev-
enue Code of 1986— 
(1) shall not be counted as new budget author-
ity, outlays, receipts, or deficit or surplus for pur-
poses of— 
(A) the budget of the United States Gov-
ernment as submitted by the President; 
(B) the congressional budget (including al-
locations of budget authority and outlays pro-
vided therein); 
(C) the Balanced Budget and Emergency 
Deficit Control Act of 1985; or 
(D) the Statutory Pay-As-You-Go Act of 
2010; 
(2) shall be exempt from any general budget 
limitation imposed by statute on expenditures and 
net lending (budget outlays) of the United States 
Government; and 
(3) shall be available only for the purposes 
specified in section 111 of the Comprehensive Envi-
ronmental Response, Compensation, and Liability 
Act of 1980 (42 U.S.C. 9611). 
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SEC. 2704. EXTENSION OF SUPERFUND TAXES. 
(a) EXCISE TAXES.—Subsection (e) of section 4611 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(e) APPLICATION
OF
HAZARDOUS
SUBSTANCE 
SUPERFUND FINANCING RATE.—The Hazardous Sub-
stance Superfund financing rate under this section shall 
apply after December 31, 1986, and before January 1, 
1996, and after the date of the enactment of the Super-
fund Reinvestment Act and before January 1, 2019.’’. 
(b) CORPORATE ENVIRONMENTAL INCOME TAX.— 
Subsection (e) of section 59A of such Code is amended 
to read as follows: 
‘‘(e) APPLICATION OF TAX.—The tax imposed by this 
section shall apply to taxable years beginning after De-
cember 31, 1986, and before January 1, 1996, and to tax-
able years beginning after the date of the enactment of 
the Superfund Reinvestment Act and before January 1, 
2019.’’. 
(c) TECHNICAL AMENDMENTS.— 
(1) Subsection (b) of section 4611 of such Code 
is amended— 
(A) by striking ‘‘or exported from’’ in 
paragraph (1)(A), 
(B) by striking ‘‘or exportation’’ in para-
graph (1)(B), and 
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(C) by striking ‘‘AND EXPORTATION’’ in 
the heading thereof. 
(2) Paragraph (3) of section 4611(d) of such 
Code is amended— 
(A) by striking ‘‘or exporting the crude oil, 
as the case may be’’ and inserting ‘‘the crude 
oil’’, and 
(B) by striking ‘‘OR
EXPORTS’’ in the 
heading thereof. 
SEC. 2705. APPLICABILITY. 
(a) IN GENERAL.—Except as provided in subsections 
(b) and (c), this subtitle (including the amendments made 
by this subtitle) shall apply to fiscal years beginning after 
September 30, 2011. 
(b) EXCISE TAXES.—The amendments made by sec-
tions 2704(a) and 2704(c) shall take effect on the date 
of the enactment of this subtitle. 
(c) INCOME TAX.—The amendment made by section 
2704(b) shall apply to taxable years beginning after the 
date of the enactment of this subtitle. 
Subtitle H—Wall Street Trading 
and Speculators Tax Act 
SEC. 2801. SHORT TITLE. 
This subtitle may be cited as the ‘‘Wall Street Trad-
ing and Speculators Tax Act’’. 
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216 
SEC. 2802. TRANSACTION TAX. 
(a) IN GENERAL.—Chapter 36 of the Internal Rev-
enue Code of 1986 is amended by inserting after sub-
chapter B the following new subchapter: 
‘‘Subchapter C—Tax on Trading Transactions 
‘‘Sec. 4475. Tax on trading transactions. 
‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
a tax on each covered transaction with respect to any secu-
rity. 
‘‘(b) RATE OF TAX.—The tax imposed under sub-
section (a) with respect to any covered transaction shall 
be 0.03 percent of the specified base amount with respect 
to such covered transaction. 
‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 
this section, the term ‘specified base amount’ means— 
‘‘(1) except as provided in paragraph (2), the 
fair market value of the security (determined as of 
the time of the covered transaction), and 
‘‘(2) in the case of any payment described in 
subsection (h), the amount of such payment. 
‘‘(d) COVERED TRANSACTION.—For purposes of this 
section, the term ‘covered transaction’ means— 
‘‘(1) except as provided in paragraph (2), any 
purchase if— 
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‘‘(A) such purchase occurs or is cleared on 
a facility located in the United States, or 
‘‘(B) the purchaser or seller is a United 
States person, and 
‘‘(2) any transaction with respect to a security 
described in subparagraph (D), (E), or (F) of sub-
section (e)(1), if— 
‘‘(A) such security is traded or cleared on 
a facility located in the United States, or 
‘‘(B) any party with rights under such se-
curity is a United States person. 
‘‘(e) SECURITY AND OTHER DEFINITIONS.—For pur-
poses of this section— 
‘‘(1) 
IN
GENERAL.—The 
term 
‘security’ 
means— 
‘‘(A) any share of stock in a corporation, 
‘‘(B) any partnership or beneficial owner-
ship interest in a partnership or trust, 
‘‘(C) any note, bond, debenture, or other 
evidence of indebtedness, 
‘‘(D) any evidence of an interest in, or a 
derivative financial instrument with respect to, 
any security or securities described in subpara-
graph (A), (B), or (C), 
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‘‘(E) any derivative financial instrument 
with respect to any currency or commodity, and 
‘‘(F) any other derivative financial instru-
ment any payment with respect to which is cal-
culated by reference to any specified index. 
‘‘(2) DERIVATIVE
FINANCIAL
INSTRUMENT.— 
The term ‘derivative financial instrument’ includes 
any option, forward contract, futures contract, no-
tional principal contract, or any similar financial in-
strument. 
‘‘(3) SPECIFIED
INDEX.—The term ‘specified 
index’ means any 1 or more of any combination of— 
‘‘(A) a fixed rate, price, or amount, or 
‘‘(B) a variable rate, price, or amount,
which is based on any current objectively deter-
minable information which is not within the control 
of any of the parties to the contract or instrument 
and is not unique to any of the parties’ cir-
cumstances. 
‘‘(4) TREATMENT OF EXCHANGES.— 
‘‘(A) IN GENERAL.—An exchange shall be 
treated as the sale of the property transferred 
and a purchase of the property received by each 
party to the exchange. 
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‘‘(B) CERTAIN DEEMED EXCHANGES.—In 
the case of a distribution treated as an ex-
change for stock under section 302 or 331, the 
corporation making such distribution shall be 
treated as having purchased such stock for pur-
poses of this section. 
‘‘(f) EXCEPTIONS.— 
‘‘(1) EXCEPTION FOR INITIAL ISSUES.—No tax 
shall be imposed under subsection (a) on any cov-
ered transaction with respect to the initial issuance 
of any security described in subparagraph (A), (B), 
or (C) of subsection (e)(1). 
‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT- 
TERM INDEBTEDNESS.—A note, bond, debenture, or 
other evidence of indebtedness which— 
‘‘(A) is traded on a trading facility located 
in the United States, and 
‘‘(B) has a fixed maturity of not more 
than 100 days, 
shall not be treated as described in subsection 
(e)(1)(C). 
‘‘(3) EXCEPTION FOR SECURITIES LENDING AR-
RANGEMENTS.—No tax shall be imposed under sub-
section (a) on any covered transaction with respect 
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to which gain or loss is not recognized by reason of 
section 1058. 
‘‘(g) BY WHOM PAID.— 
‘‘(1) IN GENERAL.—The tax imposed by this 
section shall be paid by— 
‘‘(A) in the case of a transaction which oc-
curs or is cleared on a facility located in the 
United States, such facility, and 
‘‘(B) in the case of a purchase not de-
scribed in subparagraph (A) which is executed 
by a broker (as defined in section 6045(c)(1)) 
which is a United States person, such broker. 
‘‘(2) SPECIAL
RULES
FOR
DIRECT, 
ETC., 
TRANSACTIONS.—In the case of any transaction to 
which paragraph (1) does not apply, the tax imposed 
by this section shall be paid by— 
‘‘(A) in the case of a transaction described 
in subsection (d)(1)— 
‘‘(i) the purchaser if the purchaser is 
a United States person, and 
‘‘(ii) the seller if the purchaser is not 
a United States person, and 
‘‘(B) in the case of a transaction described 
in subsection (d)(2)— 
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‘‘(i) the payor if the payor is a United 
States person, and 
‘‘(ii) the payee if the payor is not a 
United States person. 
‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE 
TRANSACTIONS.—Except as otherwise provided by the 
Secretary, any payment with respect to a security de-
scribed in subparagraph (D), (E), or (F) of subsection 
(e)(1) shall be treated as a separate transaction for pur-
poses of this section, including— 
‘‘(1) any net initial payment, net final or termi-
nating payment, or net periodical payment with re-
spect to a notional principal contract (or similar fi-
nancial instrument), 
‘‘(2) any payment with respect to any forward 
contract (or similar financial instrument), and 
‘‘(3) any premium paid with respect to any op-
tion (or similar financial instrument). 
‘‘(i) ADMINISTRATION.—The Secretary shall carry 
out this section in consultation with the Securities and Ex-
change Commission and the Commodity Futures Trading 
Commission. 
‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 
shall— 
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‘‘(1) provide guidance regarding such informa-
tion reporting concerning covered transactions as the 
Secretary deems appropriate, and 
‘‘(2) prescribe such regulations as are necessary 
or appropriate to prevent avoidance of the purposes 
of this section, including the use of non-United 
States persons in such transactions.’’. 
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 36 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to 
subchapter B the following new item: 
‘‘Subchapter C. Tax on trading transactions.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions after December 31, 
2012. 
Subtitle I—Making Work Pay Tax 
Credit 
SEC. 2901. TWO-YEAR EXTENSION OF MAKING WORK PAY 
CREDIT. 
(a) IN GENERAL.—Subsection (e) of section 36A of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘December 31, 2010’’ and inserting ‘‘December 31, 
2012’’. 
(b) TREATMENT OF POSSESSIONS.—Paragraph (1) 
of section 1001(b) of the American Recovery and Rein-
vestment Tax Act of 2009 is amended by striking ‘‘2009 
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and 2010’’ both places it appears and inserting ‘‘2009, 
2010, 2011, and 2012’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
Subtitle J—Employee 
Misclassification Prevention Act 
SEC. 2951 SHORT TITLE. 
This subtitle may be cited as the ‘‘Employee 
Misclassification Prevention Act’’. 
SEC. 2952. CLASSIFICATION OF EMPLOYEES AND NON-EM-
PLOYEES. 
(a) 
RECORDKEEPING
AND
NOTICE
REQUIRE-
MENTS.—Section 11(c) of the Fair Labor Standards Act 
of 1938 (29 U.S.C. 211(c)) is amended— 
(1) by striking ‘‘(c) Every employer subject to 
any provision of this Act or of any order issued 
under this Act’’ and inserting the following: 
‘‘(c) RECORDKEEPING
AND
NOTICE
REQUIRE-
MENTS.— 
‘‘(1) IN
GENERAL.—Every person subject to 
any provision of this Act or of any order issued 
under this Act’’; 
(2) by striking ‘‘of the persons employed by 
him’’ and inserting the following: ‘‘of— 
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‘‘(A) each individual employed by such per-
son’’; 
(3) by striking ‘‘employment maintained by 
him, and shall’’ and inserting the following: ‘‘em-
ployment; 
‘‘(B) subject to paragraph (2), each indi-
vidual— 
‘‘(i) who is not an employee within the 
meaning given the term in section 3(e) (re-
ferred to in this subsection as a ‘non-em-
ployee’); 
‘‘(ii) whom the person has engaged, in 
the course of the person’s trade or busi-
ness, for the performance of labor or serv-
ices; and 
‘‘(iii)(I) with respect to whom the per-
son is required to file an information re-
turn under section 6041A(a) of the Inter-
nal Revenue Code of 1986; or 
‘‘(II) who is providing labor or serv-
ices to the person through an entity that 
is a trust, estate, partnership, association, 
company, or corporation (as such terms 
are used in section 7701(a)(1) of the In-
ternal Revenue Code of 1986) if— 
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‘‘(aa) such individual has an 
ownership interest in the entity; 
‘‘(bb) creation or maintenance of 
such entity is a condition for the pro-
vision of such labor or services to the 
person; and 
‘‘(cc) the person would be re-
quired to file an information return 
for the entity under section 6041A(a) 
of the Internal Revenue Code of 1986 
if the entity were an individual; and 
‘‘(C) the remuneration and hours relating 
to the performance of labor or services by each 
individual described in subparagraph (B); and 
‘‘(D) the notices required under paragraph 
(5), 
and shall’’; and 
(4) by adding at the end the following: 
‘‘(2) RECORDKEEPING LIMITATION.—A person 
otherwise subject to the requirements of paragraph 
(1) shall have no responsibility for making, keeping, 
or preserving records, including the records de-
scribed in such paragraph and paragraph (4), con-
cerning the employees of any individual described in 
paragraph (1)(B) or the non-employees with whom 
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such individual has engaged for the performance of 
labor or services for such person, unless such 
records are provided during the course of the trade 
or business to the person. 
‘‘(3) PRESUMPTION.— 
‘‘(A) IN GENERAL.—For purposes of this 
Act and the regulations or orders issued under 
this Act, an individual who is employed, or who 
is remunerated for the performance of labor or 
services, by a person, shall be presumed to be 
an employee of the person if— 
‘‘(i) the person has not made, kept, 
and preserved records in accordance with 
subparagraphs (B) and (C) of paragraph 
(1) regarding the individual; or 
‘‘(ii) the person has not provided the 
individual with the notice required under 
paragraph (5). 
‘‘(B) REBUTTAL.—The presumption under 
subparagraph (A) shall be rebutted only 
through the presentation of clear and con-
vincing evidence that an individual described in 
such subparagraph is not an employee (within 
the meaning of section 3(e)) of the person. 
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‘‘(4) ACCURATE CLASSIFICATION.—An accurate 
classification of the status of each individual de-
scribed in paragraph (1) as either an employee 
(within the meaning of section 3(e)) of the person 
maintaining the records or a non-employee of such 
person shall be included within the records under 
this subsection. 
‘‘(5) NOTICE.— 
‘‘(A) IN GENERAL.—Every person subject 
to any provision of this Act or of any order 
issued under this Act shall provide the notice 
described in subparagraph (C) to each employee 
of the person and each individual classified by 
the person as a non-employee under paragraph 
(1)(B). 
‘‘(B) TIMING OF NOTICE.— 
‘‘(i) IN GENERAL.—Such notice shall 
be provided, at a minimum, not later than 
6 months after the date of enactment of 
the Employee Misclassification Prevention 
Act, and thereafter— 
‘‘(I) for new employees, upon em-
ployment; and 
‘‘(II) for new non-employees who 
are classified under paragraph (1)(B), 
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upon commencement of the labor or 
services described in such paragraph. 
‘‘(ii) CHANGE IN STATUS.—Each per-
son required to provide notice under sub-
paragraph (A) to an individual shall also 
provide such notice to such individual upon 
changing such individual’s status as an 
employee or non-employee under paragraph 
(1). 
‘‘(C) CONTENTS OF NOTICE.—The notice 
required under this paragraph shall be in writ-
ing and shall— 
‘‘(i) inform the individual of the indi-
vidual’s classification, by the person sub-
mitting the notice, as an employee or a 
non-employee under paragraph (1); 
‘‘(ii) include a statement directing 
such individual to a Department of Labor 
website established for the purpose of pro-
viding further information about the rights 
of employees under the law; 
‘‘(iii) include the address and tele-
phone number for the applicable local of-
fice of the United States Department of 
Labor; 
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‘‘(iv) include for each individual classi-
fied as a non-employee under paragraph 
(1)(B) by the person submitting the notice, 
the following statement: ‘Your rights to 
wage, hour, and other labor protections de-
pend upon your proper classification as an 
employee or non-employee. If you have any 
questions or concerns about how you have 
been classified or suspect that you may 
have been misclassified, contact the U.S. 
Department of Labor.’; and 
‘‘(v) include such additional informa-
tion as the Secretary shall prescribe by 
regulation.’’. 
(b) SPECIAL PROHIBITED ACTS.—Section 15(a) of 
the Fair Labor Standards Act of 1938 (29 U.S.C. 215(a)) 
is amended— 
(1) by striking paragraph (3) and inserting the 
following: 
‘‘(3) to discharge or in any other manner dis-
criminate against any individual (including an em-
ployee) because such individual has— 
‘‘(A) opposed any practice, or filed a peti-
tion or complaint or instituted or caused to be 
instituted any proceeding— 
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‘‘(i) under or related to this Act (in-
cluding concerning an individual’s status 
as an employee or non-employee for pur-
poses of this Act); or 
‘‘(ii) concerning an individual’s status 
as an employee or non-employee for em-
ployment tax purposes within the meaning 
of subtitle C of the Internal Revenue Code 
of 1986; 
‘‘(B) testified or is about to testify in any 
proceeding described in subparagraph (A); or 
‘‘(C) served, or is about to serve, on an in-
dustry committee;’’; 
(2) in paragraph (5), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(6) to fail to accurately classify an individual 
as an employee.’’. 
(c) 
SPECIAL
PENALTY
FOR
CERTAIN 
MISCLASSIFICATION, RECORDKEEPING, AND NOTICE VIO-
LATIONS.—Section 16 of the Fair Labor Standards Act 
of 1938 (29 U.S.C. 216) is amended— 
(1) in subsection (b)— 
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(A) in the sixth sentence, by striking ‘‘any 
employee’’ each place the term occurs and in-
serting ‘‘any employee or individual’’; 
(B) in the fourth sentence, by striking 
‘‘employee’’ and inserting ‘‘employee or indi-
vidual’’; 
(C) in the third sentence— 
(i) by striking ‘‘either of the preceding 
sentences’’ and inserting ‘‘any of the pre-
ceding sentences’’; 
(ii) by striking ‘‘one or more employ-
ees’’ and inserting ‘‘one or more employees 
or individuals’’; and 
(iii) by striking ‘‘other employees’’ 
and inserting ‘‘other employees or individ-
uals, respectively,’’; and 
(D) by inserting after the first sentence 
the following: ‘‘Such liquidated damages are 
doubled (subject to section 11 of the Portal-to- 
Portal Pay Act of 1947 (29 U.S.C. 260)) 
where, in addition to violating the provisions of 
section 6 or 7, the employer has violated the 
provisions of section 15(a)(6) with respect to 
such employee or employees.’’; and 
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(2) in subsection (e), by striking paragraph (2) 
and inserting the following: 
‘‘(2) Any person who violates section 6, 7, 11(c), or 
15(a)(6) shall be subject to a civil penalty, for each em-
ployee or other individual who was the subject of such a 
violation, in an amount— 
‘‘(A) not to exceed $1,100; or 
‘‘(B) in the case of a person who has repeatedly 
or willfully committed such violation, not to exceed 
$5,000.’’. 
(d) EMPLOYEE RIGHTS WEBSITE.— 
(1) IN
GENERAL.—Not later than 180 days 
after the date of enactment of this subtitle, the Sec-
retary of Labor shall establish, for purposes of sec-
tion 11(c)(5)(C)(ii) of the Fair Labor Standards Act 
of 1938 (as added by this subtitle), a single webpage 
on the Department of Labor website that summa-
rizes in plain language the rights of employees as 
described in the amendments made by subsection (a) 
and other information considered appropriate by the 
Secretary, including appropriate links to additional 
information on the Department of Labor website or 
other Federal agency websites. In addition, such 
webpage— 
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(A) shall include a statement explaining 
that employees may have additional or greater 
rights under State or local laws and how em-
ployees may obtain additional information about 
their rights under State or local laws; 
(B) shall be made available in English and 
any other languages that the Secretary deter-
mines to be prevalent among individuals likely 
to access the webpage; and 
(C) may provide a link to permit individ-
uals to file complaints online. 
(2) COORDINATION
WITH
OTHER
FEDERAL 
WEBSITES.—The Secretary shall coordinate with 
other relevant Federal agencies in order to provide 
information similar to the information described in 
paragraph (1) (or a link to the Department of Labor 
webpage required by this subsection) on the websites 
of such other agencies. 
SEC. 2953. MISCLASSIFICATION OF EMPLOYEES FOR UNEM-
PLOYMENT COMPENSATION PURPOSES. 
(a) IN GENERAL.—Section 303(a) of the Social Secu-
rity Act (42 U.S.C. 503(a)) is amended— 
(1) in paragraph (10), by striking the period 
and inserting ‘‘; and’’; and 
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(2) by adding after paragraph (10) the fol-
lowing: 
‘‘(11)(A) Such auditing and investigative proce-
dures as may be necessary to identify employers that 
have not registered under the State law or that are 
paying unreported wages, where these actions or 
omissions by the employers have the effect of exclud-
ing employees from unemployment compensation 
coverage; and 
‘‘(B) The making of quarterly reports to the 
Secretary of Labor (in such form as the Secretary 
of Labor may require) describing the results of the 
procedures under subparagraph (A); and 
‘‘(12) The establishment of administrative pen-
alties for misclassifying employees, or paying unre-
ported wages to employees without proper record-
keeping, for unemployment compensation pur-
poses.’’. 
(b) REVIEW
OF AUDITING PROGRAMS.—The Sec-
retary of Labor shall include, in the Department of La-
bor’s system for measuring States’ performance in con-
ducting unemployment compensation tax audits, a specific 
measure of their effectiveness in identifying the under-
reporting of wages and the underpayment of unemploy-
ment compensation contributions (including their effec-
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tiveness in identifying instances of such underreporting or 
underpayments despite the absence of cancelled checks, 
original time sheets, or other similar documentation). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by subsection (a) 
shall take effect 12 months after the date of the en-
actment of this subtitle. 
(2) EXCEPTION.—If the Secretary of Labor 
finds that legislation is necessary in order for the 
unemployment compensation law of a State to com-
ply with the amendments made by subsection (a), 
such amendments shall not apply with respect to 
such law until the later of— 
(A) the day after the close of the first reg-
ular session of the legislature of such State 
which begins after the date of the enactment of 
this subtitle; or 
(B) 12 months after the date of the enact-
ment of this subtitle. 
(d) DEFINITION OF STATE.—For purposes of this 
section, the term ‘‘State’’ has the meaning given such 
term by section 3306(j) of the Internal Revenue Code of 
1986. 
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SEC. 2954. DEPARTMENT OF LABOR COORDINATION, RE-
FERRAL, AND REGULATIONS. 
(a) 
COORDINATION
AND
REFERRAL.—Notwith-
standing any other provision of law, any office, adminis-
tration, or division of the Department of Labor that, while 
in the performance of its official duties, obtains informa-
tion regarding the misclassification by a person subject to 
the provisions of the Fair Labor Standards Act of 1938 
(29 U.S.C. 201 et seq.) or any order issued under such 
Act of any individual regarding whether such individual 
is an employee or a non-employee contracted for the per-
formance of labor or services for purposes of section 6 or 
7 of such Act (29 U.S.C. 206, 207) or in records required 
under section 11(c) of such Act (29 U.S.C. 211(c)), shall 
report such information to the Wage and Hour Division 
of the Department. The Wage and Hour Division may re-
port such information to the Internal Revenue Service as 
the Division considers appropriate. 
(b) REGULATIONS.—The Secretary of Labor shall 
promulgate regulations to carry out this Act and the 
amendments made by this Act. 
SEC. 2955. TARGETED AUDITS. 
The audits of employers subject to the Fair Labor 
Standards Act of 1938 (29 U.S.C. 201 et seq.) that are 
conducted by the Wage and Hour Division of the Depart-
ment of Labor shall include certain industries with fre-
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quent incidence of misclassifying employees as non-em-
ployees, as determined by the Secretary of Labor. 
Subtitle K—Corporate Assets 
Should Be Used to Hire Act 
SEC. 2961. SHORT TITLE. 
This subtitle may be cited as the ‘‘Corporate Assets 
Should be used to Hire Act’’. 
SEC. 2962. TEMPORARY SURTAX ON INCREASES IN RE-
TAINED EARNINGS OF DOMESTIC CORPORA-
TIONS. 
(a) IN GENERAL.—Part II of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by redesignating section 12 as section 13 and by inserting 
after section 11 the following new section: 
‘‘SEC. 12. TEMPORARY SURTAX ON INCREASES IN RE-
TAINED EARNINGS OF DOMESTIC CORPORA-
TIONS. 
‘‘(a) IN GENERAL.—In the case of a domestic cor-
poration for any taxable year beginning during 2011 or 
2012, there is hereby imposed (in addition to any other 
tax imposed by this part) a tax equal to 40 percent of 
the excess (if any) of— 
‘‘(1) the retained earnings of such corporation 
for such taxable year, over 
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‘‘(2) the average retained earnings of such cor-
poration for the 3 taxable years immediately pre-
ceding such taxable year. 
‘‘(b) EXCEPTIONS.— 
‘‘(1) 
RETAINED
EARNINGS
REQUIRED
BY 
LAW.—Subsection (a) shall not apply to so much of 
the excess described in such subsection as is attrib-
utable to any increase in retained earnings which is 
required by Federal law or regulation. 
‘‘(2) SMALL BUSINESS EXCEPTION.—Subsection 
(a) shall not apply to any corporation for any tax-
able year with respect to which the retained earnings 
of such corporation for such taxable year is less than 
$5,000,000. For purposes of this paragraph, all per-
sons treated as a single employer under subsection 
(a) or (b) of section 52, or subsection (m) or (o) of 
section 414, shall be treated as one person. 
‘‘(3) CORPORATIONS NOT IN EXISTENCE FOR 
ENTIRE
BASE
PERIOD.—Subsection (a) shall not 
apply to any corporation if such corporation was not 
in existence for the entire 3 taxable year period re-
ferred to in subsection (a)(2). 
‘‘(c) RETAINED EARNINGS.—For purposes of this 
section, the term ‘retained earnings’ means, with respect 
to any taxable year, the excess (if any) of— 
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‘‘(1) the retained earnings of such corporation 
as of the end of such taxable year, over 
‘‘(2) the retained earnings of such corporation 
as of the beginning of such taxable year. 
Appropriated and unappropriated retained earnings shall 
be taken into account under paragraphs (1) and (2). 
‘‘(d) TREATMENT
OF PREDECESSORS.—Any ref-
erence in this section to a corporation shall include a ref-
erence to any predecessor of such corporation.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part II of subchapter A of chapter 1 of such Code 
is amended by redesignating the item relating to section 
12 as an item relating to section 13 and by inserting after 
the item relating to section 11 the following new item: 
‘‘Sec. 12. Temporary surtax on increases in retained earnings of domestic cor-
porations.’’. 
(c) DEFICIT REDUCTION.—The increase in Federal 
revenue resulting from the amendments made by this sec-
tion shall be deposited in the Treasury and used for Fed-
eral budget deficit reduction or, if there is no Federal 
budget deficit, for reducing the Federal debt in such man-
ner as the Secretary of the Treasury considers appro-
priate. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
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TITLE 
III—PROTECT 
AND 
STRENGTHEN SOCIAL SECU-
RITY, MEDICARE, AND MED-
ICAID 
Subtitle A—Public Option Deficit 
Reduction Act 
SEC. 3001. SHORT TITLE. 
This subtitle may be cited as the ‘‘Public Option Def-
icit Reduction Act’’. 
SEC. 3002. PUBLIC HEALTH INSURANCE OPTION. 
(a) IN GENERAL.—Part III of subtitle D of title I 
of the Patient Protection and Affordable Care Act (Public 
Law 111–148) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 1325. PUBLIC HEALTH INSURANCE OPTION. 
‘‘(a) ESTABLISHMENT AND ADMINISTRATION OF A 
PUBLIC HEALTH INSURANCE OPTION.— 
‘‘(1) ESTABLISHMENT.—For years beginning 
with 2014, the Secretary of Health and Human 
Services (in this subtitle referred to as the ‘Sec-
retary’) shall provide for the offering through Ex-
changes established under this title of a health bene-
fits plan (in this Act referred to as the ‘public health 
insurance option’) that ensures choice, competition, 
and stability of affordable, high-quality coverage 
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throughout the United States in accordance with 
this section. In designing the option, the Secretary’s 
primary responsibility is to create a low-cost plan 
without compromising quality or access to care. 
‘‘(2) OFFERING THROUGH EXCHANGES.— 
‘‘(A) EXCLUSIVE
TO
EXCHANGES.—The 
public health insurance option shall only be 
made available through Exchanges established 
under this title. 
‘‘(B) 
ENSURING
A
LEVEL
PLAYING 
FIELD.—Consistent with this section, the public 
health insurance option shall comply with re-
quirements that are applicable under this title 
to health benefits plans offered through such 
Exchanges, including requirements related to 
benefits, benefit levels, provider networks, no-
tices, consumer protections, and cost sharing. 
‘‘(C) PROVISION OF BENEFIT LEVELS.— 
The public health insurance option— 
‘‘(i) shall offer bronze, silver, and gold 
plans; and 
‘‘(ii) may offer platinum plans. 
‘‘(3) 
ADMINISTRATIVE
CONTRACTING.—The 
Secretary may enter into contracts for the purpose 
of performing administrative functions (including 
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functions described in subsection (a)(4) of section 
1874A of the Social Security Act) with respect to 
the public health insurance option in the same man-
ner as the Secretary may enter into contracts under 
subsection (a)(1) of such section. The Secretary has 
the same authority with respect to the public health 
insurance option as the Secretary has under sub-
sections (a)(1) and (b) of section 1874A of the So-
cial Security Act with respect to title XVIII of such 
Act. Contracts under this subsection shall not in-
volve the transfer of insurance risk to such entity. 
‘‘(4) OMBUDSMAN.—The Secretary shall estab-
lish an office of the ombudsman for the public 
health insurance option which shall have duties with 
respect to the public health insurance option similar 
to the duties of the Medicare Beneficiary Ombuds-
man under section 1808(c)(2) of the Social Security 
Act. In addition, such office shall work with States 
to ensure that information and notice is provided 
that the public health insurance option is one of the 
health plans available through an Exchange. 
‘‘(5) DATA COLLECTION.—The Secretary shall 
collect such data as may be required to establish 
premiums and payment rates for the public health 
insurance option and for other purposes under this 
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section, including to improve quality and to reduce 
racial, ethnic, and other disparities in health and 
health care. 
‘‘(6) ACCESS TO FEDERAL COURTS.—The provi-
sions of Medicare (and related provisions of title II 
of the Social Security Act) relating to access of 
Medicare beneficiaries to Federal courts for the en-
forcement of rights under Medicare, including with 
respect to amounts in controversy, shall apply to the 
public health insurance option and individuals en-
rolled under such option under this title in the same 
manner as such provisions apply to Medicare and 
Medicare beneficiaries. 
‘‘(b) PREMIUMS AND FINANCING.— 
‘‘(1) ESTABLISHMENT OF PREMIUMS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish geographically adjusted premium rates 
for the public health insurance option— 
‘‘(i) in a manner that complies with 
the premium rules under paragraph (3); 
and 
‘‘(ii) at a level sufficient to fully fi-
nance the costs of— 
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‘‘(I) health benefits provided by 
the public health insurance option; 
and 
‘‘(II) administrative costs related 
to operating the public health insur-
ance option. 
‘‘(B) CONTINGENCY
MARGIN.—In estab-
lishing premium rates under subparagraph (A), 
the Secretary shall include an appropriate 
amount for a contingency margin. 
‘‘(2) ACCOUNT.— 
‘‘(A) ESTABLISHMENT.—There is estab-
lished in the Treasury of the United States an 
account for the receipts and disbursements at-
tributable to the operation of the public health 
insurance option, including the start-up funding 
under subparagraph (B). Section 1854(g) of 
the Social Security Act shall apply to receipts 
described in the previous sentence in the same 
manner as such section applies to payments or 
premiums described in such section. 
‘‘(B) START-UP FUNDING.— 
‘‘(i) IN GENERAL.—In order to pro-
vide for the establishment of the public 
health insurance option there is hereby ap-
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propriated to the Secretary, out of any 
funds in the Treasury not otherwise appro-
priated, $2,000,000,000. In order to pro-
vide for initial claims reserves before the 
collection of premiums, there is hereby ap-
propriated to the Secretary, out of any 
funds in the Treasury not otherwise appro-
priated, such sums as necessary to cover 
90 days worth of claims reserves based on 
projected enrollment. 
‘‘(ii) AMORTIZATION
OF
START-UP 
FUNDING.—The Secretary shall provide for 
the repayment of the startup funding pro-
vided under clause (i) to the Treasury in 
an amortized manner over the 10-year pe-
riod beginning with 2014. 
‘‘(iii) LIMITATION
ON
FUNDING.— 
Nothing in this subsection shall be con-
strued as authorizing any additional appro-
priations to the account, other than such 
amounts as are otherwise provided with re-
spect to other health benefits plans partici-
pating under the Exchange involved. 
‘‘(3) INSURANCE
RATING
RULES.—The pre-
mium rate charged for the public health insurance 
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option may not vary except as provided under sec-
tion 2701 of the Public Health Service Act. 
‘‘(c) PAYMENT RATES FOR ITEMS AND SERVICES.— 
‘‘(1) RATES ESTABLISHED BY SECRETARY.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish payment rates for the public health in-
surance option for services and health care pro-
viders consistent with this subsection and may 
change such payment rates in accordance with 
subsection (d). 
‘‘(B) INITIAL PAYMENT RULES.— 
‘‘(i) IN
GENERAL.—During 2014, 
2015, and 2016, the Secretary shall set 
the payment rates under this subsection 
for services and providers described in sub-
paragraph (A) equal to the payment rates 
for equivalent services and providers under 
parts A and B of Medicare, subject to 
clause (ii), paragraphs (2)(A) and (4), and 
subsection (d). 
‘‘(ii) EXCEPTIONS.— 
‘‘(I) 
PRACTITIONERS’ 
SERV-
ICES.—Payment 
rates 
for 
practi-
tioners’ services otherwise established 
under the fee schedule under section 
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1848 of the Social Security Act shall 
be applied without regard to the pro-
visions under subsection (f) of such 
section and the update under sub-
section (d)(4) under such section for a 
year as applied under this paragraph 
shall be not less than 1 percent. 
‘‘(II) ADJUSTMENTS.—The Sec-
retary may determine the extent to 
which Medicare adjustments applica-
ble to base payment rates under parts 
A and B of Medicare for graduate 
medical 
education 
and 
dispropor-
tionate share hospitals shall apply 
under this section. 
‘‘(C) FOR NEW SERVICES.—The Secretary 
shall modify payment rates described in sub-
paragraph (B) in order to accommodate pay-
ments for services, such as well-child visits, that 
are not otherwise covered under Medicare. 
‘‘(D) 
PRESCRIPTION
DRUGS.—Payment 
rates under this subsection for prescription 
drugs that are not paid for under part A or 
part B of Medicare shall be at rates negotiated 
by the Secretary. 
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‘‘(2) INCENTIVES
FOR
PARTICIPATING
PRO-
VIDERS.— 
‘‘(A) INITIAL INCENTIVE PERIOD.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall provide, in the case of services de-
scribed in clause (ii) furnished during 
2014, 2015, and 2016, for payment rates 
that are 5 percent greater than the rates 
established under paragraph (1). 
‘‘(ii) 
SERVICES
DESCRIBED.—The 
services described in this clause are items 
and professional services, under the public 
health insurance option by a physician or 
other health care practitioner who partici-
pates in both Medicare and the public 
health insurance option. 
‘‘(iii) SPECIAL RULES.—A pediatrician 
and any other health care practitioner who 
is a type of practitioner that does not typi-
cally participate in Medicare (as deter-
mined by the Secretary) shall also be eligi-
ble for the increased payment rates under 
clause (i). 
‘‘(B) SUBSEQUENT
PERIODS.—Beginning 
with 2017 and for subsequent years, the Sec-
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retary shall continue to use an administrative 
process to set such rates in order to promote 
payment accuracy, to ensure adequate bene-
ficiary access to providers, and to promote af-
fordability and the efficient delivery of medical 
care consistent with subsection (a)(1). Such 
rates shall not be set at levels expected to in-
crease average medical costs per enrollee cov-
ered under the public health insurance option 
beyond what would be expected if the process 
under paragraph (1)(B) and subparagraph (A) 
were continued, as certified by the Office of the 
Actuary of the Centers for Medicare & Medicaid 
Services. 
‘‘(C) ESTABLISHMENT
OF
A
PROVIDER 
NETWORK.—Health care providers participating 
under Medicare are participating providers in 
the public health insurance option unless they 
opt out in a process established by the Sec-
retary. 
‘‘(3) ADMINISTRATIVE PROCESS FOR SETTING 
RATES.—Chapter 5 of title 5, United States Code 
shall apply to the process for the initial establish-
ment of payment rates under this subsection but not 
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to the specific methodology for establishing such 
rates or the calculation of such rates. 
‘‘(4) CONSTRUCTION.—Nothing in this section 
shall be construed as limiting the Secretary’s author-
ity to correct for payments that are excessive or defi-
cient, taking into account the provisions of sub-
section (a)(1) and any appropriate adjustments 
based on the demographic characteristics of enrollees 
covered under the public health insurance option, 
but in no case shall the correction of payments 
under this paragraph result in a level of expendi-
tures per enrollee that exceeds the level of expendi-
tures that would have occurred under paragraphs 
(1)(B) and (2)(A), as certified by the Office of the 
Actuary of the Centers for Medicare & Medicaid 
Services. 
‘‘(5) CONSTRUCTION.—Nothing in this section 
shall be construed as affecting the authority of the 
Secretary to establish payment rates, including pay-
ments to provide for the more efficient delivery of 
services, such as the initiatives provided for under 
subsection (d). 
‘‘(6) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review of a payment 
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rate or methodology established under this sub-
section or under subsection (d). 
‘‘(d) MODERNIZED PAYMENT INITIATIVES AND DE-
LIVERY SYSTEM REFORM.— 
‘‘(1) IN GENERAL.—For plan years beginning 
with 2014, the Secretary may utilize innovative pay-
ment mechanisms and policies to determine pay-
ments for items and services under the public health 
insurance option. The payment mechanisms and 
policies under this subsection may include patient- 
centered medical home and other care management 
payments, accountable care organizations, value- 
based purchasing, bundling of services, differential 
payment rates, performance or utilization based pay-
ments, partial capitation, and direct contracting with 
providers. Payment rates under such payment mech-
anisms and policies shall not be set at levels ex-
pected to increase average medical costs per enrollee 
covered under the public health insurance option be-
yond what would be expected if the process under 
paragraphs (1)(B) and (2)(A) of subsection (c) were 
continued, as certified by the Office of the Actuary 
of the Centers for Medicare & Medicaid Services. 
‘‘(2) REQUIREMENTS
FOR
INNOVATIVE
PAY-
MENTS.—The Secretary shall design and implement 
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the payment mechanisms and policies under this 
subsection in a manner that— 
‘‘(A) seeks to— 
‘‘(i) improve health outcomes; 
‘‘(ii) reduce health disparities (includ-
ing racial, ethnic, and other disparities); 
‘‘(iii) provide efficient and affordable 
care; 
‘‘(iv) address geographic variation in 
the provision of health services; or 
‘‘(v) prevent or manage chronic ill-
ness; and 
‘‘(B) promotes care that is integrated, pa-
tient-centered, high-quality, and efficient. 
‘‘(3) ENCOURAGING THE USE OF HIGH VALUE 
SERVICES.—To the extent allowed by the benefit 
standards applied to all health benefits plans partici-
pating under the Exchange involved, the public 
health insurance option may modify cost sharing and 
payment rates to encourage the use of services that 
promote health and value. 
‘‘(4) NON-UNIFORMITY
PERMITTED.—Nothing 
in this subtitle shall prevent the Secretary from 
varying payments based on different payment struc-
ture models (such as accountable care organizations 
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and medical homes) under the public health insur-
ance option for different geographic areas. 
‘‘(e) PROVIDER PARTICIPATION.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish conditions of participation for health care pro-
viders under the public health insurance option. 
‘‘(2) LICENSURE OR CERTIFICATION.—The Sec-
retary shall not allow a health care provider to par-
ticipate in the public health insurance option unless 
such provider is appropriately licensed or certified 
under State law. 
‘‘(3) PAYMENT TERMS FOR PROVIDERS.— 
‘‘(A) PHYSICIANS.—The Secretary shall 
provide for the annual participation of physi-
cians under the public health insurance option, 
for which payment may be made for services 
furnished during the year, in one of 2 classes: 
‘‘(i) PREFERRED PHYSICIANS.—Those 
physicians who agree to accept the pay-
ment rate established under this section 
(without regard to cost-sharing) as the 
payment in full. 
‘‘(ii) 
PARTICIPATING, 
NON-PRE-
FERRED
PHYSICIANS.—Those physicians 
who agree not to impose charges (in rela-
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for the State under paragraph (1) or (2) (as 
applicable) shall be 3.2 percentage points. 
‘‘(E) FOURTH QUARTER OF FISCAL YEAR 
2011.—For each State, for the fourth quarter of 
fiscal year 2012, the FMAP percentage increase 
for the State under paragraph (1) or (2) (as 
applicable) shall be 1.2 percentage points.’’; 
(3) in subsection (c)— 
(A) in paragraph (2)(B), by striking ‘‘Jan-
uary 1, 2011’’ and inserting ‘‘April 1, 2012’’; 
(B) in paragraph (3)(B)(i), by striking 
‘‘January 1, 2011’’ and inserting ‘‘April 1, 
2012’’ each place it appears; and 
(C) in paragraph (4)(C)(ii), by striking 
‘‘January 2011’’ and inserting ‘‘April 2012’’; 
(4) in subsection (f)(1)(A), by adding at the 
end the following: ‘‘The previous sentence shall 
apply for quarters beginning after the date of the 
enactment of this sentence in the case of a State op-
erating under a Statewide waiver as of such date re-
gardless of whether the waiver in effect on July 1, 
2008, was renewed or extended after such date’’; 
(5) in subsection (g)(1), by striking ‘‘March 31, 
2012’’ and inserting ‘‘September 30, 2013’’; and 
VerDate Mar 15 2010 
00:56 Dec 17, 2011
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H3638
smartinez on DSK6TPTVN1PROD with BILLS