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50 percent of the permitted deduction calculated
under this section;
(2) for the period beginning January 1, 1995,
through December 31, 1996, the amount of the de-
duction for the taxable year shall be no more than
75 percent of the permitted deduction calculated
under this section; and
(3) for the period beginning January 1, 1997,
the amount of the deduction for the taxable year
shall be 100% of the permitted deduction calculated
under this section.
SEC. 2. REDUCTION IN CAPITAL GAINS TAX.
(a) GENERAL RULE.—Subsection (h) of section 1 of
the Internal Revenue Code of 1986 (relating to maximum
capital gains rate is amended to read as follows:
‘‘(j) MAXIMUM CAPITAL GAINS RATE.—
‘‘(1) IN GENERAL.—If a taxpayer has a quali-
fied net capital gain for any taxable year, then the
tax imposed by this section shall not exceed the sum
of—
‘‘(A) a tax computed at the rates and in
the same manner as if this subsection had not
been enacted on the taxable income reduced by
the qualified net capital gain, plus
‘‘(B) a tax equal to the sum of—
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‘‘(i) 23 percent of the 3-to-6 year net
gain,
‘‘(ii) 21 percent of the 6-to-9 year net
gain,
‘‘(iii) 19 percent of the 9-to-12 year
net gain,
‘‘(iv) 17 percent of the 12-to-15 year
net gain, plus
‘‘(v) 15 percent of the over 15-year
net gain.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) QUALIFIED NET CAPITAL GAIN.—The
term ‘qualified net capital gain’ means the less-
er of—
‘‘(i) the net capital gain determined
by taking into account only gains and
losses from dispositions of assets held for
more than 3 years, or
‘‘(ii) the net capital gain.
‘‘(B) 3-TO-6 YEAR NET GAIN.—The term
‘3-to-6 year net gain’ means the lesser of—
‘‘(i) the net capital gain determined
by only taking into account gains and
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losses from dispositions of assets held for
more than 3 but not more than 6 years, or
‘‘(ii) the qualified net capital gain.
‘‘(C) 6-TO-9 YEAR NET GAIN.—The term
‘6-to-9 year net gain’ means the lesser of—
‘‘(i) the net capital gain determined
by only taking into account gains and
losses from dispositions of assets held for
more than 6 but not more than 9 years, or
‘‘(ii) the qualified net capital gain re-
duced by the 3-to-6 year net gain.
‘‘(D) OTHER DEFINITIONS.—The 9-to-12
year net gain, 12-to-15 year net gain, and over
15-year net gain shall be determined under
principles similar to the principles of subpara-
graph (C).
‘‘(3) SPECIAL RULE.—If the highest rate of tax
set forth in subsection (a), (b), (c), (d), or (e)
(whichever applies) for any taxable year exceeds 28
percent, the amount of the tax determined under
such subsection which is attributable to the excess of
the net capital gain over the qualified net capital
gain shall not exceed 28 percent of such excess.’’.
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(b) QUALIFIED NET CAPITAL GAIN NOT TAKEN
INTO ACCOUNT IN PHASE-OUT.—Subparagraph (A) of
section 1(g)(1) of such Code is amended to read as follows:
‘‘(A) taxable income reduced by the quali-
fied net capital gain (as defined in subsection
(j)(2)), over’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1991.
SEC. 3. RESTORATION OF INVESTMENT TAX CREDIT FOR
PROPERTY WITH LONG USEFUL LIFE.
(a) GENERAL RULE.—Section 46 of the Internal
Revenue Code of 1986 (relating to amount of credit) is
amended by striking the period in subparagraph (3) and
insert in lieu thereof ‘‘, and’’ followed by the following new
subparagraph:
‘‘(4) manufacturing equipment credit.’’.
(b) MANUFACTURING EQUIPMENT CREDIT.—Section
48 of the Internal Revenue Code of 1986 is amended by
adding at the end thereof the following new section:
‘‘SEC. 48a. MANUFACTURING EQUIPMENT CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
manufacturing equipment credit for any taxable year is
10 percent of the portion of the amortizable basis of any
property if—
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‘‘(1) such property is used as an integral part
of manufacturing, production, or extraction, by a do-
mestic manufacturing company, situated within the
United States, or its territories, wherein over 50
percent of the total voting stock of such company is
owned and controlled by citizens of the United
States;
‘‘(2) the class life of such property (as defined
in section 168(i)(1)) exceeds 24 months;
‘‘(3) such property is not public utility property
(as defined in section 46(f)(5).
‘‘(b) PHASE OUT OF CREDIT.—For periods after De-
cember 31, 1993, the applicable manufacturing equipment
credit for any taxable year shall be 7.5 percent of the por-
tion of the amortizable basis of the property.’’.
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply solely to a period beginning Janu-
ary 1, 1993, through December 31, 1996.
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