‘‘(F) any use of governmental facilities (in-
cluding roads, facilities for the furnishing of
water, sewage facilities, and solid waste disposal
facilities) to the extent that the amount paid by
(or assessed against the property of) the trade
or business for such use is less than the amount
it would pay were the charge for its use (or the
assessment) determined under the same for-
mula or other basis as is used by the State or
local government with respect to other com-
parable facilities used by other trades or busi-
nesses, and
‘‘(G) any other benefit specified in regula-
tions prescribed by the Secretary.
‘‘(d) EXCEPTION
FOR SUBSIDIES
FOR EMPLOYEE
TRAINING AND EDUCATION.—No tax shall be imposed by
this section on the value of any subsidy provided for em-
ployee training or for other education programs.
‘‘(e) SPECIAL RULES.—
‘‘(1) EXCEPTION FOR SUBSIDIES PROVIDED TO
GOVERNMENTAL
ENTITIES.—No tax shall be im-
posed by this section on the value of any subsidy
provided to—
‘‘(A) an agency or instrumentality of any
government or any political subdivision thereof,
or
‘‘(B) any entity which is owned and oper-
ated by a government or any political subdivi-
sion thereof or by any agency or instrumental-
ity of one or more governments or political sub-
divisions.
‘‘(2) AVOIDANCE OF DOUBLE TAX.—No amount
shall be includible in gross income for purposes of
subtitle A by reason of any targeted subsidy on
which tax is imposed under this section.
‘‘(3) ADMINISTRATIVE PROVISIONS.—For pur-
poses of subtitle F, any tax imposed by this section
shall be treated as a tax imposed by subtitle A.’’
(b) DENIAL
OF INCOME TAX DEDUCTION
FOR
TAX.—Paragraph (6) of section 275(a) of such Code is
amended by inserting ‘‘45,’’ after ‘‘44,’’.
(c) CLERICAL AMENDMENT.—The table of chapters
for subtitle D of such Code is amended by inserting after
the item relating to chapter 44 the following new item:
‘‘Chapter 45. Excise tax on targeted State or local government de-
velopment subsidies.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to any subsidy which is provided
pursuant to an agreement or arrangement entered into
more than 30 days after the date of the enactment of this
Act.
SEC. 4. DENIAL OF EXEMPTION FROM TAX FOR INTEREST
ON BONDS PROVIDING TARGETED STATE OR
LOCAL GOVERNMENT DEVELOPMENT SUB-
SIDIES.
(a) IN GENERAL.—Subsection (b) of section 103 of
the Internal Revenue Code of 1986 (relating to interest
on State and local bonds) is amended by adding at the
end the following new paragraph:
‘‘(4) BONDS PROVIDING TARGETED DEVELOP-
MENT SUBSIDIES.—Any bond if any portion of the
proceeds of such bond is to be used to provide any
targeted subsidy (as defined in section 4986(c)).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to obligations issued after the
date of the enactment of this Act.
SEC. 5. PROHIBITION OF USE OF FEDERAL FUNDS FOR
TARGETED SUBSIDIES.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, none of the Federal funds provided to any
State or local government may be used to provide any tar-
geted subsidy (as defined in section 4986(c) of the Inter-
nal Revenue Code of 1986).
(b) RECOVERY OF FUNDS USED TO PROVIDE TAR-
GETED SUBSIDIES.—If the Secretary of the Treasury or
the Secretary’s delegate finds after reasonable notice and
opportunity for hearing that any State or local govern-
ment used Federal funds in violation of subsection (a),
the Secretary or the Secretary’s delegate shall take such
actions as are necessary (including referring the matter
to the Attorney General of the United States with a rec-
ommendation that an appropriate civil action be insti-
tuted) to recover the amount so used from the State or
local government or the trade or business, whichever the
Secretary determines to be appropriate.
(c) EFFECTIVE DATE.—This section shall apply to
funds provided after the date of the enactment of this Act.
Æ