I 
108TH CONGRESS 
2D SESSION 
H. R. 4307
To amend the Internal Revenue Code of 1986 to allow employers a credit 
against income tax for increasing employment. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 6, 2004
Mr. CHOCOLA (for himself, Mr. DAVIS of Tennessee, Mr. COLE, Mr. 
BEAUPREZ, Mr. HOSTETTLER, Mrs. WILSON of New Mexico, Mr. MIL-
LER of Florida, Mr. FEENEY, Mr. CHABOT, Mr. WILSON of South Caro-
lina, Mrs. MYRICK, Mr. JONES of North Carolina, Mrs. MUSGRAVE, Mr. 
GARRETT of New Jersey, Mr. SHADEGG, Mr. KLINE, Mr. FRANKS of Ari-
zona, Ms. GINNY BROWN-WAITE of Florida, Mr. GREEN of Wisconsin, 
Mr. PENCE, Mr. DUNCAN, Mr. PEARCE, Mr. HASTINGS of Washington, 
Mr. CARTER, Mr. EHLERS, Mr. MURPHY, Mr. BARRETT of South Caro-
lina, Mr. SENSENBRENNER, Ms. HART, Mr. DOOLITTLE, Mr. CANNON, 
Mr. TURNER of Ohio, Mr. BOYD, Mr. GOODE, Mr. MARIO DIAZ-BALART 
of Florida, Mr. SOUDER, Mr. QUINN, and Mr. GERLACH) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow em-
ployers a credit against income tax for increasing em-
ployment.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Jobs 
Creation Act of 2004’’.
SEC. 2. CREDIT FOR INCREASING EMPLOYMENT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business related credits) is amended by 
adding at the end the following new section:
‘‘SEC. 45G. CREDIT FOR INCREASING EMPLOYMENT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of an eligible employer, the increased employ-
ment credit for any taxable year shall be an amount equal 
to 50 percent of the excess of—
‘‘(1) the aggregate unemployment insurance 
wages paid during the calendar year ending during 
such taxable year, over 
‘‘(2) 102 percent of the aggregate unemploy-
ment insurance wages paid during the preceding cal-
endar year. 
‘‘(b) ELIGIBLE EMPLOYER.—For purposes of this 
section—
‘‘(1) IN
GENERAL.—The term ‘eligible em-
ployer’ means any employer having gross receipts for 
the taxable year of less than $25,000,000. 
‘‘(2) GROSS RECEIPTS.—For purposes of this 
subsection, gross receipts for any taxable year shall 
be reduced by returns and allowances made during 
the taxable year.
‘‘(c) MINIMUM PRECEDING YEAR WAGES.—For pur-
poses of determining the amount of the credit under sub-
section (a) with respect to any calendar year, the amount 
described in subsection (a)(2) shall be deemed to be not 
less than 50 percent of the amount of such wages paid 
during such preceding calendar year. 
‘‘(d) TOTAL WAGES MUST INCREASE.—The amount 
of the credit determined under this section for any taxable 
year shall not exceed the amount which would be deter-
mined for such year under subsection (a) (without regard 
to subsection (b)) if—
‘‘(1) the aggregate amounts taken into account 
as unemployment insurance wages were determined 
without any dollar limitation, and 
‘‘(2) ‘105 percent’ were substituted for ‘102 
percent’ in subsection (a). 
‘‘(e) $100,000 PER YEAR LIMITATION ON CREDIT.—
The amount of the credit determined under this section 
for any employer with respect to any calendar year shall 
not exceed $100,000. 
‘‘(f) UNEMPLOYMENT INSURANCE WAGES.—For pur-
poses of this section, the term ‘unemployment insurance 
wages’ has the meaning given to the term ‘wages’ by sec-
tion 3306(b).
‘‘(g) SPECIAL RULES.—Rules similar to the following 
rules shall apply for purposes of this section: 
‘‘(1) Section 51(g) (relating to United States 
Employment Service to notify employers of avail-
ability of credit). 
‘‘(2) Section 51(h)(1) (relating to special rules 
for agricultural labor and railway labor). 
‘‘(3) Section 52 (relating to special rules for 
work opportunity credit). 
‘‘(4) Section 41(f) (relating to adjustments for 
certain acquisitions, etc.). 
‘‘(h) OTHER SPECIAL RULES.—
‘‘(1) CHANGE
IN
STATUS
FROM
SELF-EM-
PLOYED TO EMPLOYEE.—If—
‘‘(A) during any calendar year an indi-
vidual has net earnings from self-employment 
(as defined in section 1402(a)) which are attrib-
utable to a trade or business, and 
‘‘(B) for any portion of the succeeding cal-
endar year such individual is an employee of 
such trade or business, 
then, for purposes of determining the credit allow-
able for a taxable year beginning in such succeeding 
calendar year, the employer’s aggregate unemploy-
ment insurance wages for the calendar year pre-
ceding the calendar year referred to in subparagraph 
(A) shall be increased by an amount equal to so 
much of the net earnings referred to in subpara-
graph (A) as does not exceed $7,000. 
‘‘(2) $50,000 LIMITATION
IN
THE
CASE
OF 
MARRIED
INDIVIDUALS
FILING
SEPARATE
RE-
TURNS.—In the case of a husband or wife who files 
a separate return, the limitation under subsection 
(e) shall be $50,000 in lieu of $100,000. This sub-
section shall not apply if the spouse of the taxpayer 
has no interest in a trade or business for the taxable 
year of such spouse which ends within or with the 
taxpayer’s taxable year. 
‘‘(i) TERMINATION.—This section shall not apply to 
any taxable year beginning after 2009.’’. 
(b) DENIAL OF DOUBLE BENEFIT.—Subsection (a) 
of section 280C of such Code is amended by inserting 
‘‘45G(a),’’ after ‘‘45A(a),’’. 
(c) CREDIT TREATED AS BUSINESS CREDIT.—Sub-
section (b) of section 38 of such Code is amended by strik-
ing ‘‘plus’’ at the end of paragraph (14), by striking the 
period at the end of paragraph (15) and inserting ‘‘, plus’’, 
and by adding at the end the following: 
‘‘(16) the increased employment credit deter-
mined under section 45G(a).’’.
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter I 
is amended by adding at the end the following:
‘‘Sec. 45G. Credit for increasing employment.’’.
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004.
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