I 
115TH CONGRESS 
1ST SESSION 
H. R. 116 
To amend the Internal Revenue Code of 1986 to ensure that pass-through 
businesses do not pay tax at a higher rate than corporations. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 3, 2017 
Mr. BUCHANAN 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 ensure 
that pass-through businesses do not pay tax at a higher 
rate than corporations. 
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 ‘‘Main Street Fairness 
Act’’. 
SEC. 2. BUSINESS INCOME OF PASS-THROUGH ENTITIES 
AND INDIVIDUALS. 
(a) QUALIFIED BUSINESS INCOME TAXED AT COR-
PORATE RATE.—Section 1 of the Internal Revenue Code 
of 1986 is amended by redesignating subsection (i) as sub-
VerDate Sep 11 2014 
03:46 Jan 07, 2017
Jkt 069200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H116.IH
H116
SSpencer on DSK4SPTVN1PROD with BILLS
jection (j) and by inserting after subsection (h) the fol-
lowing: 
‘‘(i) QUALIFIED BUSINESS INCOME.— 
‘‘(1) IN GENERAL.—If a taxpayer has qualified 
business income for any taxable year, the tax im-
posed by this section for such taxable year 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 greater of— 
‘‘(i) taxable income reduced by the 
sum of net capital gain plus qualified busi-
ness income, or 
‘‘(ii) the amount determined under 
clause (i) plus so much of qualified busi-
ness income that, when added together, 
would not be taxed at a rate greater than 
the maximum rate in effect under section 
11(b), 
‘‘(B) tax on qualified business income re-
duced by the amount of qualified business in-
come on which a tax is determined under sub-
paragraph (A) (if any), determined under sec-
tion 11 for the taxable year by treating quali-
VerDate Sep 11 2014 
03:46 Jan 07, 2017
Jkt 069200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H116.IH
H116
SSpencer on DSK4SPTVN1PROD with BILLS
fied business income as taxable income of a cor-
poration, plus 
‘‘(C) a tax on net capital gain, computed 
as if subsection (h) imposed a tax on net capital 
gain. 
‘‘(2) QUALIFIED BUSINESS INCOME DEFINED.— 
For purposes of this subsection— 
‘‘(A) QUALIFIED BUSINESS INCOME.—The 
term ‘qualified business income’ means all items 
of income, deduction, loss, or credit properly at-
tributable to the taxpayer from the active con-
duct of a trade or business in which— 
‘‘(i) in the case of a partnership, the 
taxpayer holds a capital or profits interest, 
‘‘(ii) in the case of an S corporation, 
the taxpayer is a shareholder, 
‘‘(iii) in the case of a sole proprietor-
ship or an entity otherwise disregarded as 
separate from its sole owner, the taxpayer 
is the sole owner, and 
‘‘(iv) in the case of a trust or estate, 
the taxpayer is a beneficiary. 
‘‘(B) NET CAPITAL GAIN.—Such term shall 
not include any item taken into account in de-
termining net capital gain. 
VerDate Sep 11 2014 
03:46 Jan 07, 2017
Jkt 069200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H116.IH
H116
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(C) EXCEPTION
FOR
FINANCIAL
SERV-
ICES INCOME OF PARTNERSHIPS.—In the case 
of a taxpayer who holds a capital or profits in-
terest in a partnership, such term does not in-
clude financial services income (as defined in 
section 904(d)(2)(D)). 
‘‘(3) LIMITATION.—Paragraph (1) shall only 
apply to a taxable year in which the maximum rate 
of tax under this section exceeds the maximum rate 
of tax under section 11. 
‘‘(4) NET CAPITAL GAIN.—For purposes of this 
subsection, the term ‘net capital gain’ has the mean-
ing given to such term by subsection (h). 
‘‘(5) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary to carry out the purposes of this subsection.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
VerDate Sep 11 2014 
03:46 Jan 07, 2017
Jkt 069200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6301
E:\BILLS\H116.IH
H116
SSpencer on DSK4SPTVN1PROD with BILLS