SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Stimulus Tax Act of 1993’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
SEC. 2. REPEAL OF LIMITATION ON PASSIVE ACTIVITY
LOSSES AND CREDITS.
(a) IN GENERAL.—Section 469 (relating to passive
activity losses and credits limited) is hereby repealed.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subpart C of part II of subchapter E of chapter
1 is amended by striking the item relating to section 469.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1993.
SEC. 3. ACCELERATED DEPRECIATION SCHEDULE FOR
REAL ESTATE.
(a) IN GENERAL.—Paragraph (1) of section 168(c)
(relating to applicable recovery period) is amended by
striking the items relating to residential rental property
and nonresidential real property and inserting the follow-
ing:
‘‘Residential rental property .............................................
15 years
Nonresidential real property ...........................................
18 years’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 1993.
SEC. 4. RESTORATION OF 10-PERCENT INVESTMENT TAX
CREDIT.
(a) ALLOWANCE OF CREDIT.—Section 46 (relating to
amount of investment credit) is amended by striking
‘‘and’’ at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting ‘‘, and’’, and
by adding at the end thereof the following new paragraph:
‘‘(4) the general investment credit.’’
(b) AMOUNT OF CREDIT.—Section 48 is amended by
adding at the end thereof the following new subsection:
‘‘(c) GENERAL INVESTMENT CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the general investment credit for any taxable year is
an amount equal to 10 percent of the qualified in-
vestment for such taxable year.
‘‘(2) QUALIFIED INVESTMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the qualified investment for any tax-
able year is the aggregate of—
‘‘(i) the applicable percentage of the
basis of each new section 38 property
placed in service by the taxpayer during
such taxable year, plus
‘‘(ii) the applicable percentage of the
cost of each used section 38 property
placed in service by the taxpayer during
such taxable year.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the applicable
percentage for any property shall be determined
under paragraphs (2) and (7) of section 46(c)
(as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of
1990).
‘‘(C) CERTAIN
RULES
MADE
APPLICA-
BLE.—The provisions of subsections (b) and (c)
of section 48 (as in effect on the day before the
date of the enactment of the Revenue Reconcili-
ation Act of 1990) shall apply for purposes of
this paragraph.
‘‘(3) SECTION 38 PROPERTY.—For purposes of
this subsection, the term ‘section 38 property’
means—
‘‘(A) tangible personal property (other
than an air conditioning or heating unit), or
‘‘(B) other tangible property (not including
a building and its structural components) but
only if such property—
‘‘(i) is used as an integral part of
manufacturing, production, or extraction
or of furnishing transportation, commu-
nications, electrical energy, gas, water, or
sewage disposal services, or
‘‘(ii) constitutes a research facility
used in connection with any of the activi-
ties referred to in clause (i), or
‘‘(iii) constitutes a facility used in
connection with any of the activities re-
ferred to in clause (i) for the bulk storage
of fungible commodities (including com-
modities in a liquid or gaseous state), or
‘‘(C) elevators and escalators, but only if—
‘‘(i) the construction, reconstruction,
or erection of the elevator or escalator is
completed by the taxpayer, or
‘‘(ii) the original use of such elevator
or escalator commences with the taxpayer,
or
‘‘(D) single purpose agricultural or horti-
cultural structures; or
‘‘(E) a storage facility (not including a
building and its structural components) used in
connection with the distribution of petroleum or
any primary product of petroleum.
Such term includes only property to which section
168 applies without regard to any useful life and
any other property with respect to which deprecia-
tion (or amortization in lieu of depreciation) is al-
lowable and having a useful life (determined as of
the time such property is placed in service) of 3
years or more.
‘‘(4) COORDINATION WITH OTHER CREDITS.—
This subsection shall not apply to any property to
which the energy credit or rehabilitation credit
would apply unless the taxpayer elects to waive the
application of such credits to such property.
‘‘(5) CERTAIN PROGRESS EXPENDITURE RULES
MADE APPLICABLE.—Rules similar to rules of sub-
section (c)(4) and (d) of section 46 (as in effect on
the day before the date of the enactment of the Rev-
enue Reconciliation Act of 1990) shall apply for pur-
poses of this subsection.’’
(c) TECHNICAL AMENDMENTS.—
(1) Subparagraph (C) of section 49(a)(1) is
amended by striking ‘‘and’’ at the end of clause (ii),
by striking the period at the end of clause (iii) and
inserting ‘‘, and’’, and by adding at the end thereof
the following new clause:
‘‘(iv) the basis of any new section 38
property and the cost of any used section
38 property.’’
(2) Subparagraph (E) of section 50(a)(2) is
amended by inserting ‘‘or 48(c)(5)’’ before the pe-
riod at the end thereof.
(3) Paragraph (5) of section 50(a) is amended
by adding at the end thereof the following new sub-
paragraph:
‘‘(D) SPECIAL RULES FOR CERTAIN PROP-
ERTY.—In the case of any section 38 property
which is 3-year property (within the meaning of
section 168(e))—
‘‘(i) the percentage set forth in clause
(ii) of the table contained in paragraph
(1)(B) shall be 66 percent,
‘‘(ii) the percentage set forth in clause
(iii) of such table shall be 33 percent, and
‘‘(iii) clauses (iv) and (v) of such table
shall not apply.’’
(4)(A) The section heading for section 48 is
amended to read as follows:
‘‘SEC. 48. OTHER CREDITS.’’
(B) The table of sections for subpart E of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 48 and inserting
the following:
‘‘Sec. 48. Other credits.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after the date of the
enactment of this Act under rules similar to the rules of
section 48(m) of the Internal Revenue Code of 1986 (as
in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).
SEC. 5. 50 PERCENT DEDUCTION FOR CERTAIN CAPITAL
GAINS.
(a) TAXPAYERS OTHER THAN CORPORATIONS.—
Part I of subchapter P of chapter 1 (relating to treatment
of capital gains) is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 1202. DEDUCTION FOR CERTAIN CAPITAL GAINS.
‘‘(a) GENERAL RULE.—If for any taxable year a tax-
payer other than a corporation has a qualified net capital
gain, there shall be allowed as a deduction from gross in-
come an amount equal to 50 percent of the qualified net
capital gain.
‘‘(b) QUALIFIED NET CAPITAL GAIN.—For purposes
of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified net
capital gain’ means the lesser of—
‘‘(A) the net capital gain for the taxable
year, or
‘‘(B) the net capital gain for the taxable
year determined by taking into account only
gain or loss from qualified assets.
‘‘(2) QUALIFIED ASSETS.—The term ‘qualified
asset’ means any property with a holding period of
at least 1 year at the time of disposition, other
than—
‘‘(A) stock or securities for which there is
a market on an established securities market or
otherwise, and
‘‘(B) property (other than stock or securi-
ties) of a kind regularly traded on an estab-
lished market.
‘‘(c) ESTATES AND TRUSTS.—In the case of an estate
or trust, the deduction under subsection (a) shall be com-
puted by excluding the portion (if any) of the gains for
the taxable year from sales or exchanges of capital assets
which, under section 652 and 662 (relating to inclusions
of amounts in gross income of beneficiaries of trusts), is
includible by the income beneficiaries as gain derived from
the sale or exchange of capital assets.’’
(b) CORPORATIONS.—Section 1201 (relating to alter-
native tax for corporations) is amended by redesignating
subsection (b) as subsection (c) and by inserting after sub-
section (a) the following new subsection:
‘‘(b) DEDUCTION FOR CERTAIN CAPITAL GAINS.—
‘‘(1) IN GENERAL.—If for any taxable year a
corporation has a qualified net capital gain, there
shall be allowed as a deduction from gross income
an amount equal to 50 percent of the qualified net
capital gain.
‘‘(2) QUALIFIED NET CAPITAL GAIN.—For pur-
poses of this subsection, the term ‘qualified net cap-
ital gain’ has the meaning given such term in section
1202(b).’’
(c) CONFORMING AMENDMENTS.—
(1)(A) Subsection (h) of section 1 is amended
by inserting after ‘‘net capital gain’’ each place it
appears the following: ‘‘(other than qualified net
capital gain (within the meaning of section
1202(b))’’.
(B) Subsection (a) of section 1201 is amended
by inserting after ‘‘net capital gain’’ each place it
appears the following: ‘‘(other than qualified net
capital gain (within the meaning of section
1202(b))’’.
(2) Subsection (a) of section 62 is amended by
adding at the end the following new paragraph:
‘‘(15) QUALIFIED
NET
CAPITAL
GAINS.—The
deduction allowed by section 1202.’’
(3)(A) The heading for section 1201 is amend-
ed to read as follows:
‘‘SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS; DE-
DUCTION FOR CERTAIN CAPITAL GAINS.’’
(B) The item relating to section 1201 in the
table of sections for part I of subchapter P of chap-
ter 1 is amended to read as follows:
‘‘Sec. 1201. Alternative tax for corporations; deduction for cer-
tain capital gains.’’
(4) The table of sections for part I of sub-
chapter P of chapter 1 is amended by adding at the
end the following new item:
‘‘Sec. 1202. Deduction for certain capital gains.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales and exchanges after the
date of the enactment of this Act.
SEC. 6. INCREASE IN DEDUCTIBLE HEALTH INSURANCE
COSTS FOR SELF-EMPLOYED INDIVIDUALS.
(a) DEDUCTION MADE PERMANENT.—
(1) IN GENERAL.—Subsection (l) of section 162
(relating to special rules for health insurance costs
of self-employed individuals) is amended by striking
paragraph (6).
(2) CONFORMING AMENDMENT.—Subsection (a)
of section 110 of the Tax Extension Act of 1991 is
amended by striking paragraph (2).
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 1991.
(b) DEDUCTION INCREASED TO 100 PERCENT.—
(1) IN
GENERAL.—Paragraph (1) of section
162(l) is amended by striking ‘‘25 percent’’ and in-
serting ‘‘100 percent’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to taxable years begin-
ning after December 31, 1992.
SEC. 7. RESTORATION OF INCOME AVERAGING.
(a) IN GENERAL.—Section 141 of the Tax Reform
Act of 1986 (and the amendments made by such section)
are hereby repealed, and the Internal Revenue Code of
1986 shall be applied and administered as if such section
(and amendments) had not been enacted.
(b) EFFECTIVE DATE.—The repeal made by this sec-
tion shall apply to taxable years beginning after Decem-
ber 31, 1993.
SEC. 8. MODIFICATIONS IN SOCIAL SECURITY TAXES.
(a) REMOVAL OF CEILING ON WAGES SUBJECT TO
TAX.—
(1) FICA TAXES.—
(A) Section 3121(a) (defining wages) is
amended by striking paragraph (1).
(B) Section 3121 is amended by striking
subsection (x) (relating to applicable contribu-
tion base).
(2) SECA TAX.—
(A) Section 1402(b) (defining self-employ-
ment income) is amended—
(i) in the 1st sentence, by striking
paragraph (1), and
(ii) by striking the 2d sentence.
(B) Section 1402 is amended by striking
subsection (k) (relating to applicable contribu-
tion base).
(b) REDUCTION IN SOCIAL SECURITY TAXES.—
(1) EMPLOYEE TAX.—Subsection (a) of section
3101 (relating to rate of tax on employees) is
amended to read as follows:
‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR-
ANCE.—In addition to other taxes, there is hereby imposed
on the income of every individual a tax equal to 4.55 per-
cent of the wages (as defined in section 3121(a)) received
by the individual with respect to employment (as defined
in section 3121(b)).’’
(2) EMPLOYER TAX.—Subsection (a) of section
3111 (relating to rate of tax on employers) is
amended to read as follows:
‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR-
ANCE.—In addition to other taxes, there is hereby imposed
on every employer an excise tax equal to 4.55 percent of
the wages (as defined in section 3121(a)) paid by the em-
ployer with respect to employment (as defined in section
3121(b)).’’
(3) SELF-EMPLOYMENT
TAX.—Subsection (a)
of section 1401 (relating to rate of tax on self-em-
ployment income) is amended to read as follows:
‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR-
ANCE.—In addition to other taxes, there is hereby imposed
for each taxable year, on the self-employment income of
every individual, a tax equal to 6.82 percent of the amount
of the self-employment income for the taxable year.’’
(c) CONFORMING AMENDMENTS.—
(1)(A) Paragraphs (2) and (3) of section
3121(i) (relating to computation of wages in certain
cases) are each amended by striking ‘‘, subject to
the provisions of subsection (a)(1) of this section,’’.
(B) Paragraph (4) of section 3121(i) is amend-
ed by striking ‘‘, subject to the provisions of sub-
section (a)(1),’’.
(C) Section 3121(s) (relating to concurrent em-
ployment by 2 or more employers) is amended by
striking ‘‘3102, 3111, and 3121(a)(1)’’ and insert-
ing ‘‘3102 and 3111’’.
(2) Section 3122 (relating to Federal service) is
amended by striking the 3d sentence.
(3) Subsections (a), (b), (c), and (d) of section
3125 (relating to returns in the case of govern-
mental employees in the States, Guam, American
Samoa, and the District of Columbia) are each
amended by striking the last sentence.
(4)(A) Clause (i) of section 3231(e)(2)(A) is
amended by striking ‘‘The’’ and inserting ‘‘In the
case of the taxes imposed by sections 3201(b),
3211(a)(2), and 3221(b), the’’.
(B) Subparagraph (B) of section 3231(e)(2) is
amended to read as follows:
‘‘(B) APPLICABLE BASE.—For purposes of
subparagraph (A), the term ‘applicable base’
means for any calendar year the contribution
and benefit base determined under section 230
of the Social Security Act for such calendar
year; except that, for such purposes and for
purposes of computing average monthly com-
pensation under section 3(j) of the Railroad Re-
tirement Act of 1974 (except with respect to
annuity amounts determined under subsection
(a) or (f)(3) of section 3 of such Act), clause
(2) of the first sentence, and the second sen-
tence, of section 230(c) of the Social Security
Act shall be disregarded.’’
(C) Subparagraph (C) of section 3231(e)(2)
(defining compensation for purposes of railroad re-
tirement tax) is amended by inserting after ‘‘employ-
ers)’’ the following: ‘‘, as such section was in effect
immediately before its repeal by the Farm and Small
Business Tax Equity Act of 1993,’’.
(D) The heading of paragraph (2) of section
3231(e) is amended by striking ‘‘BASES’’ and insert-
ing ‘‘BASE TO TIER 2 TAXES’’.
(5) Section 6413 is amended by striking sub-
section (c) (relating to special refunds for employees
receiving wages from more than 1 employer).
(6) Section 230(c) of the Social Security Act
(42 U.S.C. 430(c)) is amended by striking ‘‘and sec-
tions 1402, 3121, 3122, 3125, 6413, and 6654 of
the Internal Revenue Code of 1954’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to remuneration paid
after December 31, 1993, and with respect to earnings
from self-employment attributable to taxable years begin-
ning after such date.
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HR 912 IH——2