I 
109TH CONGRESS 
2D SESSION 
H. R. 5378 
To amend the Internal Revenue Code of 1986 to reduce by 50 percent 
certain tax benefits allowable to profitable large corporations which make 
certain workforce reductions. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 11, 2006 
Ms. MCKINNEY introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Inter-
national Relations and Financial Services, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to reduce 
by 50 percent certain tax benefits allowable to profitable 
large corporations which make certain workforce reduc-
tions. 
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 ‘‘Corporate Welfare Re-
duction and Job Preservation Act of 2006’’. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds the following: 
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(1) Corporations are subject to a tax rate of up 
to 34 percent or 35 percent. 
(2) Over the past several years, one of the most 
serious problems affecting the middle-class has been 
corporate downsizing. Many large, wealthy, and 
profitable corporations have reduced the number of 
their American employees by transferring those jobs 
to foreign countries or have reduced the number of 
their employees in order to realize an immediate 
short-term profit or increase in stock value. 
SEC. 3. REDUCTION OF TAX BENEFITS FOR PROFITABLE 
LARGE 
CORPORATIONS 
WHICH 
REDUCE 
WORKFORCE. 
(a) IN GENERAL.—Subchapter C of chapter 1 of the 
Internal Revenue Code of 1986 (relating to corporate dis-
tributions and adjustments) is amended by adding at the 
end the following new part: 
‘‘PART VII—REDUCTION OF TAX BENEFITS FOR 
PROFITABLE LARGE CORPORATIONS WHICH 
REDUCE WORKFORCE 
‘‘Sec. 386. Reduction of tax benefits for profitable large corporations which re-
duce workforce. 
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‘‘SEC. 386. REDUCTION OF TAX BENEFITS FOR PROFITABLE 
LARGE 
CORPORATIONS 
WHICH 
REDUCE 
WORKFORCE. 
‘‘(a) IN GENERAL.—For any taxable year, if any 
profitable large corporation reduces by 15 percent or more 
the number of employees who perform any task or func-
tion at any facility in the United States, the amount of 
each facility-related tax benefit shall be reduced by 50 per-
cent. 
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) FACILITY-RELATED TAX BENEFIT.— 
‘‘(A) IN GENERAL.—The term ‘facility-re-
lated tax benefit’ means— 
‘‘(i) any tax benefit to the extent at-
tributable to a facility described in sub-
section (a), or 
‘‘(ii) to the extent that a tax benefit 
is not attributable to any facility, a pro 
rata portion of such tax benefit (as deter-
mined under regulations prescribed by the 
Secretary). 
‘‘(B) EXCEPTION.—Such term shall not in-
clude— 
‘‘(i) any exclusion from gross income 
under section 127 or 129 or any other de-
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duction for the cost of employee health 
care, child care, job training, or retraining, 
or 
‘‘(ii) any other tax benefit (other than 
wages) which the Secretary determines by 
regulation to be a tax benefit for costs in-
curred primarily for the benefit of employ-
ees rather than the employer. 
‘‘(2) LARGE
CORPORATION.—The term ‘large 
corporation’ means a corporation or partnership 
which is not a small-business concern (within the 
meaning of section 3 of the Small Business Act, as 
in effect on the date of the enactment of this sec-
tion). 
‘‘(3) PROFITABLE.—Any large corporation shall 
be treated as profitable, for any taxable year, if the 
sum of taxable income (if any) for the 5-taxable-year 
period ending with the preceding taxable year (or, if 
shorter, the period consisting of all preceding taxable 
years of such large corporation) equals or exceeds 
the sum of the net operating losses (if any) attrib-
utable to such period. 
‘‘(4) RELATED PERSONS.— 
‘‘(A) IN
GENERAL.—All related persons 
shall be treated as one person. 
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‘‘(B) RELATED PERSONS DEFINED.—The 
term ‘related persons’ means— 
‘‘(i) persons bearing a relationship de-
scribed in section 267 or 707(b), and 
‘‘(ii) persons treated as a single em-
ployer under subsection (a) or (b) of sec-
tion 52. 
‘‘(5) TAX
BENEFIT.—The term ‘tax benefit’ 
means a credit, deduction, or exclusion allowable 
under this title.’’ 
(b) TRANSMISSION
OF DATA
BY SECRETARY
OF 
LABOR.—The Secretary of Labor shall transmit to the 
Secretary of the Treasury, not less than annually, a list 
of corporations and partnerships described in section 
386(a) of the Internal Revenue Code of 1986 (as added 
by this section). 
(c) CLERICAL AMENDMENT.—The table of parts for 
subchapter C of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘PART VII. REDUCTION OF TAX BENEFITS FOR PROFITABLE LARGE 
CORPORATIONS WHICH REDUCE WORKFORCE’’ 
(d) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall apply to taxable years 
beginning after December 31, 2006. 
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SEC. 4. ACCELERATION OF LOANS MADE BY CERTAIN GOV-
ERNMENT ENTITIES AS PENALTY AGAINST 
PROFITABLE LARGE CORPORATIONS WHICH 
REDUCE WORKFORCE. 
(a) OPIC LOANS.—Section 235 of the Foreign As-
sistance Act of 1961 (22 U.S.C. 2195) is amended by add-
ing at the end the following: 
‘‘(g) LIMITATIONS ON ASSISTANCE TO PROFITABLE 
LARGE CORPORATIONS THAT REDUCE WORKFORCE.— 
‘‘(1) IN GENERAL.—If a facility-related tax ben-
efit of an entity for a taxable year is reduced by rea-
son of section 386(a) of the Internal Revenue Code 
of 1986, then— 
‘‘(A) the entity shall immediately repay to 
the Corporation the amount of any loan made 
by the Corporation to the entity under section 
234; 
‘‘(B) any insurance policy provided by the 
Corporation to the entity under such section is 
rescinded; and 
‘‘(C) until the Secretary of the Treasury 
determines that the activity on the basis of 
which the facility-related tax benefit of the enti-
ty was so reduced has ceased, the Corporation 
may not, during the immediately succeeding 
taxable year of the entity, extend credit, partici-
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pate in an extension of credit, or provide any 
insurance, directly to the entity under such sec-
tion. 
‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.— 
Interest shall accrue on any amount required by 
paragraph (1)(A) to be repaid to the Corporation at 
a rate of 10 percent per month.’’. 
(b) EXPORT-IMPORT BANK LOANS.—Section 2 of the 
Export-Import Bank Act of 1945 (12 U.S.C. 635) is 
amended by adding at the end the following: 
‘‘(g) LIMITATIONS ON ASSISTANCE TO PROFITABLE 
LARGE CORPORATIONS THAT REDUCE WORKFORCE.— 
‘‘(1) IN GENERAL.—If a facility-related tax ben-
efit of an entity for a taxable year is reduced by rea-
son of section 386(a) of the Internal Revenue Code 
of 1986, then— 
‘‘(A) the entity shall immediately repay to 
the Bank the amount of any loan made by the 
Bank to the entity; 
‘‘(B) any insurance policy provided by the 
Bank to the entity is rescinded; and 
‘‘(C) until the Secretary of the Treasury 
determines that the activity on the basis of 
which the facility-related tax benefit of the enti-
ty was so reduced has ceased, the Bank may 
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not, during the immediately succeeding taxable 
year of the entity, extend credit, participate in 
an extension of credit, or provide any insurance, 
directly to the entity. 
‘‘(2) EFFECT OF FAILURE TO REPAY LOAN.— 
Interest shall accrue on any amount required by 
paragraph (1)(A) to be repaid to the Bank at a rate 
of 10 percent per month.’’. 
Æ 
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