I
105TH CONGRESS
1ST SESSION
H. R. 775
To amend the Internal Revenue Code of 1986 to discourage American busi-
nesses from moving jobs overseas and to encourage the creation of
new jobs in the United States, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 13, 1997
Ms. MCKINNEY (for herself, Mr. BONIOR, Mr. BORSKI, Mr. BROWN of Ohio,
Mrs. CLAYTON, Mr. CONYERS, Mr. CUMMINGS, Mr. DAVIS of Illinois, Mr.
DELLUMS, Mr. EVANS, Mr. FATTAH, Mr. FILNER, Mr. FOGLIETTA, Mr.
HILLIARD, Ms. JACKSON-LEE of Texas, Ms. EDDIE BERNICE JOHNSON
of Texas, Mr. LIPINSKI, Mrs. MEEK of Florida, Ms. NORTON, Mr.
OWENS, Mr. RUSH, Mr. STUPAK, Mr. TOWNS, Mr. WATT of North Caro-
lina, and Mr. WYNN) 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 discourage
American businesses from moving jobs overseas and to
encourage the creation of new jobs in the United States,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘American Jobs Act’’.
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(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. TAXATION OF INCOME OF CONTROLLED FOREIGN
CORPORATIONS 
ATTRIBUTABLE 
TO 
IM-
PORTED PROPERTY.
(a) GENERAL RULE.—Subsection (a) of section 954
(defining foreign base company income) is amended by
striking ‘‘and’’ at the end of paragraph (4), by striking
the period at the end of paragraph (5) and inserting
‘‘, and’’, and by adding at the end the following new para-
graph:
‘‘(6) imported property income for the taxable
year (determined under subsection (h) and reduced
as provided in subsection (b)(5)).’’
(b) DEFINITION
OF
IMPORTED
PROPERTY
IN-
COME.—Section 954 is amended by adding at the end the
following new subsection:
‘‘(h) IMPORTED PROPERTY INCOME.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(6), the term ‘imported property income’ means
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income (whether in the form of profits, commissions,
fees, or otherwise) derived in connection with—
‘‘(A) manufacturing, producing, growing,
or extracting imported property,
‘‘(B) the sale, exchange, or other disposi-
tion of imported property, or
‘‘(C) the lease, rental, or licensing of im-
ported property.
Such term shall not include any foreign oil and gas
extraction income (within the meaning of section
907(c)) or any foreign oil related income (within the
meaning of section 907(c)).
‘‘(2) IMPORTED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘imported
property’ means property which is imported
into the United States by the controlled foreign
corporation or a related person.
‘‘(B) IMPORTED PROPERTY INCLUDES CER-
TAIN
PROPERTY
IMPORTED
BY
UNRELATED
PERSONS.—The term ‘imported property’ in-
cludes any property imported into the United
States by an unrelated person if, when such
property was sold to the unrelated person by
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the controlled foreign corporation (or a related
person), it was reasonable to expect that—
‘‘(i) such property would be imported
into the United States, or
‘‘(ii) such property would be used as
a component in other property which would
be imported into the United States.
‘‘(C) EXCEPTION FOR PROPERTY SUBSE-
QUENTLY
EXPORTED.—The term ‘imported
property’ does not include any property which is
imported into the United States and which—
‘‘(i) before substantial use in the
United States, is sold, leased, or rented by
the controlled foreign corporation or a re-
lated person for direct use, consumption,
or disposition outside the United States, or
‘‘(ii) is used by the controlled foreign
corporation or a related person as a com-
ponent in other property which is so sold,
leased, or rented.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—
‘‘(A) IMPORT.—For purposes of this sub-
section, the term ‘import’ means entering, or
withdrawal from warehouse, for consumption or
use. Such term includes any grant of the right
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‘‘(b) QUALIFIED SOCIAL SECURITY TAXES.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified social
security taxes’ means the amount of taxes imposed
by section 3111(a) with respect to wages of an em-
ployee for employment during the 2-year period be-
ginning with the day the employee begins work for
the employer.
‘‘(2) APPLICATION
TO
RAILROAD
RETIRE-
MENT.—Such term shall also include taxes imposed
by section 3221(a) with respect to compensation
during such 2-year period but only to the extent at-
tributable to the rate of tax in effect under section
3111(a).
‘‘(3) EXCEPTION FOR EMPLOYMENT OUTSIDE
THE UNITED STATES.—Such term shall not include
taxes paid with respect to employment described in
section 3121(b)(B) (relating to employment outside
the United States by citizens and residents).
‘‘(c) CERTAIN EMPLOYEES INELIGIBLE.—
‘‘(1) 
OVERALL
EMPLOYMENT
MUST
IN-
CREASE.—
‘‘(A) IN GENERAL.—An employer may take
into account for purposes of this section only
that number of employees hired by the employer
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during a taxable year which does not exceed the
number of employees determined under sub-
paragraph (B). The employer shall designate
which employees shall be taken into account.
Such designation shall apply for such taxable
year and any succeeding taxable year.
‘‘(B) MAXIMUM
NUMBER
OF
EMPLOY-
EES.—For purposes of subparagraph (A), the
number of employees determined under this
subparagraph for a taxable year is an amount
equal to the excess (if any) of—
‘‘(i) the average daily number of full-
time equivalent employees of the taxpayer
for such taxable year, over
‘‘(ii) the average daily number of full-
time equivalent employees of the taxpayer
(or any predecessor) for the 3-taxable-year
period immediately preceding such taxable
year.
‘‘(2) OTHER INELIGIBLE EMPLOYEES.—Quali-
fied social security taxes paid with respect to any
employee shall not be taken into account under sub-
section (a) if such employee—
‘‘(A) is a member of a targeted group with
respect to whom the employer has taken into
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account wages in determining the amount of
the targeted jobs credit under section 51,
‘‘(B) is described in paragraph (1) of sec-
tion 51(i) (relating to related individuals), or
‘‘(C) is employed by the employer for less
than 120 days or has not completed at least
120 hours of service.
‘‘(d) OTHER SPECIAL RULES.—For purposes of this
section—
‘‘(1) CONTROLLED
GROUPS.—All employers
treated as a single employer under subsection (a) or
(b) of section 52 shall be treated as a single em-
ployer.
‘‘(2) OTHER RULES.—Rules similar to the rules
of section 51(k) and subsections (c), (d), and (e) of
section 52 shall apply.’’
(b) CONFORMING AMENDMENTS.—The table of sec-
tions for subpart C of part IV of subchapter A of chapter
1 is amended by striking the item relating to section 35
and inserting the following new items:
‘‘Sec. 35. Credit for new employees.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
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SEC. 4. REPORT ON ELIMINATION OF BUSINESS TAX PREF-
ERENCES.
The Secretary of the Treasury shall, as soon as prac-
ticable after the date of the enactment of this Act, report
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate recommendations as to the elimination of, or
changes in, business tax preferences. Such recommenda-
tions shall provide an increase in Federal revenues suffi-
cient to offset any overall decrease in Federal revenues
under the other provisions of this Act.
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