I 
109TH CONGRESS 
2D SESSION 
H. R. 5699 
To provide Federal contracting preferences for, and a reduction in the rate 
of income tax imposed on, Patriot corporations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 28, 2006 
Ms. SCHAKOWSKY (for herself, Mr. BROWN of Ohio, Mr. OBEY, Ms. WOOL-
SEY, Ms. LEE, Mr. DEFAZIO, Mr. LANTOS, Mr. OWENS, Mr. HINCHEY, 
Mr. CONYERS, and Ms. SOLIS) introduced the following bill; which was 
referred to the Committee on Ways and Means, and in addition to the 
Committee on Government Reform, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To provide Federal contracting preferences for, and a reduc-
tion in the rate of income tax imposed on, Patriot cor-
porations, 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. 
This Act may be cited as the ‘‘Patriot Corporations 
of America Act of 2006’’. 
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SEC. 2. FEDERAL CONTRACTING PREFERENCE FOR PA-
TRIOT CORPORATIONS. 
In the evaluation of bids or proposals for a contract 
for the procurement of goods or services, the Federal Gov-
ernment shall provide a preference to any entity that is 
a Patriot corporation (as defined in section 11(e) of the 
Internal Revenue Code of 1986, as added by section 3 of 
this Act), unless the award of the contract to such entity 
would jeopardize the national security interests of the 
United States. 
SEC. 3. REDUCTION IN RATE OF INCOME TAX FOR PATRIOT 
CORPORATIONS. 
(a) IN GENERAL.—Section 11 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) PATRIOT CORPORATIONS.— 
‘‘(1) RATE REDUCTION FOR PATRIOT CORPORA-
TIONS.—In the case of a Patriot corporation, the 
amount of the tax imposed under subsection (a) (de-
termined without regard to this paragraph) shall be 
reduced by an amount equal to 5 percent of the tax-
able income of such corporation. 
‘‘(2) PATRIOT
CORPORATION
DEFINED.—For 
purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘Patriot cor-
poration’ means, with respect to any taxable 
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year, any corporation which is certified by the 
Secretary as meeting the requirements of sub-
paragraph (B) for such taxable and the pre-
ceding taxable year. 
‘‘(B) 
REQUIREMENTS.—A 
corporation 
meets the requirements of this subparagraph, 
with respect to any taxable year, if such cor-
poration— 
‘‘(i) produces in the United States at 
least 90 percent of the goods and services 
sold by such corporation during such tax-
able year, 
‘‘(ii) does not provide compensation to 
any management personnel of such cor-
poration at a level of compensation which 
exceeds 10,000 percent of the level of com-
pensation of the full-time employee of such 
corporation with the lowest level of com-
pensation during such taxable year, 
‘‘(iii) conducts at least 50 percent of 
the research and development conducted by 
such corporation during such taxable year 
(determined on the basis of cost) in the 
United States, 
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‘‘(iv) has contributed at least 5 per-
cent of wages paid by the corporation dur-
ing the taxable year to a portable pension 
fund for the benefit of employees of the 
corporation, 
‘‘(v) has paid at least 70 percent of 
the cost of a standardized health insurance 
plan for the benefit of employees of the 
corporation during such taxable year, 
‘‘(vi) has maintained at all times dur-
ing such taxable year neutrality in em-
ployee organizing drives and has in effect 
a policy to that effect, 
‘‘(vii) has not been (at any time dur-
ing such taxable year) in violation of ap-
propriate Federal regulations including 
those related to the environment, work-
place safety, labor relations, and consumer 
protections, as determined by the Sec-
retary, and 
‘‘(viii) has not been in violation of any 
other regulations specified by the Sec-
retary. 
‘‘(C) CERTIFICATION PROCESS.—Not later 
than 90 days after the date of the enactment of 
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this subsection, the Secretary shall establish an 
application and certification process to annually 
certify corporations as Patriot corporations. 
Such certifications shall be made at such time 
and on the basis of such materials as the Sec-
retary determines appropriate.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
(c) CERTIFICATION ALLOWED FOR YEAR PRECEDING 
EFFECTIVE DATE OF RATE REDUCTION.—For purposes 
of section 11(e) of the Internal Revenue Code of 1986, 
as added by this section, the Secretary may certify a cor-
poration as a Patriot corporation for the last taxable year 
of the corporation beginning on or before December 31, 
2007, if the corporation meets the requirements of para-
graph (2)(B) of such section for such taxable year. 
SEC. 4. TAX AVOIDANCE FOREIGN CORPORATIONS SUB-
JECT TO UNITED STATES INCOME TAX. 
(a) IN GENERAL.—Paragraph (4) of section 7701(a) 
of the Internal Revenue Code of 1986 (defining domestic) 
is amended to read as follows: 
‘‘(4) DOMESTIC.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘domestic’ when ap-
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plied to a corporation or partnership means cre-
ated or organized in the United States or under 
the law of the United States or of any State 
unless, in the case of a partnership, the Sec-
retary provides otherwise by regulations. 
‘‘(B) TAX AVOIDANCE FOREIGN CORPORA-
TIONS TREATED AS DOMESTIC.—Any corpora-
tion which would (but for this subparagraph) be 
treated as a foreign corporation shall be treated 
as a domestic corporation if the Secretary de-
termines that such corporation was created or 
organized as a foreign corporation (instead of 
as a domestic corporation) principally for the 
purpose of avoiding being treated as a domestic 
corporation under this title.’’. 
(b) EFFECTIVE DATES.—The amendment made by 
this section shall also apply to taxable years beginning 
after the date of the enactment of this Act. 
SEC. 5. REDUCTION IN BENEFIT OF RATE REDUCTION FOR 
FAMILIES WITH INCOMES OVER $1,000,000. 
(a) GENERAL RULE.—Section 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(j) REDUCTION IN BENEFIT OF RATE REDUCTION 
FOR FAMILIES WITH INCOMES OVER $1,000,000.— 
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‘‘(1) IN GENERAL.—If the adjusted gross in-
come of a taxpayer exceeds the threshold amount, 
the tax imposed by this section (determined without 
regard to this subsection) shall be increased by an 
amount equal to the applicable percentage of so 
much of the adjusted gross income as exceeds the 
threshold amount. 
‘‘(2) THRESHOLD AMOUNTS.—For purposes of 
this 
subsection, 
the 
term 
‘threshold 
amount’ 
means— 
‘‘(A) $1,000,000 in the case of a joint re-
turn, and 
‘‘(B) $500,000 in the case of any other re-
turn. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxable year, such per-
centage as is estimated by the Secretary to result in 
an increase in the revenues to the Treasury for such 
taxable year which is equal to the excess of— 
‘‘(A) the decrease (if any) in the revenues 
to the Treasury that the Secretary estimates re-
sults from the application of section 11(e) for 
such taxable year, over 
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‘‘(B) the increase (if any) in the revenues 
to the Treasury that the Secretary estimates re-
sults 
from 
the 
application 
of 
section 
7701(a)(4)(B) for such taxable year. 
‘‘(4) TAX
NOT
TO
APPLY
TO
ESTATES
AND 
TRUSTS.—This subsection shall not apply to an es-
tate or trust. 
‘‘(5) SPECIAL RULE.—For purposes of section 
55, the amount of the regular tax shall be deter-
mined without regard to this subsection.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
(c) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by this section shall be subject to title 
IX of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 to the same extent and in the same manner 
as section 101 of such Act. 
(d) SECTION 15 NOT TO APPLY.—The amendment 
made by subsection (a) shall not be treated as a change 
in a rate of tax for purposes of section 15 of the Internal 
Revenue Code of 1986. 
Æ 
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