Small Business Owner Tax Relief Act of 2022
Bill: H.R.8559 | Sponsor: Rep. Craig, Angie (D-MN)
Policy area: Taxation

Summary:
Small Business Owner Tax Relief Act of 2022
This bill increases the tax deduction for the payroll taxes of small businesses and imposes an excise tax on corporations for their stock repurchases.
The bill allows self-employed taxpayers earning less than $400,000 in a taxable year to deduct three-quarters (currently, one-half) of their payroll taxes.
The bill also imposes an excise tax of 0.8% on the fair market value of any stock of a publicly traded domestic corporation that is repurchased by the corporation during the taxable year.

To amend the Internal Revenue Code of 1986 to provide tax relief for 
  certain small business owners, to impose a tax on the repurchase of 
                corporate stock, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Owner Tax Relief Act 
of 2022''.

SEC. 2. ENHANCED DEDUCTION FOR CERTAIN SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--Section 164(f) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(3) Enhanced deduction for lower-income individuals.--In 
        the case of an individual with a gross income of less than 
        $400,000 for the taxable year, paragraph (1) shall be applied 
        by substituting `three quarters of the taxes imposed' for `one-
        half of the taxes imposed'.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2021.

SEC. 3. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.

    (a) In General.--Subtitle D is amended by inserting after chapter 
36 the following new chapter:

              ``CHAPTER 37--REPURCHASE OF CORPORATE STOCK

``Sec. 4501. Repurchase of corporate stock.

``SEC. 4501. REPURCHASE OF CORPORATE STOCK.

    ``(a) General Rule.--There is hereby imposed on each covered 
corporation a tax equal to 0.8 percent of the fair market value of any 
stock of the corporation which is repurchased by such corporation 
during the taxable year.
    ``(b) Covered Corporation.--For purposes of this section, the term 
`covered corporation' means any domestic corporation the stock of which 
is traded on an established securities market (within the meaning of 
section 7704(b)(1)).
    ``(c) Repurchase.--For purposes of this section--
            ``(1) In general.--The term `repurchase' means--
                    ``(A) a redemption within the meaning of section 
                317(b) with regard to the stock of a covered 
                corporation, and
                    ``(B) any transaction determined by the Secretary 
                to be economically similar to a transaction described 
                in subparagraph (A).
            ``(2) Treatment of purchases by specified affiliates.--
                    ``(A) In general.--The acquisition of stock of a 
                covered corporation by a specified affiliate of such 
                covered corporation, from a person who is not the 
                covered corporation or a specified affiliate of such 
                covered corporation, shall be treated as a repurchase 
                of the stock of the covered corporation by such covered 
                corporation.
                    ``(B) Specified affiliate.--For purposes of this 
                section, the term `specified affiliate' means, with 
                respect to any corporation--
                            ``(i) any corporation more than 50 percent 
                        of the stock of which is owned (by vote or by 
                        value), directly or indirectly, by such 
                        corporation, and
                            ``(ii) any partnership more than 50 percent 
                        of the capital interests or profits interests 
                        of which is held, directly or indirectly, by 
                        such corporation.
            ``(3) Adjustment.--The amount taken into account under 
        subsection (a) with respect to any stock repurchased by a 
        covered corporation shall be reduced by the fair market value 
        of any stock issued by the covered corporation during the 
        taxable year, including the fair market value of any stock 
        issued to employees of such covered corporation or a specified 
        affiliate of such covered corporation during the taxable year, 
        whether or not such stock is issued in response to the exercise 
        of an option to purchase such stock.
    ``(d) Special Rules for Acquisition of Stock of Certain Foreign 
Corporations.--
            ``(1) In general.--In the case of an acquisition of stock 
        of an applicable foreign corporation by a specified affiliate 
        of such corporation (other than a foreign corporation or a 
        foreign partnership (unless such partnership has a domestic 
        entity as a direct or indirect partner)) from a person who is 
        not the applicable foreign corporation or a specified affiliate 
        of such applicable foreign corporation, for purposes of this 
        section--
                    ``(A) such specified affiliate shall be treated as 
                a covered corporation with respect to such acquisition,
                    ``(B) such acquisition shall be treated as a 
                repurchase of stock of a covered corporation by such 
                covered corporation, and
                    ``(C) the adjustment under subsection (c)(3) shall 
                be determined only with respect to stock issued by such 
                specified affiliate to employees of the specified 
                affiliate.
            ``(2) Surrogate foreign corporations.--In the case of a 
        repurchase of stock of a covered surrogate foreign corporation 
        by such covered surrogate foreign corporation, or an 
        acquisition of stock of a covered surrogate foreign corporation 
        by a specified affiliate of such corporation, for purposes of 
        this section--
                    ``(A) the expatriated entity with respect to such 
                covered surrogate foreign corporation shall be treated 
                as a covered corporation with respect to such 
                repurchase or acquisition,
                    ``(B) such repurchase or acquisition shall be 
                treated as a repurchase of stock of a covered 
                corporation by such covered corporation, and
                    ``(C) the adjustment under subsection (c)(3) shall 
                be determined only with respect to stock issued by such 
                expatriated entity to employees of the expatriated 
                entity.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Applicable foreign corporation.--The term 
                `applicable foreign corporation' means any foreign 
                corporation the stock of which is traded on an 
                established securities market (within the meaning of 
                section 7704(b)(1)).
                    ``(B) Covered surrogate foreign corporation.--The 
                term `covered surrogate foreign corporation' means any 
                surrogate foreign corporation (as determined under 
                section 7874(a)(2)(B) by substituting `September 20, 
                2021' for `March 4, 2003' each place it appears) the 
                stock of which is traded on an established securities 
                market (within the meaning of section 7704(b)(1)), but 
                only with respect to taxable years which include any 
                portion of the applicable period with respect to such 
                corporation under section 7874(d)(1).
                    ``(C) Expatriated entity.--The term `expatriated 
                entity' has the meaning given such term by section 
                7874(a)(2)(A).
    ``(e) Exceptions.--Subsection (a) shall not apply--
            ``(1) to the extent that the repurchase is part of a 
        reorganization (within the meaning of section 368(a)) and no 
        gain or loss is recognized on such repurchase by the 
        shareholder under chapter 1 by reason of such reorganization,
            ``(2) in any case in which the stock repurchased is, or an 
        amount of stock equal to the value of the stock repurchased is, 
        contributed to an employer-sponsored retirement plan, employee 
        stock ownership plan, or similar plan,
            ``(3) in any case in which the total value of the stock 
        repurchased during the taxable year does not exceed $1,000,000,
            ``(4) under regulations prescribed by the Secretary, in 
        cases in which the repurchase is by a dealer in securities in 
        the ordinary course of business,
            ``(5) to repurchases by a regulated investment company (as 
        defined in section 851) or a real estate investment trust, or
            ``(6) to the extent that the repurchase is treated as a 
        dividend for purposes of this title.
    ``(f) Regulations and Guidance.--The Secretary shall prescribe such 
regulations and other guidance as are necessary or appropriate to 
administer and to prevent the avoidance of the purposes of this 
section, including regulations and other guidance--
            ``(1) to prevent the abuse of the exceptions provided by 
        subsection (e),
            ``(2) to address special classes of stock and preferred 
        stock, and
            ``(3) for the application of the rules under subsection 
        (d).''.
    (b) Tax Not Deductible.--Paragraph (6) of section 275(a) is amended 
by inserting ``37,'' before ``41''.
    (c) Clerical Amendment.--The table of chapters for subtitle D is 
amended by inserting after the item relating to chapter 36 the 
following new item:

             ``Chapter 37--Repurchase of Corporate Stock''.

    (d) Effective Date.--The amendments made by this section shall 
apply to repurchases (within the meaning of section 4501(c) of the 
Internal Revenue Code of 1986, as added by this section) of stock after 
December 31, 2021.
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