Drive American Act

Bill: 118-s-2962
Sponsor: full_name: Sen. Vance, J. D. [R-OH]
Introduced: 2023-09-28
Policy area: Taxation
Latest action: action_date: 2023-09-28
text: Read twice and referred to the Committee on Finance.

Summaries:

tv_txt: II 118th CONGRESS 1st Session S. 2962 IN THE SENATE OF THE UNITED STATES September 28 (legislative day, September 22), 2023 Mr. Vance introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To repeal tax incentives relating to electric vehicles, and to establish a tax credit to promote automobile manufacturing in the United States.

1. Short title This Act may be cited as the Drive American Act . 2. Amendment of 1986 Code Except as otherwise expressly provided, whenever in this Act an amendment 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 provision of the Internal Revenue Code of 1986. I Repeal of Electric Vehicle Incentives 101. Repeal of clean vehicle credit (a) In general Subpart B of part IV of subchapter A of chapter 1 is amended by striking section 30D (and by striking the item relating to such section in the table of sections for such subpart). (b) Conforming amendments (1) Section 30B(d)(3) is amended by striking subparagraph (D). (2) Section 38(b) is amended by striking paragraph (30). (3) Section 179D(d)(3)(B)(ii) is amended by inserting , as in effect on the day before the date of the enactment of the Drive American Act after section 30D(g)(9) . (4) Section 1016(a) is amended— (A) in paragraph (36), by adding and at the end, (B) by striking paragraph (37), and (C) by redesignating paragraph (38) as paragraph (37). (5) Section 6213(g)(2) is amended by striking subparagraph (T). (6) Section 6417(d)(1)(A)(iv) is amended by inserting , as in effect on the day before the date of the enactment of the Drive American Act after section 30D(g)(9) . (7) Section 6501(m) is amended by striking 30D(f)(6), . (8) Section 166(b)(5)(A)(ii) of title 23, United States Code, is amended by inserting , as in effect on the day before the date of the enactment of the Drive American Act after section 30D(d)(1) of the Internal Revenue Code of 1986 . (c) Effective date The amendments made by this section shall apply to vehicle placed in service after December 31, 2022. 102. Repeal of credit for previously-owned clean vehicles (a) In general Subpart A of part IV of subchapter A of chapter 1 is amended by striking section 25E (and by striking the item relating to such section in the table of sections for such subpart). (b) Conforming amendment Section 6213(g)(2) is amended by striking subparagraph (U). (c) Effective date The amendments made by this section shall apply to vehicles acquired after December 31, 2022. 103. Repeal of credit for qualified commercial clean vehicles (a) In general Subpart D of part IV of subchapter A of chapter 1 is amended by striking section 45W (and by striking the item relating to such section in the table of sections for such subpart). (b) Conforming amendments (1) Section 38(b) is amended by striking paragraph (37). (2) Section 6213(g)(2) is amended by striking subparagraph (V). (c) Effective date The amendments made by this section shall apply to vehicles acquired after December 31, 2022. 104. Alternative fuel refueling property credit (a) In general Subpart B of part IV of subchapter A of chapter 1 is amended by striking section 30C (and by striking the item relating to such section in the table of sections for such subpart). (b) Conforming amendments (1) Section 38(b) is amended by striking paragraph (25). (2) Section 55(c)(3) is amended by striking sections 30C(d)(2) and 38(c) and inserting section 38(c) . (3) Section 1016(a), as amended by section 101, is amended— (A) in paragraph (35), by adding and at the end, (B) by striking paragraph (36), and (C) by redesignating paragraph (37) as paragraph (36). (4) Section 6417(b) is amended by striking paragraph (1). (5) Section 6418(f)(1)(A) is amended by striking clause (i). (6) Section 6501(m) is amended by striking 30C(e)(4), . (7) Section 244(b) of the Energy Independence and Security Act of 2007 ( 42 U.S.C. 17052(b) ) is amended by striking paragraph (6). (c) Effective date The amendments made by this section shall apply to property placed in service after December 31, 2021. II Credit for automobiles made in the United States 201. Establishment of America First Vehicle Credit (a) In general Subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section: 30E. America First Vehicle Credit (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new vehicle placed in service by the taxpayer during the taxable year. (b) Per vehicle dollar limitation (1) In general The amount determined under this subsection with respect to any new vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle. (2) Base amount The amount determined under this paragraph is $2,500. (3) Vehicle capacity (A) In general The amount determined under this paragraph is the greater of— (i) the payload capacity adjustment, or (ii) the seating capacity adjustment. (B) Payload capacity adjustment (i) In general For purposes of subparagraph (A)(i), the payload capacity adjustment is $500 for every 250 pounds of payload capacity in excess of 1,000 pounds. (ii) Payload capacity For purposes of clause (i), the payload capacity of any new vehicle shall be an amount equal to the difference between— (I) the vehicle curb weight (as such term is defined in section 216 of the Clean Air Act ( 42 U.S.C. 7550 )) of such vehicle, and (II) the gross vehicle weight rating of such vehicle. (C) Seating capacity adjustment (i) In general For purposes of subparagraph (A)(ii), the seating capacity adjustment is $1,000 for each passenger by which the seating capacity of the new vehicle is in excess of 4 passengers. (ii) Seating capacity For purposes of clause (i), the seating capacity of any new vehicle shall be the maximum number of passengers (including the driver) which such vehicle can safely transport (as determined pursuant to applicable Federal laws and regulations). (D) Limitation The amount determined under this paragraph shall not exceed $5,000. (c) Application with other credits (1) Business credit treated as part of general business credit So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)). (2) Personal credit For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year. (d) New vehicle (1) In general The term new vehicle means a motor vehicle— (A) the original use of which commences with the taxpayer, (B) which is acquired for use or lease by the taxpayer and not for resale, (C) which is made by a qualified manufacturer, (D) which satisfies each of the requirements under paragraphs (1) and (2) of subsection (e), (E) which has a gross vehicle weight rating of less than 14,000 pounds, (F) which is propelled to a significant extent by a gasoline or diesel internal combustion engine, (G) the final assembly of which occurs within the United States, and (H) for which the person who sells any vehicle to the taxpayer furnishes a report to the taxpayer and to the Secretary, at such time and in such manner as the Secretary shall provide, containing— (i) the name and taxpayer identification number of the taxpayer, (ii) the vehicle identification number of the vehicle, unless, in accordance with any applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number, (iii) verification that original use of the vehicle commences with the taxpayer, and (iv) the maximum credit under this section allowable to the taxpayer with respect to the vehicle. (2) Motor vehicle The term motor vehicle means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels. (3) Qualified manufacturer The term qualified manufacturer means any manufacturer (as defined in section 30102(a)(6) of title 49, United States Code, but not including any importer described in subparagraph (B) of that section) which enters into a written agreement with the Secretary under which such manufacturer agrees to make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) providing vehicle identification numbers and such other information related to each vehicle manufactured by such manufacturer as the Secretary may require. (4) Final assembly For purposes of paragraph (1)(G), the term final assembly means the process by which a manufacturer produces a new vehicle at, or through the use of, a plant, factory, or other place from which the vehicle is delivered to a dealer or importer with all component parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts are permanently installed in or on the vehicle. (e) Content requirements (1) Regional value content (A) In general The requirement described in this paragraph with respect to a vehicle is that the regional value content is not less than 60 percent (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary). (B) Regional value content The regional value content is the amount (expressed as a percentage) equal to the quotient of— (i) the net cost of the vehicle minus the value of any non-originating materials used in the production of the vehicle, divided by (ii) the net cost of the vehicle. (C) Value of non-originating materials (i) In general For purposes of subparagraph (B)(i), the value of any non-originating materials shall include any materials of indeterminate origin which are used by the producer in the production of the vehicle. (ii) Exclusion For purposes of subparagraph (B)(i), the value of any non-originating materials used in the production of the vehicle shall not include the value of any non-originating materials used or consumed to produce originating materials which are subsequently used or consumed in the production of the vehicle. (2) Labor value content (A) In general The requirement described in this paragraph with respect to a vehicle is that the labor value content is not less than 25 percent (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary). (B) Labor value content The labor value content is the amount (expressed as a percentage) equal to the quotient of— (i) the sum of— (I) the value of high-wage material contained in the vehicle, plus (II) the value of high-wage labor costs associated with production of the vehicle, divided by (ii) the net cost of the vehicle. (3) Definitions For purposes of this subsection— (A) High-wage labor costs The term high-wage labor costs means an amount equal to the sum of wage expenditures (not including benefits) incurred in the assembly of the vehicle for workers who perform direct production work at a qualifying wage-rate assembly plant. (B) High-wage material The term high-wage material means the net cost of material that undergoes production in a qualifying wage-rate production plant and that is used in the production of the vehicle. (C) Net cost The term net cost means total cost minus sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and nonallowable interest costs that are included in the total cost. (D) Non-originating material The term non-originating material means a material which is not an originating material. (E) Originating material The term originating material means a material which is— (i) wholly obtained or produced entirely in the United States or Canada, or (ii) substantially transformed in the United States or Canada from a material which is not wholly grown, produced, or manufactured in the United States or Canada. (F) Qualifying wage-rate assembly plant The term qualifying wage-rate production plant means a facility which— (i) assembles passenger vehicles, light trucks, or heavy trucks, (ii) is located in the United States, and (iii) has an average hourly production wage rate for employees working in such facility which is not less than $44 per hour. (G) Qualifying wage-rate production plant The term qualifying wage-rate production plant means a facility which— (i) produces materials for passenger vehicles, light trucks, or heavy trucks, (ii) is located in the United States, and (iii) has an average hourly production wage rate for employees working in such facility which is not less than $35 per hour. (4) Inflation adjustment (A) In general In the case of any calendar year beginning after 2025, the dollar amounts in subparagraphs (F)(iii) and (G)(iii) of paragraph (3) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting in subparagraph (A)(ii) thereof calendar year 2024 for calendar year 2016 . (B) Rounding If any amount as adjusted under subparagraph (A) is not a multiple of $1, such dollar amount shall be rounded to the next lowest multiple of $1. (5) Regulations and guidance (A) In general The Secretary shall, in consultation with the Secretary of Commerce and the Secretary of Labor, issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection. (B) Deadline for proposed guidance Not later than December 31, 2024, the Secretary shall issue proposed guidance with respect to the requirements under this subsection. (f) Special rules (1) Basis reduction For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (c)). (2) No double benefit The amount of any deduction or other credit allowable under this chapter for a vehicle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such vehicle (determined without regard to subsection (c)). (3) Property used by tax-exempt entity In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (c)). For purposes of subsection (c), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation. (4) Property used outside United States not qualified No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1). (5) Recapture The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit. (6) Election not to take credit No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle. (7) Interaction with motor vehicle safety standards A vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code. (8) One credit per vehicle In the case of any vehicle, the credit described in subsection (a) shall only be allowed once with respect to such vehicle, as determined based upon the vehicle identification number of such vehicle. (9) VIN requirement No credit shall be allowed under this section with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year. (10) Limitation based on modified adjusted gross income (A) In general No credit shall be allowed under subsection (a) for any taxable year if— (i) the lesser of— (I) the modified adjusted gross income of the taxpayer for such taxable year, or (II) the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds (ii) the threshold amount. (B) Threshold amount For purposes of subparagraph (A)(ii), the threshold amount shall be— (i) in the case of a joint return or a surviving spouse (as defined in section 2(a)), $300,000, (ii) in the case of a head of household (as defined in section 2(b)), $225,000, and (iii) in the case of a taxpayer not described in clause (i) or (ii), $150,000. (C) Modified adjusted gross income For purposes of this paragraph, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (11) Manufacturer's suggested retail price limitation (A) In general No credit shall be allowed under subsection (a) for a vehicle with a manufacturer's suggested retail price in excess of the applicable limitation. (B) Applicable limitation For purposes of subparagraph (A), the applicable limitation for each vehicle classification is as follows: (i) Vans In the case of a van, $80,000. (ii) Sport utility vehicles In the case of a sport utility vehicle, $80,000. (iii) Pickup trucks In the case of a pickup truck, $80,000. (iv) Other In the case of any other vehicle, $55,000. (C) Regulations and guidance For purposes of this paragraph, the Secretary shall prescribe such regulations or other guidance as the Secretary determines necessary for determining vehicle classifications using criteria similar to the criteria described in part 523 of title 49, Code of Federal Regulations (as in effect on the date of enactment of the Drive American Act ). (g) Termination No credit shall be allowed under this section with respect to any vehicle placed in service after December 31, 2033. . (b) Conforming amendments (1) Section 38(b), as amended by section 103, is amended by inserting after paragraph (36) the following: (37) the portion of the America First vehicle credit to which section 30E(c)(1) applies, . (2) Section 1016(a) is amended— (A) in paragraph (37), by striking and at the end, (B) by redesignating paragraph (38) as paragraph (39), and (C) by inserting after paragraph (37) the following: (38) to the extent provided in section 30E(f)(1), and . (3) Section 6213(g)(2), as amended by sections 101, 102, and 103, is amended by inserting after subparagraph (S) the following: (T) an omission of a correct vehicle identification number required under section 30E(f)(9) (relating to credit for new vehicles) to be included on a return. . (4) Section 6501(m), as amended by section 101, is amended by inserting 30E(f)(6), after 30D(e)(4), . (5) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item: Sec. 30E. America First Vehicle Credit. . (c) Effective date The amendments made by this section shall apply to vehicles placed in service after December 31, 2024.