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108th CONGRESS
2d Session
S. 2155
To amend the Internal Revenue Code of 1986 to provide for a
manufacturer's jobs credit, and for other purposes.
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IN THE SENATE OF THE UNITED STATES
March 2, 2004
Ms. Collins introduced the following bill; which was read twice and
referred to the Committee on Finance
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A BILL
To amend the Internal Revenue Code of 1986 to provide for a
manufacturer's jobs credit, 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; ETC.
(a) Short Title.--This Act may be cited as the ``Growing Our
Manufacturing Employment (GoME) Act''.
(b) 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.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--GENERAL MANUFACTURING PROVISIONS
Sec. 101. Manufacturer's jobs credit.
Sec. 102. Deduction relating to income attributable to United States
production activities.
TITLE II--MANUFACTURING RELATING TO TIMBER
Sec. 201. Expensing of certain reforestation expenditures.
Sec. 202. Election to treat cutting of timber as a sale or exchange.
Sec. 203. Capital gain treatment under section 631(b) to apply to
outright sales by landowners.
TITLE III--REVENUE PROVISIONS
Sec. 301. Clarification of economic substance doctrine.
Sec. 302. Tax treatment of inverted corporate entities.
TITLE I--GENERAL MANUFACTURING PROVISIONS
SEC. 101. MANUFACTURER'S JOBS CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business-related
credits) is amended by adding at the end the following:
``SEC. 45G. MANUFACTURER'S JOBS CREDIT.
``(a) General Rule.--For purposes of section 38, in the case of an
eligible taxpayer, the manufacturer's jobs credit determined under this
section is an amount equal to the lesser of the following:
``(1) The excess of the W-2 wages paid by the taxpayer
during the taxable year over the W-2 wages paid by the taxpayer
during the preceding taxable year.
``(2) The W-2 wages paid by the taxpayer during the taxable
year to any employee who is an eligible TAA recipient (as
defined in section 35(c)(2)) for any month during such taxable
year.
``(3) 22.4 percent of the W-2 wages paid by the taxpayer
during the taxable year.
``(b) Limitation.--The amount of credit determined under subsection
(a) shall be reduced by an amount which bears the same ratio to the
amount of the credit (determined without regard to this subsection)
as--
``(1) the excess of the W-2 wages paid by the taxpayer to
employees outside the United States during the taxable year
over such wages paid during the most recent taxable year ending
before the date of the enactment of this section, bears to
``(2) the excess of the W-2 wages paid by the taxpayer to
employees within the United States during the taxable year over
such wages paid during such most recent taxable year.
``(c) Eligible Taxpayer.--For purposes of this section, the term
`eligible taxpayer' means any taxpayer--
``(1) which has domestic production gross receipts for the
taxable year and the preceding taxable year, and
``(2) which is not treated at any time during the taxable
year as an inverted domestic corporation under section 7874.
``(d) Definitions.--For purposes of this section, W-2 wages and
domestic production gross receipts shall be determined in the same
manner as under section 199.
``(e) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(f) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2005.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b)
(relating to current year business credit) is amended by striking
``plus'' at the end of paragraph (14), by striking the period at the
end of paragraph (15) and inserting ``, plus'', and by adding at the
end the following:
``(16) the manufacturer's jobs credit determined under
section 45G.''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following:
``Sec. 45G. Manufacturer's jobs
credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 102. DEDUCTION RELATING TO INCOME ATTRIBUTABLE TO UNITED STATES
PRODUCTION ACTIVITIES.
(a) In General.--Part VI of subchapter B of chapter 1 (relating to
itemized deductions for individuals and corporations) is amended by
adding at the end the following new section:
``SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES.
``(a) Allowance of Deduction.--There shall be allowed as a
deduction an amount equal to 9 percent of the qualified production
activities income of the taxpayer for the taxable year.
``(b) Deduction Limited to Wages Paid.--
``(1) In general.--The amount of the deduction allowable
under subsection (a) for any taxable year shall not exceed 50
percent of the W-2 wages of the employer for the taxable year.
``(2) W-2 wages.--For purposes of paragraph (1), the term
`W-2 wages' means the sum of the aggregate amounts the taxpayer
is required to include on statements under paragraphs (3) and
(8) of section 6051(a) with respect to employment of employees
of the taxpayer during the taxpayer's taxable year.
``(3) Special rules.--
``(A) Pass-thru entities.--In the case of an S
corporation, partnership, estate or trust, or other
pass-thru entity, the limitation under this subsection
shall apply at the entity level.
``(B) Acquisitions and dispositions.--The Secretary
shall provide for the application of this subsection in
cases where the taxpayer acquires, or disposes of, the
major portion of a trade or business or the major
portion of a separate unit of a trade or business
during the taxable year.
``(c) Qualified Production Activities Income.--For purposes of this
section--
``(1) In general.--The term `qualified production
activities income' means an amount equal to the portion of the
modified taxable income of the taxpayer which is attributable
to domestic production activities.
``(2) Reduction for taxable years beginning before 2013.--
The amount otherwise determined under paragraph (1) (the
`unreduced amount') shall not exceed the product of the
unreduced amount and the domestic/worldwide fraction.
``(d) Determination of Income Attributable to Domestic Production
Activities.--For purposes of this section--
``(1) In general.--The portion of the modified taxable
income which is attributable to domestic production activities
is so much of the modified taxable income for the taxable year
as does not exceed--
``(A) the taxpayer's domestic production gross
receipts for such taxable year, reduced by
``(B) the sum of--
``(i) the costs of goods sold that are
allocable to such receipts,
``(ii) other deductions, expenses, or
losses directly allocable to such receipts, and
``(iii) a proper share of other deductions,
expenses, and losses that are not directly
allocable to such receipts or another class of
income.
``(2) Allocation method.--The Secretary shall prescribe
rules for the proper allocation of items of income, deduction,
expense, and loss for purposes of determining income
attributable to domestic production activities.
``(3) Special rules for determining costs.--
``(A) In general.--For purposes of determining
costs under clause (i) of paragraph (1)(B), any item or
service brought into the United States shall be treated
as acquired by purchase, and its cost shall be treated
as not less than its fair market value immediately
after it entered the United States. A similar rule
shall apply in determining the adjusted basis of leased
or rented property where the lease or rental gives rise
to domestic production gross receipts.
``(B) Exports for further manufacture.--In the case
of any property described in subparagraph (A) that had
been exported by the taxpayer for further manufacture,
the increase in cost or adjusted basis under
subparagraph (A) shall not exceed the difference
between the value of the property when exported and the
value of the property when brought back into the United
States after the further manufacture.
``(4) Modified taxable income.--The term `modified taxable
income' means taxable income computed without regard to the
deduction allowable under this section.
``(e) Domestic Production Gross Receipts.--For purposes of this
section--
``(1) In general.--The term `domestic production gross
receipts' means the gross receipts of the taxpayer which are
derived from--
``(A) any sale, exchange, or other disposition of,
or
``(B) any lease, rental, or license of,
qualifying production property which was manufactured,
produced, grown, or extracted in whole or in significant part
by the taxpayer within the United States.
``(2) Special rules for certain property.--In the case of
any qualifying production property described in subsection
(f)(1)(C)--
``(A) such property shall be treated for purposes
of paragraph (1) as produced in significant part by the
taxpayer within the United States if more than 50
percent of the aggregate development and production
costs are incurred by the taxpayer within the United
States, and
``(B) if a taxpayer acquires such property before
such property begins to generate substantial gross
receipts, any development or production costs incurred
before the acquisition shall be treated as incurred by
the taxpayer for purposes of subparagraph (A) and
paragraph (1).
``(f) Qualifying Production Property.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
paragraph, the term `qualifying production property' means--
``(A) any tangible personal property,
``(B) any computer software, and
``(C) any property described in section 168(f) (3)
or (4), including any underlying copyright or
trademark.
``(2) Exclusions from qualifying production property.--The
term `qualifying production property' shall not include--
``(A) consumable property that is sold, leased, or
licensed by the taxpayer as an integral part of the
provision of services,
``(B) oil or gas,
``(C) electricity,
``(D) water supplied by pipeline to the consumer,
``(E) utility services, or
``(F) any film, tape, recording, book, magazine,
newspaper, or similar property the market for which is
primarily topical or otherwise essentially transitory
in nature.
``(g) Domestic/Worldwide Fraction.--For purposes of this section--
``(1) In general.--The term `domestic/worldwide fraction'
means a fraction (not greater than 1)--
``(A) the numerator of which is the value of the
domestic production of the taxpayer, and
``(B) the denominator of which is the value of the
worldwide production of the taxpayer.
``(2) Value of domestic production.--The value of domestic
production is the excess (if any) of--
``(A) the domestic production gross receipts, over
``(B) the cost of purchased inputs allocable to
such receipts that are deductible under this chapter
for the taxable year.
``(3) Purchased inputs.--
``(A) In general.--Purchased inputs are any of the
following items acquired by purchase:
``(i) Services (other than services of
employees) used in manufacture, production,
growth, or extraction activities.
``(ii) Items consumed in connection with
such activities.
``(iii) Items incorporated as part of the
property being manufactured, produced, grown,
or extracted.
``(B) Special rule.--Rules similar to the rules of
subsection (d)(3) shall apply for purposes of this
subsection.
``(4) Value of worldwide production.--
``(A) In general.--The value of worldwide
production shall be determined under the principles of
paragraph (2), except that--
``(i) worldwide production gross receipts
shall be taken into account, and
``(ii) paragraph (3)(B) shall not apply.
``(B) Worldwide production gross receipts.--The
worldwide production gross receipts is the amount that
would be determined under subsection (e) if such
subsection were applied without any reference to the
United States.
``(h) Definitions and Special Rules.--
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