Investing in Our Children's Health Act of 1998 - Amends the Internal Revenue Code to exclude from an individual's gross income any income from dividends paid by a tobacco company which meets specified youth smoking reduction targets.
Provides for annual child tobacco use surveys.
[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3908 Introduced in House (IH)]
105th CONGRESS
2d Session
H. R. 3908
To amend the Internal Revenue Code of 1986 to exclude from gross income
the dividends paid by tobacco companies which meet youth smoking
reduction targets.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 20, 1998
Mr. Bryant introduced the following bill; which was referred to the
Committee on Way and Means, and in addition to the Committee on
Commerce, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income
the dividends paid by tobacco companies which meet youth smoking
reduction targets.
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 ``Investing in Our Children's Health
Act of 1998''.
SEC. 2. EXCLUSION FROM GROSS INCOME FOR DIVIDENDS FROM TOBACCO
COMPANIES WHICH MEET YOUTH SMOKING REDUCTION TARGETS.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically excluded
from gross income) is amended by inserting after section 115 the
following new section:
``SEC. 116. DIVIDENDS FROM TOBACCO COMPANIES WHICH ACHIEVE YOUTH
SMOKING REDUCTION TARGETS.
``(a) In General.--In the case of an individual, gross income does
not include any dividend paid by a corporation to the extent such
dividend is attributable to qualifying earnings and profits.
``(b) Qualifying Earnings and Profits.--
``(1) In general.--For purposes of this section, the term
`qualifying earnings and profits' means earnings and profits--
``(A) which are from the manufacture in, or the
importation into, the United States of any tobacco
product, and
``(B) which are for any taxable year beginning in a
calendar year with respect to which there has been a
reduction in the underage use of such product of not
less than the applicable percentage of the baseline
level.
``(2) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage for any taxable year is the
applicable percentage determined under the following table for
the calendar year in which such taxable year begins.
Applicable
Calendar year: percentage:
2002.......................................... 10
2003.......................................... 20
2004.......................................... 30
2005.......................................... 40
2006.......................................... 50
2007.......................................... 60
2008.......................................... 70
2009.......................................... 80
2010 or thereafter............................ 90.
``(c) Youth Smoking Reduction Target.--For purposes of this
section, the baseline level for any tobacco product manufactured or
imported by any corporation, and whether the requirement of subsection
(b)(2) has been met, shall be determined by the Secretary of Health and
Human Services in accordance with section 3 of the Investing in Our
Children's Health Act of 1998.
``(d) Special Rules.--For purposes of this section--
``(1) A dividend from a regulated investment company shall
be subject to the limitation prescribed in section 854(c).
``(2) The amount of dividends properly allocable to a
beneficiary under section 652 or 662 shall be deemed to have
been received by the beneficiary ratably on the same date that
the dividends were received by the estate or trust.
``(e) Certain Nonresident Aliens Ineligible for Exclusion.--In the
case of a nonresident alien individual, subsection (a) shall apply
only--
``(1) in determining the tax imposed for the taxable year
pursuant to section 871(b)(1) and only in respect of dividends
which are effectively connected with the conduct of a trade or
business within the United States, or
``(2) in determining the tax imposed for the taxable year
pursuant to section 877(b).''
(b) Conforming Amendments.--
(1) Subsection (c) of section 584 of such Code is amended
by adding at the end the following new sentence:
``The proportionate share of each participant in the amount of
dividends received by the common trust fund and to which section 116
applies shall be considered for purposes of such section as having been
received by such participant.''
(2) Subsection (a) of section 643 of such Code is amended
by inserting after paragraph (7) the following new paragraph:
``(8) Dividends.--There shall be included the amount of any
dividends excluded from gross income pursuant to section 116.''
(3) Section 854 of such Code is amended by adding at the
end the following new subsection:
``(c) Treatment Under Section 116.--
``(1) In general.--For purposes of section 116, in the case
of any dividend (other than a dividend described in subsection
(a)) received from a regulated investment company which meets
the requirements of section 852 for the taxable year in which
it paid the dividend, a portion of such dividend shall be
treated as excludable under section 116 based on the portion of
the company's gross income (determined without regard to gain
from the sale or other disposition of stock or securities)
which consists of dividends which are so excludable.
``(2) Notice to shareholders.--The amount of any
distribution by a regulated investment company which may be
taken into account as a dividend for purposes of the exclusion
under section 116 shall not exceed the amount so designated by
the company in a written notice to its shareholders mailed not
later than 45 days after the close of its taxable year.''
(4) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by inserting after the item
relating to section 115 the following new item:
``Sec. 116. Dividends from tobacco
companies which achieve youth
smoking reduction targets.''
(c) Effective Date.--The amendments made by this section shall
apply with respect to taxable years beginning after the date of the
enactment of this Act.
SEC. 3. CHILD TOBACCO USE SURVEYS.
(a) Annual Performance Survey.--Not later than October 1, 1999, and
annually thereafter, the Secretary of Health and Human Services
(hereafter in this section referred to as the ``Secretary'') shall
conduct a survey to determine--
(1) the percentage of all young individuals who used a type
of tobacco product within the 30-day period prior to the
conduct of the survey; and
(2) the percentage of young individuals who identify each
brand of each type of tobacco product as the usual brand smoked
or used within such 30-day period.
(b) Young Individuals.--For the purposes of this section, the term
``young individuals'' means individuals who are under 18 years of age.
(c) Baseline Level.--
(1) In general.--For the purposes of this section, the term
``baseline level'' means, with respect to each type of tobacco
product, the percentage of young individuals determined to have
used such tobacco products in the annual performance survey
described in subsection (a) completed by October 1, 1999.
(2) Manufacturer's baseline level.--For the purposes of
this section, the term ``manufacturer's baseline level'' means,
with respect to each type of tobacco product, the percentage of
young individuals determined to have identified a brand of each
such tobacco product of such manufacturer as the usual brand
smoked or used in the annual performance survey described in
subsection (a) completed by October 1, 1999.
(3) Use of certain data or methodology.--
(A) In general.--For purposes of determining the
percentages under paragraphs (1) and (2), the Secretary
may use the data collected through national surveys of
young individuals. Such surveys shall--
(i) be based on a nationally representative
sample of at least 20,000 completed interviews
of young individuals;
(ii) be on a household-based in person
survey;
(iii) measure the use of tobacco product
within the past 30 days;
(iv) identify the usual brand of each type
of tobacco product used within the past 30
days; and
(v) calculate the actual percentage
reductions in the underage use of a type of
tobacco product (or, in the case of the
manufacturer-specific surcharge, the use of a
type of tobacco product of a manufacturer)
based on the point estimates from the annual
performance survey.
For purposes of clause (iv), point estimates shall be
deemed acceptable for measuring compliance with
percentage reduction targets and for calculating
surcharges if the precision of estimates of the
proportion of young individuals reporting the use of a
type of tobacco product (or, in the case of the
manufacturer-specific surcharge, the use of a type of
tobacco product of a manufacturer) for the purpose of
measuring compliance with percentage reduction targets and calculating
surcharges without regard to the 95 percent confidence interval around
such point estimates if the precision of estimates of the percentage of
young individuals reporting use of a type of tobacco product (or, in
the case of the manufacturer-specific surcharge, the use of a type of
tobacco product of a manufacturer) is such that the 95 percent
confidence interval around such point estimates is no more than plus or
minus 1 percent.
(B) Conclusive accurateness.--A survey using the
methodology described in subparagraph (A) shall be
deemed conclusively proper, correct, and accurate for
purposes of this Act. The Secretary may, by notice and
comment rulemaking, subsequently adopt a different
survey methodology.
(C) Final determination.--The determination of the
Secretary as to the amount and allocation of the
surcharge under this section shall be final and the
manufacturer shall pay such surcharge within 30 days of
the date on which the manufacturer is assessed. Such
payment shall be retained by the Secretary pending
final judicial review of what, if any, change in the
surcharge is appropriate.
(D) Review.--The amount of any surcharge paid under
this section shall be subject to judicial review by the
United States Court of Appeals for the District of
Columbia Circuit, based on the arbitrary and capricious
standard of section 706 of title 5, United States Code.
Notwithstanding any other provision of law, no court
shall have the authority to stay any surcharge payment
due to the Secretary under this section pending
judicial review until the Secretary has made or failed
to make a compliance determination, as described under
this section, that has adversely affected the person
seeking the review.
(E) Nonapplicability.--Chapter 35 of title 44,
United States Code, shall not apply to information
required for the purposes of carrying out this
subsection.
(F) Amendment to public health service act.--
Section 308(d) of the Public Health Service Act (42
U.S.C. 242m(d)) is amended--
(i) by inserting after ``or 307'' the
following: ``, or a survey conducted under
section 132 of the KIDS Act,''; and
(ii) by inserting after ``or 306'' the
following: ``, or in the course of a survey
conducted under section 132 of the KIDS Act,''.
(d) Administration.--
(1) Technical adjustments.--The Secretary may make
technical changes in the manner in which the surveys are
conducted under this section to reflect improved methodology so
long as adjustments are made to ensure that the results of the
surveys are comparable from year to year.
(2) Participation in survey.--Notwithstanding any other
provision of law, the Secretary may conduct a survey under this
section involving minors if the results of such survey with
respect to such minors are kept confidential and not disclosed.
(e) Tobacco Product.--For the purposes of this section, cigarettes,
cigars, little cigars, snuff, chewing tobacco, pipe tobacco, and roll-
your-own tobacco shall each be considered as a separate type of tobacco
product.
<all>
Introduced in House
Introduced in House
Referred to House Ways and Means
Referred to the Committee on Ways and Means, and in addition to the Committee on Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to House Commerce
Referred to the Subcommittee on Health and Environment, for a period to be subsequently determined by the Chairman.
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