Rebuilding American Manufacturing Act of 2015
Amends the Internal Revenue Code to allow taxpayers engaged in domestic manufacturing in the United States a tax deduction equal to 50.5% (43% for C corporations) of the lesser of their domestic manufacturing income or their taxable income for the taxable year (thus effectively reducing their income tax rate to approximately 20%). Limits the amount of such deduction to 25% of such taxpayer's qualifying domestic investment (defined as the sum of the taxpayer's W-2 wages and certain allowable tax deductions, excluding any amounts not properly allocable to the taxpayer's domestic manufacturing gross receipts).
[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2970 Introduced in House (IH)]
114th CONGRESS
1st Session
H. R. 2970
To amend the Internal Revenue Code of 1986 to reduce the rate of tax on
domestic manufacturing income to 20 percent.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 8, 2015
Mr. Kind (for himself, Mr. Neal, Mr. Rangel, Mr. Pascrell, Mr. Larson
of Connecticut, Mr. McDermott, Mr. Danny K. Davis of Illinois, and Mr.
Levin) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reduce the rate of tax on
domestic manufacturing income to 20 percent.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Rebuilding
American Manufacturing Act of 2015''.
(b) Findings.--Congress finds the following:
(1) American manufacturing is vital to our economy, and
those who produce American goods and hire American workers
should be a priority.
(2) Manufacturing is an essential source of innovation that
is critical to our continued prosperity in an increasingly
competitive global economy.
(3) Approximately 1.2 million Americans are employed by the
manufacturing industry.
(4) The manufacturing industry provides stable jobs with
sustainable wages to Americans in every State.
(5) Manufacturing jobs provide, on average, wages that are
above the national average and provide a gateway to the middle
class.
(6) The effective tax rate of domestic manufacturers ranges
from 27 to 31 percent, depending on location and the size of
equipment used in production.
(7) Tax reform must make the United States more
competitive, boost economic growth, and foster the creation of
sustainable American jobs.
(8) Tax reform should particularly focus on those companies
that grow, build, and create goods in the United States.
(9) The tax rate of domestic manufacturers should reflect
the industry's contributions of employment, growth, innovation,
and competition in the United States.
SEC. 2. 20-PERCENT INCOME TAX RATE FOR DOMESTIC MANUFACTURING INCOME.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 200. DOMESTIC MANUFACTURING INCOME.
``(a) Allowance of Deduction.--There shall be allowed as a
deduction an amount equal to 50.5 percent (43 percent in the case of a
C corporation) of the lesser of--
``(1) the domestic manufacturing income of the taxpayer for
the taxable year, or
``(2) taxable income (determined without regard to this
section and section 199) for the taxable year.
``(b) Limitation Based on Domestic Investment.--For purposes of
this section--
``(1) In general.--The amount of the deduction allowable
under subsection (a) for any taxable year shall not exceed 25
percent of the taxpayer's qualifying domestic investment for
the taxable year.
``(2) Qualifying domestic investment amount.--The term
`qualifying domestic investment' means, with respect to any
taxpayer for any taxable year, the sum of--
``(A) the W-2 wages of such taxpayer for such
taxable year,
``(B) the sum of the deductions allowable under
sections 167, 169, 179, and 179D to such taxpayer for
such taxable year, plus
``(C) the deduction allowable under section 174 to
such taxpayer for such taxable year.
``(3) W-2 wages.--The term `W-2 wages' means, with respect
to any person for any taxable year, the sum of the amounts
described in paragraphs (3) and (8) of section 6051(a) paid by
such person with respect to employment of employees by such
person during the calendar year ending during such taxable
year. Such term shall not include any amount which is not
properly included in a return filed with the Social Security
Administration on or before the 60th day after the due date
(including extensions) for such return.
``(4) Limitation to amounts attributable to domestic
production.--The term `qualifying domestic investment' shall
not include any amount which is not properly allocable to
domestic manufacturing gross receipts for purposes of
subsection (c) (and shall include any amount which is so
allocable under subsection (c)(4)).
``(5) 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) Domestic Manufacturing Income.--For purposes of this
section--
``(1) In general.--The term `domestic manufacturing income'
for any taxable year means an amount equal to the excess (if
any) of--
``(A) the taxpayer's domestic manufacturing gross
receipts for such taxable year, over
``(B) the sum of--
``(i) the cost of goods sold that are
allocable to such receipts, and
``(ii) other expenses, losses, or
deductions (other than the deduction allowed
under this section), which are properly
allocable to such receipts.
``(2) Allocation method.--The Secretary shall prescribe
rules for the proper allocation of items described in paragraph
(1) for purposes of determining domestic manufacturing income.
Such rules shall provide for the proper allocation of items
whether or not such items are directly allocable to domestic
manufacturing gross receipts.
``(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 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 manufacturing 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) Treatment of certain accelerated depreciation
deductions.--In the case of property placed in service after
December 31, 2007, and before the first taxable year of the
taxpayer beginning after December 31, 2014, the deduction under
section 168 with respect to such property which is treated as
properly allocable to domestic manufacturing gross receipts of
the taxpayer for any taxable year shall be determined without
regard to section 168(k)(1).
``(5) Treatment of deferred compensation under nonqualified
plans.--In the case of compensation paid or incurred by the
taxpayer which is deferred under a nonqualified deferred
compensation plan (as defined in section 409A(d)(1)), the
amount under paragraph (1)(B)(ii) shall be determined as though
the deduction for such compensation is allowed for the taxable
year in which the services for which such compensation was paid
or incurred are performed. This paragraph shall not apply with
respect to compensation paid or incurred for services performed
in taxable years beginning before the first taxable year of the
taxpayer beginning after December 31, 2014.
``(d) Domestic Manufacturing Gross Receipts.--For purposes of this
section--
``(1) In general.--The term `domestic manufacturing gross
receipts' means the gross receipts of the taxpayer which are
derived from any lease, rental, license, sale, exchange, or
other disposition of qualified property which was manufactured,
produced, or grown by the taxpayer in whole or in significant
part within the United States. Such term shall not include
gross receipts of the taxpayer which are derived from the sale
of food and beverages prepared by the taxpayer at a retail
establishment.
``(2) Special rule for certain government contracts.--Gross
receipts derived from the manufacture or production of any
property shall not fail to be treated as meeting the
requirements of paragraph (1) solely because title or risk of
loss with respect to such property is held by the Federal
Government if--
``(A) such property is manufactured or produced by
the taxpayer pursuant to a contract with the Federal
Government, and
``(B) the Federal Acquisition Regulation requires
that title or risk of loss with respect to such
property be transferred to the Federal Government
before the manufacture or production of such property
is complete.
``(3) Qualified property.--The term `qualified property'
means--
``(A) any tangible personal property other than--
``(i) oil, gas, and primary products
thereof (within the meaning of section
199(d)(9)(C)),
``(ii) property with respect to which
section 613 applies,
``(iii) property described in paragraph (3)
or (4) of section 168(f), and
``(iv) electricity and potable water, and
``(B) any computer software other than video games
rated M, AO, RP, or any similar rating as determined by
the Secretary, by the Entertainment Software Rating
Board.
``(4) Partnerships owned by expanded affiliated groups.--
For purposes of this subsection, if all of the interests in the
capital and profits of a partnership are owned by members of a
single expanded affiliated group at all times during the
taxable year of such partnership, the partnership and all
members of such group shall be treated as a single taxpayer
during such period.
``(5) Related persons.--
``(A) In general.--The term `domestic manufacturing
gross receipts' shall not include any gross receipts of
the taxpayer derived from property leased, licensed, or
rented by the taxpayer for use by any related person.
``(B) Related person.--For purposes of subparagraph
(A), a person shall be treated as related to another
person if such persons are treated as a single employer
under subsection (a) or (b) of section 52 or subsection
(m) or (o) of section 414, except that determinations
under subsections (a) and (b) of section 52 shall be
made without regard to section 1563(b).
``(e) Special Rules.--
``(1) Elective application of deduction.--Except as
otherwise provided by the Secretary, the taxpayer may elect not
to take any item of income into account as domestic
manufacturing gross receipts for purposes of this section.
``(2) Coordination with section 199.--If a deduction is
allowed under this section with respect to any taxpayer for any
taxable year, any gross receipts of the taxpayer which are
taken into account under this section for such taxable year
(and any items properly allocable thereto under subsections (b)
or (c)) shall not be taken into account under section 199 for
such taxable year.
``(3) Application of section to pass-thru entities.--
``(A) Partnerships and s corporations.--In the case
of a partnership or S corporation--
``(i) this section shall be applied at the
partner or shareholder level,
``(ii) each partner or shareholder shall
take into account such person's allocable share
of each item described in subparagraph (A) or
(B) of subsection (c)(1) (determined without
regard to whether the items described in such
subparagraph (A) exceed the items described in
such subparagraph (B)), and
``(iii) each partner or shareholder shall
be treated for purposes of subsection (b) as
having an amount of each item taken into
account in determining qualifying domestic
investment of the partnership or S corporation
for the taxable year equal to such person's
allocable share of such item (as determined
under regulations prescribed by the Secretary).
``(B) Trust and estates.--In the case of a trust or
estate--
``(i) the items referred to in subparagraph
(A)(ii) (as determined therein) and the
qualifying domestic investment of the trust or
estate for the taxable year, shall be
apportioned between the beneficiaries and the
fiduciary (and among the beneficiaries) under
regulations prescribed by the Secretary, and
``(ii) for purposes of paragraph (4),
adjusted gross income of the trust or estate
shall be determined as provided in section
67(e) with the adjustments described in such
paragraph.
``(C) Regulations.--The Secretary may prescribe
rules requiring or restricting the allocation of items
and qualifying domestic investment under this paragraph
and may prescribe such reporting requirements as the
Secretary determines appropriate.
``(4) Application to individuals.--In the case of an
individual, subsection (a)(2) shall be applied by substituting
`adjusted gross income' for `taxable income'. For purposes of
the preceding sentence, adjusted gross income shall be
determined--
``(A) after application of sections 86, 135, 137,
219, 221, 222, and 469, and
``(B) without regard to this section and section
199.
``(5) Application of other rules.--Rules similar to the
rules of paragraphs (3), (4), (5), (6), (7), and (10) of
section 199(d) shall apply for purposes of this section.''.
(b) Conforming Amendments.--
(1) Section 56(d)(1)(A) of such Code is amended by striking
``deduction under section 199'' both places it appears and
inserting ``deductions under sections 199 and 200''.
(2) Section 56(g)(4)(C) of such Code is amended by adding
at the end the following new clause:
``(vii) Deduction for domestic business
income.--Clause (i) shall not apply to any
amount allowable as a deduction under section
200.''.
(3) The following provisions of such Code are each amended
by inserting ``200,'' after ``199,''.
(A) Section 86(b)(2)(A).
(B) Section 135(c)(4)(A).
(C) Section 137(b)(3)(A).
(D) Section 219(g)(3)(A)(ii).
(E) Section 221(b)(2)(C)(i).
(F) Section 222 (b)(2)(C)(i).
(G) Section 246(b)(1).
(H) Section 469(i)(3)(F)(iii).
(4) Section 163(j)(6)(A)(i) of such Code is amended by
striking ``and'' at the end of subclause (III) and by inserting
after subclause (IV) the following new subclause:
``(V) any deduction allowable under
section 200, and''.
(5) Section 170(b)(2)(C) of such Code is amended by
striking ``and'' at the end of clause (iv), by striking the
period at the end of clause (v) and inserting ``, and'', and by
inserting after clause (v) the following new clause:
``(vi) section 200.''.
(6) Section 172(d) of such Code is amended by adding at the
end the following new paragraph:
``(8) Domestic business income.--The deduction under
section 200 shall not be allowed.''.
(7) Section 199(d)(2)(A) of such Code is amended by
inserting ``200,'' after ``137,''.
(8) Section 613(a) of such Code is amended by striking
``deduction under section 199'' and inserting ``deductions
under sections 199 and 200''.
(9) Section 613A(d)(1) of such Code is amended by
redesignating subparagraphs (C), (D), and (E) as subparagraphs
(D), (E), and (F), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
``(C) any deduction allowable under section 200,''.
(10) Section 1402(a) of such Code is amended by striking
``and'' at the end of paragraph (16), by redesignating
paragraph (17) as paragraph (18), and by inserting after
paragraph (16) the following new paragraph:
``(17) the deduction provided by section 200 shall not be
allowed; and''.
(11) The table of sections for part VI of subchapter B of
chapter 1 of such Code is amended by adding at the end the
following new item:
``Sec. 200. Domestic manufacturing income.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2014.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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