Text: H.R.5029 — 111th Congress (2009-2010)All Bill Information (Except Text)

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Introduced in House (04/15/2010)


111th CONGRESS
2d Session
H. R. 5029


To amend the Internal Revenue Code of 1986 to allow the private sector to create robust levels of economic growth.


IN THE HOUSE OF REPRESENTATIVES

April 15, 2010

Mr. Jordan of Ohio (for himself and Mr. Chaffetz) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Financial Services and Appropriations, 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 allow the private sector to create robust levels of economic growth.

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 “Economic Freedom Act of 2010”.

SEC. 2. Zero percent capital gains rate for individuals and corporations.

(a) Zero percent capital gains rate for individuals.—

(1) IN GENERAL.—Paragraph (1) of section 1(h) of the Internal Revenue Code of 1986 is amended by striking subparagraph (C), by redesignating subparagraphs (D) and (E) and subparagraphs (C) and (D), respectively, and by amending subparagraph (B) to read as follows:

“(B) 0 percent of the adjusted net capital gain (or, if less, taxable income);”.

(2) ALTERNATIVE MINIMUM TAX.—Paragraph (3) of section 55(b) is amended by striking subparagraph (C), by redesignating subparagraph (D) as subparagraph (C), and by amending subparagraph (B) to read as follows:

“(B) 0 percent of the adjusted net capital gain (or, if less, taxable excess), plus”.

(3) REPEAL OF SUNSET OF REDUCTION IN CAPITAL GAINS RATES FOR INDIVIDUALS.—Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 shall not apply to section 301 of such Act.

(b) Zero percent capital gains rate for corporations.—

(1) IN GENERAL.—Section 1201 of the Internal Revenue Code of 1986 is amended by redesignating subsection (b) as subsection (c), and by striking subsection (a) and inserting the following new subsections:

“(a) General rule.—If for any taxable year a corporation has a net capital gain, then, in lieu of the tax imposed by sections 11, 511, 821(a) or (c), and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of—

“(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted,

“(2) 0 percent of the adjusted net capital gain (or, if less, taxable income),

“(3) 25 percent of the excess (if any) of—

“(A) the unrecaptured section 1250 gain (or, if less, the net capital gain (determined without regard to subsection (b)(2)), over

“(B) the excess (if any) of—

“(i) the sum of the amount on which tax is determined under paragraph (1) plus the net capital gain, over

“(ii) taxable income, plus

“(4) 28 percent of the amount of taxable income in excess of the sum of the amounts on which tax is determined under the preceding paragraphs of this subsection.

“(b) Definitions and special rules.—For purposes of this section—

“(1) IN GENERAL.—The terms ‘adjusted net capital gain’ and ‘unrecaptured section 1250 gain’ shall have the respective meanings given such terms in section 1(h).

“(2) DIVIDENDS TAXED AT NET CAPITAL GAIN.—Except as otherwise provided in this section, the term ‘net capital gain’ has the meaning given such term in section 1(h)(11).”.

(2) ALTERNATIVE MINIMUM TAX.—Section 55(b) of such Code is amended by adding at the end the following new paragraph:

“(4) MAXIMUM RATE OF TAX ON NET CAPITAL GAIN OF CORPORATIONS.—The amount determined under paragraph (1)(B)(i) shall not exceed the sum of—

“(A) the amount determined under such paragraph computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the net capital gain, plus

“(B) the amount determined under section 1201.”.

(3) TECHNICAL AMENDMENTS.—

(A) Section 1202(a) of such Code is amended by striking “50 percent” and inserting “100 percent”.

(B) Section 1445(e)(1) of such Code is amended by striking “35 percent (or, to the extent provided in regulations, 15 percent)” and inserting “0 percent”.

(C) Section 1445(e)(2) of such Code is amended by striking “35 percent” and inserting “0 percent”.

(D) Section 7518(g)(6)(A) of such Code is amended by striking “15 percent (34 percent in the case of a corporation)” and inserting “0 percent” .

(E) Section 607(h)(6)(A) of the Merchant Marine Act, 1936 is amended by striking “15 percent (34 percent in the case of a corporation)” and inserting “0 percent”.

(c) Effective date.—

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2009.

(2) WITHHOLDING.—The amendments made by subparagraphs (A) and (B) of subsection (b)(3) shall take apply to dispositions and distributions after the date of the enactment of this Act.

SEC. 3. Reduction in corporate income tax rates.

(a) In general.—Subsection (b) of section 11 of the Internal Revenue Code of 1986 is amended to read as follows:

“(b) Amount of tax.—The amount of the tax imposed by subsection (a) shall be 12.5 percent of taxable income.”.

(b) Conforming amendments.—

(1) Section 55(b)(1)(B)(i) of such Code is amended by striking “20 percent” and inserting “12.5 percent”.

(2) Section 280C(c)(3)(B)(ii)(II) of such Code is amended by striking “maximum rate of tax under section 11(b)(1)” and inserting “rate of tax under section 11(b)”.

(3) Section 832(b)(1) of such Code is amended by striking “rates provided in section 11(b)” and inserting “rate provided in section 11(b)”.

(4) Sections 244(a)(2)(B), 247(a)(2)(B), 527(b)(1), 835(e), 852(b)(1), 857(b)(4)(A), 860G(c)(1), 904(b)(3)(E)(ii)(II), and 1375(a) of such Code is amended by striking “highest rate of tax” and inserting “rate of tax”.

(5) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 1446(b)(2)(B), and 7874(e)(1)(B) of such Code are each amended by striking “highest rate of tax specified in section 11(b)(1)” and inserting “rate of tax specified in section 11(b)”.

(6) Section 904(b)(3)(D)(ii) of such Code is amended by striking “(determined without regard to the last sentence of section 11(b)(1))”.

(7) Section 962 of such Code is amended by striking subsection (c) and by redesignating subsection (d) as subsection (c).

(8) Section 1201(a) of such Code is amended—

(A) by striking “35 percent (determined without regard to the last 2 sentences of section 11(b)(1))” and inserting “15 percent”, and

(B) by striking “35 percent” in paragraph (2) and inserting “15 percent”.

(9) Section 1561(a) of such Code is amended—

(A) by striking paragraph (1) and by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively,

(B) by striking “The amounts specified in paragraph (1), the” and inserting “The”,

(C) by striking “paragraph (2)” and inserting “paragraph (1)”,

(D) by striking “paragraph (3)” both places it appears and inserting “paragraph (2)”,

(E) by striking “paragraph (4)” and inserting “paragraph (3)”, and

(F) by striking the fourth sentence.

(10) Subsection (b) of section 1561 of such Code is amended to read as follows:

“(b) Certain short taxable years.—If a corporation has a short taxable year which does not include a December 31 and is a component member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle, the amount to be used in computing the accumulated earnings credit under section 535(c)(2) and (3) of such corporation for such taxable year shall be the amount specified in subsection (a)(1) divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31.”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2009.

SEC. 4. Estate tax repeal made permanent.

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act.

SEC. 5. Election to expense business assets.

(a) In general.—Section 179 of the Internal Revenue Code of 1986 is amended to read as follows:

“SEC. 179. Election to expense certain depreciable business assets.

“(a) Treatment as expenses.—A taxpayer may elect to treat the cost of any property to which this section applies as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which such property is placed in service.

“(b) Property to which section applies.—

“(1) IN GENERAL.—This section shall apply to property—

“(A) which is—

“(i) tangible property (to which section 168 applies), or

“(ii) computer software (as defined in section 197(e)(3)(B)) which is described in section 197(e)(3)(A)(i), to which section 167 applies,

“(B) which is section 1245 property (as defined in section 1245(a)(3)) or 1250 property (as defined in section 1250(c)), and

“(C) which is acquired by purchase for use in the active conduct of a trade or business.

Such term shall not include any property described in section 50(b) and shall not include air conditioning or heating units.

“(2) PURCHASE DEFINED.—For purposes of paragraph (1), the term ‘purchase’ means any acquisition of property, but only if—

“(A) the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants),

“(B) the property is not acquired by one component member of a controlled group from another component member of the same controlled group, and

“(C) the basis of the property in the hands of the person acquiring it is not determined—

“(i) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or

“(ii) under section 1014(a) (relating to property acquired from a decedent).

“(3) COST.—For purposes of this section, the cost of property does not include so much of the basis of such property as is determined by reference to the basis of other property held at any time by the person acquiring such property.

“(4) CONTROLLED GROUP DEFINED.—For purposes of this section, the term ‘controlled group’ has the meaning assigned to it by section 1563(a), except that, for such purposes, the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in section 1563(a)(1).

“(5) COORDINATION WITH SECTION 38.—No credit shall be allowed under section 38 with respect to any amount for which a deduction is allowed under subsection (a).

“(6) RECAPTURE IN CERTAIN CASES.—The Secretary shall, by regulations, provide for recapturing the benefit under any deduction allowable under subsection (a) with respect to any property which is not used predominantly in a trade or business at any time.

“(c) Election.—

“(1) IN GENERAL.—An election under this section for any taxable year shall—

“(A) specify the items of property to which the election applies, and

“(B) be made on the taxpayer’s return of the tax imposed by this chapter for the taxable year.

Such election shall be made in such manner as the Secretary may by regulations prescribe.

“(2) ELECTION IRREVOCABLE.—Any election made under this section, and any specification contained in any such election, may not be revoked except with the consent of the Secretary.”.

(b) Effective date.—The amendment made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 6. Payroll Tax Decrease for 2010.

(a) Employees.—Section 3101 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(d) Reduction in tax rate for 2010.—In the case of wages received during calendar year 2010—

“(1) subsection (a) shall be applied by substituting ‘3.1 percent’ for ‘6.2 percent’ in the table contained therein, and

“(2) subsection (b) shall be applied by substituting ‘0.725 percent’ for ‘1.45 percent’ in paragraph (6) thereof.”.

(b) Employers.—Section 3111 of such Code is amended by adding at the end the following new subsection:

“(d) Reduction in tax rate for 2010.—In the case of wages paid during calendar year 2010—

“(1) subsection (a) shall be applied by substituting ‘3.1 percent’ for ‘6.2 percent’ in the table contained therein, and

“(2) subsection (b) shall be applied by substituting ‘0.725 percent’ for ‘1.45 percent’ in paragraph (6) thereof.”.

(c) Self-Employment.—Section 1401 of such Code is amended by adding at the end the following new subsection:

“(d) Reduction in tax rate for 2010.—In the case of a taxable year beginning in 2010—

“(1) subsection (a) shall be applied by substituting ‘6.2 percent’ for ‘12.4 percent’ in the table contained therein, and

“(2) subsection (b) shall be applied by substituting ‘1.45 percent’ for ‘2.90 percent’ in paragraph (6) thereof.”.

(d) Effective date.—

(1) IN GENERAL.—Except as provided by paragraph (2), the amendments made by this section shall apply with respect to remuneration paid after December 31, 2009.

(2) SELF-EMPLOYMENT.—The amendment made by subsection (c) shall apply to taxable years beginning after December 31, 2009.

SEC. 7. Rescission and repeal in ARRA.

(a) Rescission.—Of the discretionary appropriations made available in division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), all unobligated balances are rescinded.

(b) Repeal.—Subtitles B and C of title II and titles III through VII of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) are repealed.

SEC. 8. Termination of TARP authority.

Section 120 of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5230) is amended to read as follows:

“SEC. 120. Termination of authority.

“The authorities provided under sections 101(a), excluding section 101(a)(3), and 102 shall terminate on the date of the enactment of the Economic Freedom Act of 2010.”.

SEC. 9. Requiring the sale of stock and warrants received under TARP.

Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Secretary of the Treasury shall sell all stock and warrants acquired by the Secretary under the Troubled Asset Relief Program under title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.).