[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4201 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4201

 To amend the Internal Revenue Code of 1986 to provide incentives for 
  the creation of jobs and business opportunities by individuals and 
small businesses through reduction of the social security tax burden on 
                 small employers and the self-employed.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 13, 1994

 Mr. Martinez 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 provide incentives for 
  the creation of jobs and business opportunities by individuals and 
small businesses through reduction of the social security tax burden on 
                 small employers and the self-employed.

    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 ``Job Creation and Business Equity Act 
of 1994''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the vast majority of jobs created in the United States 
        over the past quarter century are in new, small businesses 
        created through the entrepreneurial skills of individuals who 
        take the risks of business development;
            (2) current tax laws in the United States, while well 
        designed for the long-term protection of American businesses 
        and workers, are often the major reason that new or emerging 
        businesses fail or are restricted in the pace of their growth 
        and job creation;
            (3) providing special tax deferrals, suspensions and other 
        rules for new or emerging businesses will enhance the creation 
        of jobs throughout the economy over the next decade;
            (4) current tax incentives offered to small businesses or 
        proposed with respect to those businesses do not deal with the 
        direct costs associated with employing workers, or do so in a 
        manner that does not always support long-term employment 
        activities, especially for targeted populations; and
            (5) tax based incentives that are specifically linked to 
        the development of jobs in new small businesses are the best 
        kinds of incentives that can be offered to entrepreneurs who 
        are willing to develop those jobs.

SEC. 3. AMENDMENT TO SECTION 1402.

    (a) Section 1402 of the Internal Revenue Code of 1986 is amended by 
adding a new subsection (l) at the end thereof, to read as follows:
    ``(l) Special Rule for New Businesses.--For purposes of this 
chapter--
            ``(1) a new business shall be defined as a sole-
        proprietorship or partnership whose owners would be treated as 
        self-employed under this chapter, where the principal owners of 
        the business have not engaged in self-employment activities for 
        more than 3 years out of the 10 years immediately preceding the 
        year for which such determination is made under this section; 
        and
            ``(2) the owners, and each of them, where a partnership is 
        involved, of a new business, as defined in paragraph (1), shall 
        be exempt from tax under this subtitle until the self-
        employment income, as defined in subsection (b) of this 
        section, exceeds $25,000 for each owner.''
    (b) This section shall be effective for businesses created on or 
after January 1, 1994, and for tax periods beginning on or after that 
date and shall continue in effect until December 31, 1999.

SEC. 4. AMENDMENT TO SECTION 3111.

    (a) Section 3111 of the Internal Revenue Code of 1986 is amended by 
adding a new subsection (d) at the end thereof, to read as follows:
    ``(d) Special Rule for New Business Employers.--For purposes of 
this chapter--
            ``(1) a new business employer shall be defined as a sole-
        proprietorship, partnership, or corporation where the principal 
        owners of the business have not, directly as individuals, 
        partners in arrangements with others or as owners of a 
        corporation, engaged in commercial or other activities that 
        involve the employment of other persons (other than as 
        household employees) for more than 3 years out of 10 years 
        immediately preceding the year for which such determination is 
        made under this section; and
            ``(2) the new business employer, and each of them, where a 
        partnership is involved, as defined in paragraph (1), shall be 
        exempt from tax on employers under this subchapter until the 
        gross value of wages (including any self-employment income, as 
        defined in subsection (b) of section 1401 for each owner of the 
        business) shall exceed $100,000.''
    (b) This section shall be effective for businesses created on or 
after January 1, 1994, and for tax periods beginning on or after that 
date and shall continue in effect until December 31, 1999.

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