[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 947 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 947

 To amend the Internal Revenue Code of 1986 to limit the tax rate for 
           certain small businesses, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                May 13 (legislative day, April 19), 1993

Mr. Pressler (for himself, Mr. Bennett, Mr. Burns, and Mr. Kempthorne) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to limit the tax rate for 
           certain small businesses, 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. MAXIMUM SMALL BUSINESS TAX RATE.

    (a) In General.--Section 1 of the Internal Revenue Code of 1986 
(relating to tax imposed) is amended by adding at the end the following 
new subsection:
    ``(i) Maximum Small Business Tax Rate.--
            ``(1) In general.--If a taxpayer has taxable small business 
        income for any taxable year to which this subsection applies, 
        then the tax imposed by this section shall not exceed the sum 
        of--
                    ``(A) a tax computed at the rates and in the same 
                manner as if this subsection had not been enacted on 
                the greater of--
                            ``(i) taxable income reduced by the amount 
                        of taxable small business income, or
                            ``(ii) the amount of taxable income taxed 
                        at a rate below 31 percent, plus
                    ``(B) a tax of 31 percent of the amount of taxable 
                income in excess of the amount determined under 
                paragraph (1).
            ``(2) Taxable small business income.--For purposes of this 
        subsection, the term `taxable small business income' means the 
        taxable income of the taxpayer for any taxable year 
        attributable to the active conduct of any trade or business of 
        an eligible small business in which the taxpayer materially 
        participates (within the meaning of section 469(h) (other than 
        paragraph (4)).
            ``(3) Eligible small business.--For purposes of paragraph 
        (2)--
                    ``(A) In general.--The term `eligible small 
                business' means for any taxable year an individual, 
                partnership, S corporation, or other pass-through 
                entity the average annual gross receipts of which do 
                not exceed $5,000,000 for the 3-taxable-year period 
                ending with the preceding taxable year.
                    ``(B) Applicable rules.--
                            ``(i) Aggregation rules.--All persons 
                        treated as a single employer under subsection 
                        (a) or (b) of section 52 shall be treated as 1 
                        person for purposes of subparagraph (A).
                            ``(ii) Special rules.--The rules of 
                        subsections (c)(3) and (d)(8) of section 448 
                        shall apply for purposes of subparagraph (A).
            ``(4) Years to which subsection applies.--This subsection 
        shall apply to any taxable year if the highest rate of tax set 
        forth in subsection (a), (b), (c), (d), or (e) (whichever 
        applies) for the taxable year exceeds 31 percent.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1992.

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