[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2574 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2574

To amend the Internal Revenue Code of 1986 to provide comprehensive tax 
    relief for American families and businesses to encourage family 
          stability, economic growth, and tax simplification.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 20, 1999

  Mr. Maloney of Connecticut (for himself, Mr. Roemer, Mr. Dooley of 
  California, Mr. Smith of Washington, Mr. Weygand, Mr. Sherman, Ms. 
Hooley of Oregon, Ms. Stabenow, Mr. Etheridge, Mr. Gonzalez, Mr. Moore, 
 and Mr. Stupak) 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 comprehensive tax 
    relief for American families and businesses to encourage family 
          stability, economic growth, and tax simplification.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Pro-Family, Pro-
Growth, Pro-Reform Tax Reduction Act of 1999''.
    (b) Table of Contents.--

Sec. 1. Short title; etc.
                         TITLE I--CAPITAL GAINS

Sec. 101. Repeal of application of alternative minimum tax to stock 
                            transferred pursuant to incentive stock 
                            options.
                          TITLE II--EDUCATION

Sec. 201. Extension of exclusion for employer-provided educational 
                            assistance; exclusion to apply to 
                            assistance provided for graduate education.
Sec. 202. Employer-provided workplace literacy tax credit.
Sec. 203. Credit for information technology training program expenses.
Sec. 204. Teacher Technology Access Act.
Sec. 205. Teacher Technology Training Act.
Sec. 206. Increase in Hope and Lifetime Learning tax credits.
Sec. 207. Tax treatment of student loan forgiveness.
Sec. 208. Exclusion of certain amounts received under the national 
                            health service corps scholarship program, 
                            the F. Edward Hebert Armed Forces Health 
                            Professions Scholarship and Financial 
                            Assistance Program, and certain other 
                            programs.
Sec. 209. Elimination of 60-month limit on student loan interest 
                            deduction.
Sec. 210. Credit for school construction bonds in high-growth areas.
Sec. 211. Credit for school modernization bonds in distressed areas.
                         TITLE III--EMPLOYMENT

Sec. 301. Extension of Work Opportunity Credit and Welfare-to-Work 
                            credit.
                            TITLE IV--ENERGY

Sec. 401. Credit for certain energy-efficient property used in 
                            business.
Sec. 402. Extension of credit for qualified electric vehicles.
Sec. 403. Modifications to credit for electricity produced from certain 
                            renewable resources.
Sec. 404. Credit for certain nonbusiness energy property.
Sec. 405. Extension of wind and biomass tax credit.
Sec. 406. Kerosene Tax Equalizer Act.
                          TITLE V--ENVIRONMENT

Sec. 501. Better America Bonds tax credit.
Sec. 502. Permanent extension of brownfields tax deduction at 100 
                            percent.
Sec. 503. Restoration of deduction for demolition of certain 
                            structures.
Sec. 504. Increase in land donation tax deduction from 30 percent to 50 
                            percent.
Sec. 505. Temporary suspension of maximum amount of amortizable 
                            reforestation expenditures.
                     TITLE VI--ESTATE TAX REDUCTION

Sec. 601. Repeal of limitation on estate tax deduction for family-owned 
                            business interests.
Sec. 602. Unified credit increased by unused unified credit of 
                            predeceased spouse.
                     TITLE VII--FAMILY ENHANCEMENT

Sec. 701. Nonrefundable personal credits allowed against alternative 
                            minimum tax.
Sec. 702. Elimination of marriage penalty in standard deduction.
Sec. 703. Expansion of dependent care tax credit.
Sec. 704. Employer-provided child care services.
                        TITLE VIII--HEALTH CARE

Sec. 801. Credit for taxpayers with long-term care needs.
Sec. 802. Credit for employer health care costs.
Sec. 803. Emergency Medical Services Enhancement Act.
Sec. 804. Deduction for health insurance costs for self-employed 
                            individuals.
                           TITLE IX--HOUSING

Sec. 901. Extension of first-time District of Columbia home buyer tax 
                            credit.
Sec. 902. Increase in State ceiling in low-income housing tax credit.
                     TITLE X--RESEARCH AND BUSINESS

Sec. 1001. Increase in expense treatment for small businesses.
Sec. 1002. Medical innovation tax credit.
Sec. 1003. Permanent extension of research credit.
                     TITLE XI--RETIREMENT SECURITY

Sec. 1101. Adjustment in monthly exempt amount for purposes of the 
                            social security earnings test.
Sec. 1102. Small business credit for pension plan start-up costs.
Sec. 1103. Increase in taxpayer IRA contributions.
    TITLE XII--NATIONAL COMMISSION ON TAX SIMPLIFICATION AND REFORM

Sec. 1201. Establishment.
Sec. 1202. Functions.
Sec. 1203. Administration.
Sec. 1204. General.
    TITLE XIII--AMOUNT OF REVENUES RESERVED FOR SOCIAL SECURITY AND 
                                MEDICARE

Sec. 1301. Amount of revenues reserved for Social Security and 
                            Medicare.

                         TITLE I--CAPITAL GAINS

SEC. 101. REPEAL OF APPLICATION OF ALTERNATIVE MINIMUM TAX TO STOCK 
              TRANSFERRED PURSUANT TO INCENTIVE STOCK OPTIONS.

    (a) In General.--Subsection (b) of section 56 of the Internal 
Revenue Code of 1986 (relating to adjustments in computing alternative 
minimum taxable income) is amended by striking paragraph (3).
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to options exercised after December 31, 1999.

                          TITLE II--EDUCATION

SEC. 201. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL 
              ASSISTANCE; EXCLUSION TO APPLY TO ASSISTANCE PROVIDED FOR 
              GRADUATE EDUCATION.

    (a) Extension.--Subsection (d) of section 127 of the Internal 
Revenue Code of 1986 is hereby repealed.
    (b) Exclusion To Apply to Graduate Students.--The last sentence of 
section 127(c)(1) of such Code is amended by striking ``hobbies'' and 
all that follows and inserting ``hobbies.''
    (c) Effective Date.--The amendments made by this section shall 
apply to courses beginning after June 30, 1999.

SEC. 202. EMPLOYER-PROVIDED WORKPLACE LITERACY TAX CREDIT.

    (a) General Rule.--Subpart D of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end thereof the following new 
section:

``SEC. 45D. EXPENDITURES TO PROVIDE LANGUAGE TRAINING TO EMPLOYEES.

    ``(a) General Rule.--For purposes of section 38, the amount of the 
language training credit determined under this section for the taxable 
year is 10 percent of the qualified language training expenses paid or 
incurred by the taxpayer during the taxable year.
    ``(b) Dollar Limit Per Employee.--The maximum credit determined 
under this section with respect to each employee shall not exceed $525.
    ``(c) Qualified Language Training Expenses.--For purposes of this 
section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified language training expenses' 
        means--
                    ``(A) amounts paid or incurred by the taxpayer with 
                respect to expenses incurred by or on behalf of an 
                employee for qualified language training of such 
                employee (including but not limited to tuition, fees, 
                and similar payments, books and supplies), and
                    ``(B) the following expenses paid or incurred by 
                the taxpayer--
                            ``(i) wages (as defined in section 
                        41(b)(2)(D)) paid or incurred by the taxpayer 
                        to an employee for services consisting of 
                        providing qualified language training to 
                        employees of the taxpayer, and
                            ``(ii) expenses of books and supplies used 
                        in connection with the provision of such 
                        training,
        but only if such expenses are incurred pursuant to a program 
        which meets the requirements of paragraphs (2) and (3) of 
        section 127.
            ``(2) Only domestic employment qualified.--Amounts may be 
        taken into account under paragraph (1) with respect to any 
        employee receiving qualified language training only if--
                    ``(A) the employee is a citizen or resident of the 
                United States and has attained age 18, and
                    ``(B) substantially all of the services performed 
                by such employee during the taxable year for the 
                taxpayer are performed in the United States or any 
                possession of the United States.
    ``(d) Qualified Language Training.--For purposes of this section, 
the term `qualified language training' means--
            ``(1) training in English language and literacy to 
        individuals with limited English proficiency, and
            ``(2) remedial training in English language and literacy.
    ``(e) Exclusion from Employee's Income.--Amounts taken into account 
in determining the credit under this section shall not be includible in 
the gross income of the employee.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code is amended by striking ``plus'' at the end of 
paragraph (11), by striking the period at the end of paragraph (12) and 
inserting ``, plus'', and by adding at the end thereof the following 
new paragraph:
            ``(13) the language training credit determined under 
        section 45D(a).''.
    (c) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end thereof the following new subsection:
    ``(d) Credit for Literacy Enhancement Expenses.--No deduction shall 
be allowed for that portion of the qualified literacy education 
expenses (as defined in section 45D(b)) otherwise allowable as a 
deduction for the taxable year which is equal to the amount of the 
credit determined for such taxable year under section 45D(a).''
    (d) Credit Allowable Against Minimum Tax.--Subsection (c) of 
section 38 of such Code is amended by redesignating paragraph (3) as 
paragraph (4) and by inserting after paragraph (2) the following new 
paragraph:
            ``(3) Language training credit allowed against minimum 
        tax.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) shall be reduced by the portion of the 
                language training credit not used against the normal 
                limitation.
                    ``(B) Portion of language training credit not used 
                against normal limitation.--For purposes of 
                subparagraph (A), the portion of the language training 
                credit not used against the normal limitation is the 
                excess (if any) of--
                            ``(i) the portion of the credit allowable 
                        under subsection (a) which is attributable to 
                        the language training credit, over
                            ``(ii) the limitation of paragraph (1) 
                        (determined without regard to this paragraph) 
                        reduced by the portion of the credit under 
                        subsection (a) which is not so attributable.''
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end thereof the following new section:

                              ``Sec. 45D. Expenditures to provide 
                                        language training to 
                                        employees.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 203. CREDIT FOR INFORMATION TECHNOLOGY TRAINING PROGRAM EXPENSES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following:

``SEC. 45E. INFORMATION TECHNOLOGY TRAINING PROGRAM EXPENSES.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
employer, the information technology training program credit determined 
under this section is an amount equal to 20 percent of information 
technology training program expenses paid or incurred by the taxpayer 
during the taxable year.
    ``(b) Additional Credit Percentage for Certain Programs.--The 
percentage under subsection (a) shall be increased by 5 percentage 
points for information technology training program expenses paid or 
incurred by the taxpayer with respect to a program operated--
            ``(1) in an empowerment zone or enterprise community 
        designated under part I of subchapter U,
            ``(2) in a school district in which at least 50 percent of 
        the students attending schools in such district are eligible 
        for free or reduced-cost lunches under the school lunch program 
        established under the National School Lunch Act,
            ``(3) in an area designated as a disaster area by the 
        Secretary of Agriculture or by the President under the Disaster 
        Relief and Emergency Assistance Act in the taxable year or the 
        4 preceding taxable years,
            ``(4) in a rural enterprise community designated under 
        section 766 of the Agriculture, Rural Development, Food and 
        Drug Administration, and Related Agencies Appropriations Act, 
        1999,
            ``(5) in an area designated by the Secretary of Agriculture 
        as a Rural Economic Area Partnership Zone, or
            ``(6) by an employer who has 200 or fewer employees for 
        each working day in each of 20 or more calendar weeks in the 
        current or preceding calendar year.
    ``(c) Limitation.--The amount of information technology training 
program expenses with respect to an individual which may be taken into 
account under subsection (a) for the taxable year shall not exceed 
$6,000.
    ``(d) Information Technology Training Program Expenses.--For 
purposes of this section--
            ``(1) In general.--The term `information technology 
        training program expenses' means expenses paid or incurred by 
        reason of the participation of the employer in any information 
        technology training program.
            ``(2) Information technology training program.--The term 
        `information technology training program' means a program--
                    ``(A) for the training of computer programmers, 
                systems analysts, and computer scientists or engineers 
                (as such occupations are defined by the Bureau of Labor 
                Statistics),
                    ``(B) involving a partnership of--
                            ``(i) employers, and
                            ``(ii) State training programs, school 
                        districts, university systems, or certified 
                        commercial information technology training 
                        providers, and
                    ``(C) at least 50 percent of the costs of which are 
                paid or incurred by the employers.
            ``(3) Certified commercial information technology training 
        provider.--The term `certified commercial information 
        technology training providers' means a private sector provider 
        of educational products and services utilized for training in 
        information technology which is certified with respect to--
                    ``(A) the curriculum that is used for the training, 
                or
                    ``(B) the technical knowledge of the instructors of 
                such provider,
        by 1 or more software publishers or hardware manufacturers the 
        products of which are a subject of the training.
    ``(e) Denial of Double Benefit.--No deduction or credit under any 
other provision of this chapter shall be allowed with respect to 
information technology training program expenses (determined without 
regard to the limitation under subsection (c)).
    ``(f) Allocations.--For purposes of this section, rules similar to 
the rules of section 41(f)(2) shall apply.''
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (12), 
by striking the period at the end of paragraph (13) and inserting ``, 
plus'', and by adding at the end the following:
            ``(14) the information technology training program credit 
        determined under section 45E.''
    (c) No Carrybacks.--Subsection (d) of section 39 of the Internal 
Revenue Code of 1986 (relating to carryback and carryforward of unused 
credits) is amended by adding at the end the following:
            ``(9) No carryback of section 45e credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the information technology 
        training program credit determined under section 45E may be 
        carried back to a taxable year ending before the date of the 
        enactment of section 45E.''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following:

                              ``Sec. 45E. Information technology 
                                        training program expenses.''
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of enactment of this 
Act in taxable years ending after such date.

SEC. 204. TEACHER TECHNOLOGY ACCESS ACT.

    (a) Findings.--The Congress finds the following:
            (1) There is a need for widespread commitment to provide 
        each child with a high quality education that will prepare that 
        child to successfully compete in a global marketplace.
            (2) The technological transformation of our schools will go 
        to waste if elementary and secondary teachers are not provided 
        with the support they need to effectively integrate 
        technologies into their teaching.
            (3) Teachers should be provided with the tools and time 
        required to master a variety of technological skills, redesign 
        their lesson plans around technology-enhanced resources, and 
        take on a complex new role in the technologically transformed 
        classroom.
            (4) Teachers receive little support for these fundamental 
        changes, and most teachers are left largely on their own as 
they struggle to integrate technology into their curricula.
            (5) Just as our Nation's businesses are provided with a 
        variety of tax incentives to improve their business operations 
        in order to strengthen the American economy, so also it is 
        necessary and appropriate that our Nation's secondary and 
        elementary teachers are afforded similar opportunities in order 
        to fulfill our commitment to providing every child with a high 
        quality education.
    (b) Credit for Acquisition of Computer Hardware and Software by 
Elementary and Secondary Teachers.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        nonrefundable personal credits) is amended by inserting after 
        section 25A the following new section:

``SEC. 25B. ACQUISITION OF COMPUTER HARDWARE AND SOFTWARE BY ELEMENTARY 
              AND SECONDARY TEACHERS.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
chapter for a taxable year an amount equal to the qualified computer 
expenditures made by such individual for the taxable year.
    ``(b) Limitation.--No amount shall be allowed as a credit under 
subsection (a) for a taxable year if such amount, when added to all 
previous amounts allowed as a credit under subsection (a) for any 
taxable year, exceeds $2,000.
    ``(c) Definitions.--For purposes of subsection (a)--
            ``(1) Qualified computer expenditures.--
                    ``(A) In general.--The term `qualified computer 
                expenditures' means the amount paid or incurred for the 
                acquisition of a computer, related peripheral 
                equipment, and computer software. Such term shall not 
                include computer software that is primarily used for 
                entertainment or amusement.
                    ``(B) Computer, related peripheral equipment.--The 
                terms `computer' and `related peripheral equipment' 
                have the meanings given to such terms by section 
                168(i)(2)(B).
                    ``(C) Computer software.--The term `computer 
                software' has the meaning given to such term by section 
                197(e)(3)(B), except that such term shall include 
                educational software available only to educators.
            ``(2) Eligible individual.--The term `eligible individual' 
        means an individual who is a teacher in the classroom in an 
        elementary or secondary school.
    ``(d) Denial of Double Benefit.--No deduction or credit shall be 
allowed under any other provision of this chapter for any amount 
allowed as a credit under this section.
    ``(e) Termination.--Subsection (a) shall not apply to expenditures 
made after December 31, 2004.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25A the 
        following new item:

                              ``Sec. 25B. Acquisition of computer 
                                        hardware and software by 
                                        elementary and secondary 
                                        teachers.''.
            (3) Effective date.--The amendments made by this section 
        shall apply to taxable years beginning after December 31, 1999.

SEC. 205. TEACHER TECHNOLOGY TRAINING ACT.

    (a) In General.--Subsection (c) of section 25A of the Internal 
Revenue Code of 1986 (relating to lifetime learning credit) is amended 
by adding at the end the following new paragraph:
            ``(3) Special rule for technology training for elementary 
        and secondary teachers.--If any portion of the qualified 
        tuition and related expenses to which this subsection applies--
                    ``(A) is paid or incurred by an individual who is a 
                teacher in the classroom in an elementary or secondary 
                school, and
                    ``(B) is incurred before January 1, 2005--
                            ``(i) for the enrollment or attendance of 
                        such individual in a course of instruction on 
                        basic or advanced computer functions or 
                        computer software (including educational 
                        software offered by a single institution) 
                        approved for such individual by such local 
                        educational agency, and
                            ``(ii) for purposes of integrating 
                        materials covered by such course into the 
                        courses taught in the elementary or secondary 
                        classroom,
        paragraph (1) shall be applied with respect to such portion by 
        substituting `50 percent' for `20 percent'.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to expenses paid after December 31, 1999, for education furnished 
in academic periods beginning after such date.

SEC. 206. INCREASE IN HOPE AND LIFETIME LEARNING TAX CREDITS.

    (a) Increase in Maximum Credit.--
            (1) Hope scholarship credit.--Paragraph (1) of section 
        25A(b) of the Internal Revenue Code of 1986 is amended by 
        striking ``$1,000'' each place it appears and inserting 
        ``$2,500''.
            (2) Lifetime learning credit.--Paragraph (1) of section 
        25A(c) of such Code is amended by striking ``$10,000 ($5,000'' 
        and inserting ``$13,000 ($6,500''.
    (b) Hope Credit To Apply to All 4 Years.--Paragraph (2) of section 
25A(b) is amended by striking ``2'' each place it appears and inserting 
``4''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 207. TAX TREATMENT OF STUDENT LOAN FORGIVENESS.

    (a) In General.--Section 108(f) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(4) William d. ford federal direct loans.--For purposes 
        of this subsection, the term `student loan' includes loans made 
        under the William D. Ford Federal Direct Loan Program if loan 
        repayment and forgiveness are contingent on the borrower's 
        income level.''
    (b) Effective Date.--The amendment made by this section shall apply 
to loans canceled after December 31, 1999.

SEC. 208. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL 
              HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM, THE F. EDWARD 
              HEBERT ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP AND 
              FINANCIAL ASSISTANCE PROGRAM, AND CERTAIN OTHER PROGRAMS.

    (a) In General.--Section 117(c) of the Internal Revenue Code of 
1986 (relating to the exclusion from gross income amounts received as a 
qualified scholarship) is amended--
            (1) by striking ``Subsections (a)'' and inserting the 
        following:
            ``(1) In general.--Except as provided in paragraph (2), 
        subsections (a)'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exceptions.--Paragraph (1) shall not apply to any 
        amount received by an individual under--
                    ``(A) the National Health Service Corps Scholarship 
                program under section 338A(g)(1)(A) of the Public 
                Health Service Act,
                    ``(B) the Armed Forces Health Professions 
                Scholarship and Financial Assistance program under 
                subchapter I of chapter 105 of title 10, United States 
                Code,
                    ``(C) the National Institutes of Health 
                Undergraduate Scholarship program under section 487D of 
                the Public Health Service Act, or
                    ``(D) any State program determined by the Secretary 
                to have substantially similar objectives as such 
                programs.''
    (b) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by subsection (a) shall apply to amounts 
        received in taxable years beginning after December 31, 1993.
            (2) State programs.--Section 117(c)(2)(D) of the Internal 
        Revenue Code of 1986 (as added by the amendments made by 
        subsection (a)) shall apply to amounts received in taxable 
        years beginning after December 31, 1999.

SEC. 209. ELIMINATION OF 60-MONTH LIMIT ON STUDENT LOAN INTEREST 
              DEDUCTION.

    (a) In General.--Section 221 of the Internal Revenue Code of 1986 
(relating to interest on education loans) is amended by striking 
subsection (d) and by redesignating subsections (e), (f), and (g) as 
subsections (d), (e), and (f), respectively.
    (b) Conforming Amendment.--Section 6050(e) of the Internal Revenue 
Code of 1986 is amended by striking ``section 221(e)(1)'' and inserting 
``section 221(d)(1)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to any loan interest paid after December 31, 1999.

SEC. 210. CREDIT FOR SCHOOL CONSTRUCTION BONDS IN HIGH-GROWTH AREAS.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to credits against tax) is 
amended by inserting after subpart G the following new subpart:

``Subpart H--Credit to Holders of Qualified Public School Construction 
                                 Bonds

                              ``Sec. 54. Credit to holders of qualified 
                                        public school construction 
                                        bonds.
                              ``Sec. 54A. Qualified public school 
                                        construction bonds.

``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL CONSTRUCTION 
              BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified public school construction bond on the credit allowance date 
of such bond which occurs during the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for such 
taxable year the amount determined under subsection (b).
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any qualified public 
        school construction bond is the amount equal to the product 
        of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (2) for the month in which such bond 
                was issued, multiplied by
                    ``(B) the face amount of the bond held by the 
                taxpayer on the credit allowance date.
            ``(2) Determination.--During each calendar month, the 
        Secretary shall determine a credit rate which shall apply to 
        bonds issued during the following calendar month. The credit 
        rate for any month is the percentage which the Secretary 
        estimates will on average permit the issuance of qualified 
        public school construction bonds without discount and without 
        interest cost to the issuer.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subpart C thereof, relating to 
                refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Definitions.--For purposes of this subpart--
            ``(1) Credit allowance date.--The term `credit allowance 
        date' means, with respect to any issue, the last day of the 1-
        year period beginning on the date of issuance of such issue and 
the last day of each successive 1-year period thereafter.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(4) Public school facility.--The term `public school 
        facility' shall not include any stadium or other facility 
        primarily used for athletic contests or exhibitions or other 
        events for which admission is charged to the general public.
    ``(e) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section and the 
amount so included shall be treated as interest income.
    ``(f) Bonds Held by Regulated Investment Companies.--If any 
qualified public school construction bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.

``SEC. 54A. QUALIFIED PUBLIC SCHOOL CONSTRUCTION BONDS.

    ``(a) Qualified Public School Construction Bond.--For purposes of 
this subpart--
            ``(1) In general.--The term `qualified public school 
        construction bond' means any bond issued as part of an issue 
        if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for the construction, 
                rehabilitation, or repair of a public school facility,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which such school 
                is located,
                    ``(C) the issuer designates such bond for purposes 
                of this section, and
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 15 years.
            ``(2) Temporary period exception.--A bond shall not be 
        treated as failing to meet the requirement of paragraph (1)(A) 
        solely by reason of the fact that the proceeds of the issue of 
        which such bond is a part are invested for a reasonable 
        temporary period (but not more than 36 months) until such 
        proceeds are needed for the purpose for which such issue was 
        issued. Any earnings on such proceeds during such period shall 
        be treated as proceeds of the issue for purposes of applying 
        paragraph (1)(A).
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the limitation amount allocated under subsection (d) for such calendar 
year to such issuer.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national qualified school construction bond limitation for each 
calendar year. Such limitation is--
            ``(1) $3,600,000,000 for 2000,
            ``(2) $3,600,000,000 for 2001, and
            ``(3) except as provided in subsection (e), zero after 
        2001.
    ``(d) Allocation of Limitation Among States.--
            ``(1) In general.--The Secretary shall allocate the 
        national qualified school construction bond limitation for any 
        calendar year among the States with projected enrollment 
        increases. The amount allocated to a State under the preceding 
        sentence shall be allocated by the State education agency to 
        issuers within such State and such allocations may be made only 
        if there is an approved State application.
            ``(2) Allocation formula.--
                    ``(A) In general.--The national qualified school 
                construction bond limitation shall be allocated among 
                the States with projected enrollment increases in 
                proportion to their respective shares of the national 
                projected enrollment increase.
                    ``(B) Projected enrollment increase.--The amount of 
                projected enrollment increase for the United States or 
                any State is the amount of the increase (as projected 
                by the Secretary of Education using data as of January 
                1, 1998) in enrollment in public elementary and 
                secondary schools in the United States or in such State 
                (as the case may be) during the 10-year period 
                beginning with 1997.
            ``(3) Approved state application.--For purposes of 
        paragraph (1), the term `approved State application' means an 
        application which is approved by the Secretary of Education and 
        which includes--
                    ``(A) the results of a recent publicly-available 
                survey (undertaken by the State with the involvement of 
                local education officials, members of the public, and 
                experts in school construction and management) of such 
                State's needs for public school facilities, including 
                descriptions of--
                            ``(i) health and safety problems at such 
                        facilities,
                            ``(ii) the capacity of public schools in 
                        the State to house projected enrollments, and
                            ``(iii) the extent to which the public 
                        schools in the State offer the physical 
                        infrastructure needed to provide a high-quality 
                        education to all students, and
                    ``(B) a description of how the State will allocate 
                to local educational agencies, or otherwise use, its 
                allocation under this subsection to address the needs 
                identified under subparagraph (A), including a 
                description of how it will--
                            ``(i) give priority to localities 
                        experiencing the largest increases in 
                        enrollment,
                            ``(ii) use its allocation under this 
                        subsection to assist localities that lack the 
                        fiscal capacity to issue bonds on their own, 
                        and
                            ``(iii) ensure that its allocation under 
                        this subsection is used only to supplement, and 
                        not supplant, the amount of school 
                        construction, rehabilitation, and repair in the 
                        State that would have occurred in the absence 
                        of such allocation.
        Any allocation under paragraph (1) by a State education agency 
        shall be binding if such agency reasonably determined that the 
        allocation was in accordance with the plan approved under this 
        paragraph.
    ``(e) Carryover of Unused Limitation.--If for any calendar year--
            ``(1) the amount allocated under subsection (d) to any 
        State, exceeds
            ``(2) the amount of bonds issued during such year which are 
        designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the 
following calendar year shall be increased by the amount of such 
excess. The subsection shall not apply if such following calendar year 
is after 2003.''
    (b) Reporting.--Subsection (d) of section 6049 of such Code 
(relating to returns regarding payments of interest) is amended by 
adding at the end the following new paragraph:
            ``(8) Reporting of credit on qualified public school 
        construction bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(e) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(d)(1)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''
    (c) Clerical Amendment.--The table of subparts for part IV of 
subchapter A of chapter 1 of such Code is amended by adding at the end 
the following new item:

                              ``Subpart H. Credit to holders of 
                                        qualified public school 
                                        construction bonds.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 1999.

SEC. 211. CREDIT FOR SCHOOL MODERNIZATION BONDS IN DISTRESSED AREAS.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

         ``Subchapter X--Public School Modernization Provisions

                              ``Part I. Credit to holders of qualified 
                                        public school modernization 
                                        bonds.
                              ``Part II. Qualified school construction 
                                        bonds.
                              ``Part III. Incentives for education 
                                        zones.

 ``PART I--CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL MODERNIZATION 
                                 BONDS

                              ``Sec. 1400F. Credit to holders of 
                                        qualified public school 
                                        modernization bonds.

``SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL 
              MODERNIZATION BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified public school modernization bond on a credit allowance date 
of such bond which occurs during the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for such 
taxable year an amount equal to the sum of the credits determined under 
subsection (b) with respect to credit allowance dates during such year 
on which the taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified public school modernization bond is 25 percent 
        of the annual credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified public school modernization bond is 
        the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (1), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined under regulations 
        prescribed by the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Public School Modernization Bond; Credit Allowance 
Date.--For purposes of this section--
            ``(1) Qualified public school modernization bond.--The term 
        `qualified public school modernization bond' means--
                    ``(A) a qualified zone academy bond, and
                    ``(B) a qualified school construction bond.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
    ``(e) Other Definitions.--For purposes of this subchapter--
            ``(1) Local educational agency.--The term `local 
        educational agency' has the meaning given to such term by 
        section 14101 of the Elementary and Secondary Education Act of 
        1965. Such term includes the local educational agency that 
        serves the District of Columbia but does not include any other 
        State agency.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(4) Public school facility.--The term `public school 
        facility' shall not include--
                    ``(A) any stadium or other facility primarily used 
                for athletic contests or exhibitions or other events 
                for which admission is charged to the general public, 
                or
                    ``(B) any facility which is not owned by a State or 
                local government or any agency or instrumentality of a 
                State or local government.
    ``(f) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(g) Bonds Held by Regulated Investment Companies.--If any 
qualified public school modernization bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.
    ``(h) Credits May be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified public school 
        modernization bond and the entitlement to the credit under this 
        section with respect to such bond. In case of any such 
        separation, the credit under this section shall be allowed to 
        the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified public school modernization bond as if 
        it were a stripped bond and to the credit under this section as 
        if it were a stripped coupon.
    ``(i) Treatment for Estimated Tax Purposes.--Solely for purposes of 
sections 6654 and 6655, the credit allowed by this section to a 
taxpayer by reason of holding a qualified public school modernization 
bonds on a credit allowance date shall be treated as if it were a 
payment of estimated tax made by the taxpayer on such date.
    ``(j) Credit May Be Transferred.--Nothing in any law or rule of law 
shall be construed to limit the transferability of the credit allowed 
by this section through sale and repurchase agreements.
    ``(k) Reporting.--Issuers of qualified public school modernization 
bonds shall submit reports similar to the reports required under 
section 149(e).
    ``(l) Termination.--This section shall not apply to any bond issued 
after September 30, 2004.

             ``PART II--QUALIFIED SCHOOL CONSTRUCTION BONDS

                              ``Sec. 1400G. Qualified school 
                                        construction bonds.

``SEC. 1400G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

    ``(a) Qualified School Construction Bond.--For purposes of this 
subchapter, the term `qualified school construction bond' means any 
bond issued as part of an issue if--
            ``(1) 95 percent or more of the proceeds of such issue are 
        to be used for the construction, rehabilitation, or repair of a 
        public school facility or for the acquisition of land on which 
        such a facility is to be constructed with part of the proceeds 
        of such issue,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such school is located,
            ``(3) the issuer designates such bond for purposes of this 
        section, and
            ``(4) the term of each bond which is part of such issue 
        does not exceed 15 years.
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the sum of--
            ``(1) the limitation amount allocated under subsection (d) 
        for such calendar year to such issuer, and
            ``(2) if such issuer is a large local educational agency 
        (as defined in subsection (e)(4)) or is issuing on behalf of 
        such an agency, the limitation amount allocated under 
        subsection (e) for such calendar year to such agency.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national qualified school construction bond limitation for each 
calendar year. Such limitation is--
            ``(1) $11,000,000,000 for 2000,
            ``(2) $11,000,000,000 for 2001, and
            ``(3) except as provided in subsection (f), zero after 
        2001.
    ``(d) Half of Limitation Allocated Among States.--
            ``(1) In general.--One-half of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        among the States under paragraph (2) by the Secretary. The 
        limitation amount allocated to a State under the preceding 
        sentence shall be allocated by the State to issuers within such 
        State and such allocations may be made only if there is an 
        approved State application.
            ``(2) Allocation formula.--The amount to be allocated under 
        paragraph (1) for any calendar year shall be allocated among 
        the States in proportion to the respective amounts each such 
        State received for Basic Grants under subpart 2 of part A of 
        title I of the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6331 et seq.) for the most recent fiscal year ending 
        before such calendar year. For purposes of the preceding 
        sentence, Basic Grants attributable to large local educational 
        agencies (as defined in subsection (e)) shall be disregarded.
            ``(3) Minimum allocations to states.--
                    ``(A) In general.--The Secretary shall adjust the 
                allocations under this subsection for any calendar year 
                for each State to the extent necessary to ensure that 
                the sum of--
                            ``(i) the amount allocated to such State 
                        under this subsection for such year, and
                            ``(ii) the aggregate amounts allocated 
                        under subsection (e) to large local educational 
                        agencies in such State for such year,
                is not less than an amount equal to such State's 
                minimum percentage of the amount to be allocated under 
                paragraph (1) for the calendar year.
                    ``(B) Minimum percentage.--A State's minimum 
                percentage for any calendar year is the minimum 
                percentage described in section 1124(d) of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6334(d)) for such State for the most recent 
                fiscal year ending before such calendar year.
            ``(4) Allocations to certain possessions.--The amount to be 
        allocated under paragraph (1) to any possession of the United 
        States other than Puerto Rico shall be the amount which would 
        have been allocated if all allocations under paragraph (1) were 
        made on the basis of respective populations of individuals 
        below the poverty line (as defined by the Office of Management 
        and Budget). In making other allocations, the amount to be 
        allocated under paragraph (1) shall be reduced by the aggregate 
        amount allocated under this paragraph to possessions of the 
        United States.
            ``(5) Allocations for indian schools.--In addition to the 
        amounts otherwise allocated under this subsection, $200,000,000 
        for calendar year 2000, and $200,000,000 for calendar year 
        2001, shall be allocated by the Secretary of the Interior for 
        purposes of the construction, rehabilitation, and repair of 
        schools funded by the Bureau of Indian Affairs. In the case of 
        amounts allocated under the preceding sentence, Indian tribal 
        governments (as defined in section 7871) shall be treated as 
        qualified issuers for purposes of this subchapter.
            ``(6) Approved state application.--For purposes of 
        paragraph (1), the term `approved State application' means an 
        application which is approved by the Secretary of Education and 
        which includes--
                    ``(A) the results of a recent publicly-available 
                survey (undertaken by the State with the involvement of 
                local education officials, members of the public, and 
                experts in school construction and management) of such 
                State's needs for public school facilities, including 
                descriptions of--
                            ``(i) health and safety problems at such 
                        facilities,
                            ``(ii) the capacity of public schools in 
                        the State to house projected enrollments, and
                            ``(iii) the extent to which the public 
                        schools in the State offer the physical 
                        infrastructure needed to provide a high-quality 
                        education to all students, and
                    ``(B) a description of how the State will allocate 
                to local educational agencies, or otherwise use, its 
                allocation under this subsection to address the needs 
                identified under subparagraph (A), including a 
                description of how it will--
                            ``(i) give highest priority to localities 
                        with the greatest needs, as demonstrated by 
                        inadequate school facilities coupled with a low 
                        level of resources to meet those needs,
                            ``(ii) use its allocation under this 
                        subsection to assist localities that lack the 
                        fiscal capacity to issue bonds on their own, 
                        and
                            ``(iii) ensure that its allocation under 
                        this subsection is used only to supplement, and 
                        not supplant, the amount of school 
                        construction, rehabilitation, and repair in the 
                        State that would have occurred in the absence 
                        of such allocation.
        Any allocation under paragraph (1) by a State shall be binding 
        if such State reasonably determined that the allocation was in 
        accordance with the plan approved under this paragraph.
    ``(e) Half of Limitation Allocated Among Largest School 
Districts.--
            ``(1) In general.--One-half of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        under paragraph (2) by the Secretary among local educational 
        agencies which are large local educational agencies for such 
        year. No qualified school construction bond may be issued by 
        reason of an allocation to a large local educational agency 
        under the preceding sentence unless such agency has an approved 
        local application.
            ``(2) Allocation formula.--The amount to be allocated under 
        paragraph (1) for any calendar year shall be allocated among 
large local educational agencies in proportion to the respective 
amounts each such agency received for Basic Grants under subpart 2 of 
part A of title I of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6331 et seq.) for the most recent fiscal year ending before 
such calendar year.
            ``(3) Allocation of unused limitation to state.--The amount 
        allocated under this subsection to a large local educational 
        agency for any calendar year may be reallocated by such agency 
        to the State in which such agency is located for such calendar 
        year. Any amount reallocated to a State under the preceding 
        sentence may be allocated as provided in subsection (d)(1).
            ``(4) Large local educational agency.--For purposes of this 
        section, the term `large local educational agency' means, with 
        respect to a calendar year, any local educational agency if 
        such agency is--
                    ``(A) among the 100 local educational agencies with 
                the largest numbers of children aged 5 through 17 from 
                families living below the poverty level, as determined 
                by the Secretary using the most recent data available 
                from the Department of Commerce that are satisfactory 
                to the Secretary, or
                    ``(B) 1 of not more than 25 local educational 
                agencies (other than those described in subparagraph 
                (A)) that the Secretary of Education determines (based 
                on the most recent data available satisfactory to the 
                Secretary) are in particular need of assistance, based 
                on a low level of resources for school construction, a 
                high level of enrollment growth, or such other factors 
                as the Secretary deems appropriate.
            ``(5) Approved local application.--For purposes of 
        paragraph (1), the term `approved local application' means an 
        application which is approved by the Secretary of Education and 
        which includes--
                    ``(A) the results of a recent publicly-available 
                survey (undertaken by the local educational agency or 
                the State with the involvement of school officials, 
                members of the public, and experts in school 
                construction and management) of such agency's needs for 
                public school facilities, including descriptions of--
                            ``(i) the overall condition of the local 
                        educational agency's school facilities, 
                        including health and safety problems,
                            ``(ii) the capacity of the agency's schools 
                        to house projected enrollments, and
                            ``(iii) the extent to which the agency's 
                        schools offer the physical infrastructure 
                        needed to provide a high-quality education to 
                        all students,
                    ``(B) a description of how the local educational 
                agency will use its allocation under this subsection to 
                address the needs identified under subparagraph (A), 
                and
                    ``(C) a description of how the local educational 
                agency will ensure that its allocation under this 
                subsection is used only to supplement, and not 
                supplant, the amount of school construction, 
                rehabilitation, or repair in the locality that would 
                have occurred in the absence of such allocation.
        A rule similar to the rule of the last sentence of subsection 
        (d)(6) shall apply for purposes of this paragraph.
    ``(f) Carryover of Unused Limitation.--If for any calendar year--
            ``(1) the amount allocated under subsection (d) to any 
        State, exceeds
            ``(2) the amount of bonds issued during such year which are 
        designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the 
following calendar year shall be increased by the amount of such 
excess. A similar rule shall apply to the amounts allocated under 
subsection (d)(5) or (e).
    ``(g) Special Rules Relating to Arbitrage.--
            ``(1) In general.--A bond shall not be treated as failing 
        to meet the requirement of subsection (a)(1) solely by reason 
        of the fact that the proceeds of the issue of which such bond 
        is a part are invested for a temporary period (but not more 
        than 36 months) until such proceeds are needed for the purpose 
        for which such issue was issued.
            ``(2) Binding commitment requirement.--Paragraph (1) shall 
        apply to an issue only if, as of the date of issuance, there is 
        a reasonable expectation that--
                    ``(A) at least 10 percent of the proceeds of the 
                issue will be spent within the 6-month period beginning 
                on such date for the purpose for which such issue was 
                issued, and
                    ``(B) the remaining proceeds of the issue will be 
                spent with due diligence for such purpose.
            ``(3) Earnings on proceeds.--Any earnings on proceeds 
        during the temporary period shall be treated as proceeds of the 
        issue for purposes of applying subsection (a)(1) and paragraph 
        (1) of this subsection.

               ``PART III--INCENTIVES FOR EDUCATION ZONES

                              ``Sec. 1400H. Qualified zone academy 
                                        bonds.
                              ``Sec. 1400I. Corporate contributions to 
                                        specialized training centers.

``SEC. 1400H. QUALIFIED ZONE ACADEMY BONDS.

    ``(a) Qualified Zone Academy Bond.--For purposes of this 
subchapter--
            ``(1) In general.--The term `qualified zone academy bond' 
        means any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for a qualified purpose with 
                respect to a qualified zone academy established by a 
                local educational agency,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which such 
                academy is located,
                    ``(C) the issuer--
                            ``(i) designates such bond for purposes of 
                        this section,
                            ``(ii) certifies that it has written 
                        assurances that the private business 
                        contribution requirement of paragraph (2) will 
                        be met with respect to such academy, and
                            ``(iii) certifies that it has the written 
                        approval of the local educational agency for 
                        such bond issuance, and
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 15 years.
        Rules similar to the rules of section 1400G(g) shall apply for 
        purposes of paragraph (1).
            ``(2) Private business contribution requirement.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the private business contribution requirement of this 
                paragraph is met with respect to any issue if the local 
                educational agency that established the qualified zone 
                academy has written commitments from private entities 
                to make qualified contributions having a present value 
                (as of the date of issuance of the issue) of not less 
                than 10 percent of the proceeds of the issue.
                    ``(B) Qualified contributions.--For purposes of 
                subparagraph (A), the term `qualified contribution' 
                means any contribution (of a type and quality 
                acceptable to the local educational agency) of--
                            ``(i) equipment for use in the qualified 
                        zone academy (including state-of-the-art 
                        technology and vocational equipment),
                            ``(ii) technical assistance in developing 
                        curriculum or in training teachers in order to 
                        promote appropriate market driven technology in 
                        the classroom,
                            ``(iii) services of employees as volunteer 
                        mentors,
                            ``(iv) internships, field trips, or other 
                        educational opportunities outside the academy 
                        for students, or
                            ``(v) any other property or service 
                        specified by the local educational agency.
            ``(3) Qualified zone academy.--The term `qualified zone 
        academy' means any public school (or academic program within a 
        public school) which is established by and operated under the 
        supervision of a local educational agency to provide education 
        or training below the postsecondary level if--
                    ``(A) such public school or program (as the case 
                may be) is designed in cooperation with business to 
                enhance the academic curriculum, increase graduation 
                and employment rates, and better prepare students for 
                the rigors of college and the increasingly complex 
                workforce,
                    ``(B) students in such public school or program (as 
                the case may be) will be subject to the same academic 
                standards and assessments as other students educated by 
                the local educational agency,
                    ``(C) the comprehensive education plan of such 
                public school or program is approved by the local 
                educational agency, and
                    ``(D)(i) such public school is located in an 
                empowerment zone or enterprise community (including any 
                such zone or community designated after the date of the 
                enactment of this section), or
                    ``(ii) there is a reasonable expectation (as of the 
                date of issuance of the bonds) that at least 35 percent 
                of the students attending such school or participating 
                in such program (as the case may be) will be eligible 
                for free or reduced-cost lunches under the school lunch 
                program established under the National School Lunch 
                Act.
            ``(4) Qualified purpose.--The term `qualified purpose' 
        means, with respect to any qualified zone academy--
                    ``(A) constructing, rehabilitating, or repairing 
                the public school facility in which the academy is 
                established,
                    ``(B) acquiring the land on which such facility is 
                to be constructed with part of the proceeds of such 
                issue,
                    ``(C) providing equipment for use at such academy,
                    ``(D) developing course materials for education to 
                be provided at such academy, and
                    ``(E) training teachers and other school personnel 
                in such academy.
    ``(b) Limitations on Amount of Bonds Designated.--
            ``(1) In general.--There is a national zone academy bond 
        limitation for each calendar year. Such limitation is--
                    ``(A) $400,000,000 for 1998,
                    ``(B) $400,000,000 for 1999,
                    ``(C) $1,000,000,000 for 2000,
                    ``(D) $1,400,000,000 for 2001, and
                    ``(E) except as provided in paragraph (3), zero 
                after 2001.
            ``(2) Allocation of limitation.--
                    ``(A) Allocation among states.--
                            ``(i) 1998 and 1999 limitations.--The 
                        national zone academy bond limitations for 
                        calendar years 1998 and 1999 shall be allocated 
                        by the Secretary among the States on the basis 
                        of their respective populations of individuals 
                        below the poverty line (as defined by the 
                        Office of Management and Budget).
                            ``(ii) Limitation after 1999.--The national 
                        zone academy bond limitation for any calendar 
                        year after 1999 shall be allocated by the 
                        Secretary among the States in the manner 
                        prescribed by section 1400G(d); except that in 
                        making the allocation under this clause, the 
                        Secretary shall take into account--
                                    ``(I) Basic Grants attributable to 
                                large local educational agencies (as 
                                defined in section 1400G(e)).
                                    ``(II) the national zone academy 
                                bond limitation.
                    ``(B) Allocation to local educational agencies.--
                The limitation amount allocated to a State under 
                subparagraph (A) shall be allocated by the State 
                education agency to qualified zone academies within 
                such State.
                    ``(C) Designation subject to limitation amount.--
                The maximum aggregate face amount of bonds issued 
                during any calendar year which may be designated under 
                subsection (a) with respect to any qualified zone 
                academy shall not exceed the limitation amount 
                allocated to such academy under subparagraph (B) for 
                such calendar year.
            ``(3) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the limitation amount under this subsection 
                for any State, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (a) (or the 
                corresponding provisions of prior law) with respect to 
                qualified zone academies within such State,
        the limitation amount under this subsection for such State for 
        the following calendar year shall be increased by the amount of 
        such excess.

``SEC. 1400I. CORPORATE CONTRIBUTIONS TO SPECIALIZED TRAINING CENTERS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
corporation, the specialized training center credit determined under 
this section is an amount equal to 50 percent of the amount of the 
designated qualified contributions made by the taxpayer during the 
taxable year to a specialized training center.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Specialized training center.--The term `specialized 
        training center' means any qualified zone academy (as defined 
        in section 1400H(a)(3))--
                    ``(A) which is located in an empowerment zone or 
                enterprise community, or
                    ``(B) which is located in proximity to such a zone 
                or community and a significant number of the students 
                attending such academy have their principal place of 
                abode in such zone or community.
            ``(2) Designated qualified contributions.--The term 
        `designated qualified contribution' means any contribution--
                    ``(A) which is made pursuant to an agreement under 
                which the taxpayer participates in the design of the 
                academic program of the specialized training center, 
                and
                    ``(B) which is designated under subsection (c).
    ``(c) Designation of Contributions.--
            ``(1) Limitation on amount designated.--The maximum amount 
        of contributions made which may be designated under this 
        subsection with respect to all specialized training centers 
        located in an empowerment zone or enterprise community shall 
        not exceed--
                    ``(A) $8,000,000 in the case of an empowerment 
                zone, and
                    ``(B) $2,000,000 in the case of an enterprise 
                community.
            ``(2) Designations.--Designations under this subsection 
        shall be made (in consultation with the local educational 
        agency) by the local government agency responsible for 
        implementing the strategic plan described in section 1391(f)(2) 
        for the empowerment zone or enterprise community.
    ``(d) Value of Contributions.--The amount of any designated 
qualified contribution which may be taken into account under this 
section shall be--
            ``(1) the amount of such contribution which would be 
        allowed as a deduction under section 170 without regard to 
        section 280C(d), or
            ``(2) in the case of a contribution of services performed 
        on the premises of a specialized training center by an employee 
        of the taxpayer, the amount of wages (as defined in section 
        3306(b) but without regard to any dollar limitation contained 
        in such section) paid by the taxpayer for such services.''
    (b) Reporting.--Subsection (d) of section 6049 of such Code 
(relating to returns regarding payments of interest) is amended by 
adding at the end the following new paragraph:
            ``(8) Reporting of credit on qualified public school 
        modernization bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 1400F(f) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 1400F(d)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''
    (c) Conforming Amendments Related to Credit for Corporate 
Contributions to Specialized Training Centers.--
            (1) Denial of double benefit.--Section 280C of such Code is 
        amended by adding at the end the following new subsection:
    ``(d) Credit for Corporate Contributions to Specialized Training 
Centers.--No deduction shall be allowed for that portion of the 
designated qualified contributions (as defined in section 1400I(b)) 
made during the taxable year which is equal to the credit determined 
for the taxable year under section 1400I(a). Paragraph (3) of 
subsection (b) shall apply for purposes of this subsection.''
            (2) Credit to be part of general business credit.--
                    (A) Section 38(b) of such Code is amended--
                            (i) by striking ``plus'' at the end of 
                        paragraph (11),
                            (ii) by striking the period at the end of 
                        paragraph (12) and inserting ``, plus'', and
                            (iii) by adding at the end the following 
                        new paragraph:
            ``(13) in the case of a corporation, the specialized 
        training center credit determined under section 1400I(a).''
                    (B) Subsection (d) of section 39 of such Code 
                (relating to carryback and carryforward of unused 
                credits) is amended by adding at the end the following 
                new paragraph:
            ``(9) No carryback of section 1400i credit before january 
        1, 2000.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit determined 
        under section 1400I may be carried back to a taxable year 
        beginning before January 1, 2000.''.
    (d) Other Conforming Amendments.--
            (1) Subchapter U of chapter 1 of such Code is amended by 
        striking part IV, by redesignating part V as part IV, and by 
        redesignating section 1397F as section 1397E.
            (2) The table of subchapters for chapter 1 of such Code is 
        amended by adding at the end the following new item:

                              ``Subchapter X. Public school 
                                        modernization provisions.''
            (3) The table of parts of subchapter U of chapter 1 of such 
        Code is amended by striking the last 2 items and inserting the 
        following item:

                              ``Part IV. Regulations.''
    (e) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        obligations issued after December 31, 1999.
            (2) Credit for corporate contributions to specialized 
        training centers.--Section 1400I of the Internal Revenue Code 
        of 1986 (as added by this section) shall apply to taxable years 
        beginning after December 31, 1999.
            (3) Repeal of restriction on zone academy bond holders.--In 
        the case of bonds to which section 1397E of the Internal 
        Revenue Code of 1986 (as in effect before the date of the 
        enactment of this Act) applies, the limitation of such section 
        to eligible taxpayers (as defined in subsection (d)(6) of such 
        section) shall not apply after the date of the enactment of 
        this Act.
    (f) Application of Certain Labor Standards on Construction Projects 
Financed Under Public School Modernization Program.--Section 439 of the 
General Education Provisions Act (relating to labor standards) is 
amended--
            (1) by inserting ``(a)'' before ``All laborers and 
        mechanics'', and
            (2) by adding at the end the following:
    ``(b)(1) For purposes of this section, the term `applicable 
program' also includes the qualified zone academy bond provisions 
enacted by section 226 of the Taxpayer Relief Act of 1997 and the 
program established by section 2 of the Public School Modernization Act 
of 1999.
    ``(2) A State or local government participating in a program 
described in paragraph (1) shall--
            ``(A) in the awarding of contracts, give priority to 
        contractors with substantial numbers of employees residing in 
        the local education area to be served by the school being 
        constructed; and
            ``(B) include in the construction contract for such school 
        a requirement that the contractor give priority in hiring new 
        workers to individuals residing in such local education area.
    ``(3) In the case of a program described in paragraph (1), nothing 
in this subsection or subsection (a) shall be construed to deny any tax 
credit allowed under such program. If amounts are required to be 
withheld from contractors to pay wages to which workers are entitled, 
such amounts shall be treated as expended for construction purposes in 
determining whether the requirements of such program are met.''.
    (g) Employment and Training Activities Relating to Construction or 
Reconstruction of Public School Facilities.--
            (1) In general.--Section 134 of the Workforce Investment 
        Act of 1998 (29 U.S.C. 2864) is amended by adding at the end 
        the following:
    ``(f) Local Employment and Training Activities Relating to 
Construction or Reconstruction of Public School Facilities.--
            ``(1) In general.--In order to provide training services 
        related to construction or reconstruction of public school 
facilities receiving funding assistance under an applicable program, 
each State shall establish a specialized program of training meeting 
the following requirements:
                    ``(A) The specialized program provides training for 
                jobs in the construction industry.
                    ``(B) The program is designed to provide trained 
                workers for projects for the construction or 
                reconstruction of public school facilities receiving 
                funding assistance under an applicable program.
                    ``(C) The program is designed to ensure that 
                skilled workers (residing in the area to be served by 
                the school facilities) will be available for the 
                construction or reconstruction work.
            ``(2) Coordination.--The specialized program established 
        under paragraph (1) shall be integrated with other activities 
        under this Act, with the activities carried out under the 
        National Apprenticeship Act of 1937 by the State Apprenticeship 
        Council or through the Bureau of Apprenticeship and Training in 
        the Department of Labor, as appropriate, and with activities 
        carried out under the Carl D. Perkins Vocational and Technical 
        Education Act of 1998. Nothing in this subsection shall be 
        construed to require services duplicative of those referred to 
        in the preceding sentence.
            ``(3) Applicable program.--In this subsection, the term 
        `applicable program' has the meaning given the term in section 
        439(b) of the General Education Provisions Act (relating to 
        labor standards).''.
            (2) State Plan.--Section 112(b)(17)(A) of the Workforce 
        Investment Act of 1998 (29 U.S.C. 2822(b)(17)(A)) is amended--
                    (A) in clause (iii), by striking ``and'' at the 
                end;
                    (B) by redesignating clause (iv) as clause (v); and
                    (C) by inserting after clause (iii) the following:
                    ``(iv) how the State will establish and carry out a 
                specialized program of training under section 134(f); 
                and''.

                         TITLE III--EMPLOYMENT

SEC. 301. EXTENSION OF WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK 
              CREDIT.

    (a) Work Opportunity Credit.--Subparagraph (B) of section 51(c)(4) 
of the Internal Revenue Code of 1986 (relating to termination) is 
amended by striking ``June 30, 1999'' and inserting ``June 30, 2004''.
    (b) Welfare-to-Work Credit.--Subparagraph (f) of section 51A of 
such Code (relating to temporary incentives for employing long-term 
family assistance recipients) is amended by striking ``June 30, 1999'' 
and inserting ``June 30, 2004''.

                            TITLE IV--ENERGY

SEC. 401. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED IN 
              BUSINESS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48 the following new section:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the sum of--
            ``(1) the amount equal to the energy percentage of the 
        basis of each energy property placed in service during such 
        taxable year, and
            ``(2) the credit amount for each qualified hybrid vehicle 
        placed in service during the taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--The energy percentage shall be 
        determined in accordance with the following table:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description         Column B--Energy Percentage                Column C--Period
----------------------------------------------------------------------------------------------------------------
                                                                                   For the period:
           In the case of:              The energy percentage is:  ---------------------------------------------
                                                                        Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
Solar energy property (other than     10 percent                     1/1/2000               no end date
 elected solar hot water property
 and photovoltaic property) and
 geothermal energy property.........
Elected solar hot water property....  15 percent                     1/1/2000              12/31/2004
Photovoltaic property...............  15 percent                     1/1/2000              12/31/2006
20 percent energy-efficient building  20 percent                     1/1/2000              12/31/2003
 property...........................
10 percent energy-efficient building  10 percent                     1/1/2000              12/31/2001
 property...........................
Combined heat and power system        8 percent                      1/1/2000              12/31/2002.
 property...........................
----------------------------------------------------------------------------------------------------------------

            ``(2) Periods for which percentage not specified.--In the 
        case of any energy property, the energy percentage shall be 
        zero for any period for which an energy percentage is not 
        specified for such property under paragraph (1).
            ``(3) Coordination with rehabilitation.--The energy 
        percentage shall not apply to that portion of the basis of any 
        property which is attributable to qualified rehabilitation 
        expenditures.
            ``(4) Transitional rules.--Rules similar to the rules of 
        section 48(m) (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this subsection.
    ``(c) Maximum Credit for Certain Property.--In the case of property 
described in the following table, the amount of the current year 
business credit under subsection (a) for the taxable year for each item 
of such property with respect to a building shall not exceed the amount 
specified for such property in such table:
      

------------------------------------------------------------------------
     Description of property:        Maximum allowable credit amount is:
------------------------------------------------------------------------
Elected solar hot water property..      $1,000.
Photovoltaic property with respect      $2,000.
 to which the energy percentage is
 greater than 10 percent.
20 percent energy-efficient         ....................................
 building property:
  fuel cell described in                $500 per each kw/hr of capacity.
   subsection (e)(3)(A).
  natural gas heat pump described       $1,000.
   in subsection (e)(3)(D).
20 percent energy-efficient             $500.
 building property (other than a
 fuel cell and a natural gas heat
 pump)
10 percent energy-efficient             $250.
 building property.
------------------------------------------------------------------------

    ``(d) Energy Property Defined.--
            ``(1) In general.--For purposes of this subpart, the term 
        `energy property' means any property--
                    ``(A) which is--
                            ``(i) solar energy property,
                            ``(ii) geothermal energy property,
                            ``(iii) 20 percent energy-efficient 
                        building property,
                            ``(iv) 10 percent energy-efficient building 
                        property, or
                            ``(v) combined heat and power system 
                        property,
                    ``(B)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer,
                    ``(C) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(D) which meets the performance and quality 
                standards (if any), and the certification requirements 
                (if any), which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy or the Administrator of the 
                        Environmental Protection Agency, as 
                        appropriate), and
                            ``(ii) are in effect at the time of the 
                        acquisition of the property.
            ``(2) Exception.--Such term shall not include any property 
        which is public utility property (as defined in section 
        46(f)(5) as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990). The 
        preceding sentence shall not apply to combined heat and power 
        system property.
    ``(e) Definitions Relating to Types of Energy Property.--For 
purposes of this section--
            ``(1) Solar energy property.--
                    ``(A) In general.--The term `solar energy property' 
                means equipment which uses solar energy--
                            ``(i) to generate electricity,
                            ``(ii) to heat or cool (or provide hot 
                        water for use in) a structure, or
                            ``(iii) to provide solar process heat.
                    ``(B) Elected solar water heating property.--
                            ``(i) In general.--The term `elected solar 
                        water heating property' means property which is 
                        solar energy property by reason of subparagraph 
                        (A)(ii) and for which an election under this 
                        subparagraph is in effect.
                            ``(ii) Election.--For purposes of clause 
                        (i) and the energy percentage specified in the 
                        table in subsection (b)(1), a taxpayer may 
                        elect to treat property described in clause (i) 
                        as elected solar water heating property.
                    ``(C) Photovoltaic property.--The term 
                `photovoltaic property' means solar energy property 
                which uses a solar photovoltaic process to generate 
                electricity.
                    ``(D) Swimming pools, etc., used as storage 
                medium.--The term `solar energy property' shall not 
                include a swimming pool, hot tub, or any other energy 
                storage medium which has a function other than the 
                function of such storage.
                    ``(E) Solar panels.--No solar panel or other 
                property installed as a roof (or portion thereof) shall 
                fail to be treated as solar energy property solely 
                because it constitutes a structural component of the 
                structure on which it is installed.
            ``(2) Geothermal energy property.--The term `geothermal 
        energy property' means equipment used to produce, distribute, 
        or use energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2)), but only, in the case of 
        electricity generated by geothermal power, up to (but not 
        including) the electrical transmission stage.
            ``(3) 20 percent energy-efficient building property.--The 
        term `20 percent energy-efficient building property' means--
                    ``(A) a fuel cell that--
                            ``(i) generates electricity and heat using 
                        an electrochemical process,
                            ``(ii) has an electricity-only generation 
                        efficiency greater than 35 percent, and
                            ``(iii) has a minimum generating capacity 
                        of 5 kilowatts,
                    ``(B) an electric heat pump hot water heater that 
                yields an energy factor of 1.7 or greater,
                    ``(C) an electric heat pump that has a heating 
                system performance factor (HSPF) of 9 or greater and a 
                cooling seasonal energy efficiency ratio (SEER) of 15 
                or greater,
                    ``(D) a natural gas heat pump that has a 
                coefficient of performance of not less than 1.25 for 
                heating and not less than 0.70 for cooling,
                    ``(E) a central air conditioner that has a cooling 
                seasonal energy efficiency ratio (SEER) of 15 or 
                greater, and
                    ``(F) an advanced natural gas water heater that has 
                an energy factor of at least 0.80.
            ``(4) 10 percent energy-efficient building property.--The 
        term `10 percent energy-efficient building property' means--
                    ``(A) an electric heat pump that has a heating 
                system performance factor (HSPF) of 7.5 or greater and 
                a cooling seasonal energy efficiency ratio (SEER) of 
                13.5 or greater,
                    ``(B) a central air conditioner that has a cooling 
                seasonal energy efficiency ratio (SEER) of 13.5 or 
                greater, and
                    ``(C) an advanced natural gas water heater that has 
                an energy factor of at least 0.65.
            ``(5) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property comprising a 
                system--
                            ``(i) which uses the same energy source for 
                        the simultaneous or sequential generation of 
                        electrical power, mechanical shaft power, or 
                        both, in combination with the generation of 
                        steam or other forms of useful thermal energy 
                        (including heating and cooling applications),
                            ``(ii) which has an electrical capacity of 
                        more than 50 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy, and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or a 
                                combination thereof), and
                            ``(iv) the energy efficiency percentage of 
                        which exceeds 60 percent (70 percent in the 
                        case of a system with an electrical capacity in 
                        excess of 50 megawatts or a mechanical energy 
                        capacity in excess of 67,000 horsepower, or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities).
                    ``(B) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of subparagraph (A)(iv), the energy 
                        efficiency percentage of a system is the 
                        fraction--
                                    ``(I) the numerator of which is the 
                                total useful electrical, thermal, and 
                                mechanical power produced by the system 
                                at normal operating rates, and
                                    ``(II) the denominator of which is 
                                the lower heating value of the primary 
                                fuel source for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage and the 
                        percentages under subparagraph (A)(iii) shall 
                        be determined on a Btu basis.
                            ``(iii) Input and output property not 
                        included.--The term `combined heat and power 
                        system property' does not include property used 
                        to transport the energy source to the facility 
                        or to distribute energy produced by the 
                        facility.
                            ``(iv) Accounting rule for public utility 
                        property.--In the case that combined heat and 
                        power system property is public utility 
                        property (as defined in section 46(f)(5) as in 
                        effect on the day before the date of the 
                        enactment of the Revenue Reconciliation Act of 
                        1990), the taxpayer may only claim the credit 
                        under subsection (a)(1) if, with respect to 
                        such property, the taxpayer uses a 
                        normalization method of accounting.
                            ``(v) Depreciation.--No credit shall be 
                        allowed for any combined heat and power system 
                        property unless the taxpayer elects to treat 
                        such property for purposes of section 168 as 
                        having a class life of not less than 22 years.
    ``(f) Qualified Hybrid Vehicles.--For purposes of subsection 
(a)(2)--
            ``(1) Credit amount.--
                    ``(A) In general.--The credit amount for each 
                qualified hybrid vehicle with a rechargeable energy 
                storage system that provides the applicable percentage 
                of the maximum available power shall be the amount 
                specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------ Credit amount is:
    Greater than or equal to--         Less than--
------------------------------------------------------------------------
5 percent.........................      10 percent           $ 500
10 percent........................      20 percent           $1,000
20 percent........................      30 percent           $1,500
30 percent........................                           $2,000
------------------------------------------------------------------------

                    ``(B) Increase in credit amount for regenerative 
                braking system.--In the case of a qualified hybrid 
                vehicle that actively employs a regenerative braking 
                system which supplies to the rechargeable energy 
                storage system the applicable percentage of the energy 
                available from braking in a typical 60 miles per hour 
                to 0 miles per hour braking event, the credit amount 
                determined under subparagraph (A) shall be increased by 
                the amount specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------   Credit amount
    Greater than or equal to--         Less than--        increase is:
------------------------------------------------------------------------
20 percent........................      40 percent           $ 250
40 percent........................      60 percent           $ 500
60 percent........................                           $1,000
------------------------------------------------------------------------

            ``(2) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle means an automobile that meets all applicable 
        regulatory requirements and that can draw propulsion energy 
        from both of the following on-board sources of stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system.
            ``(3) Maximum available power.--The term `maximum available 
        power' means the maximum value of the sum of the heat engine 
        and electric drive system power or other non-heat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(4) Automobile.--The term `automobile' has the meaning 
        given such term by section 4064(b)(1) (without regard to 
        subparagraphs (B) and (C) thereof). A vehicle shall not fail to 
        be treated as an automobile solely by reason of weight if such 
        vehicle is rated at 8,500 pounds gross vehicle weight rating or 
        less.
            ``(5) Double benefit; property used outside United States, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(2) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 25C or 30,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(6) Regulations.--
                    ``(A) Treasury.--The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to carry 
                out the purposes of this subsection.
                    ``(B) Environmental Protection Agency.--
                    ``(A) Treasury.--The Administrator of the 
                Environmental Protection Agency shall prescribe such 
                regulations as may be necessary or appropriate to 
                specify the testing and calculation procedures that 
                would be used to determine whether a vehicle meets the 
                qualifications for a credit under this subsection.
            ``(7) Termination.--Paragraph (2) shall not apply with 
        respect to any vehicle placed in service during a calendar year 
        ending before January 1, 2003, or after December 31, 2006.
    ``(g) Special Rules.--For purposes of this section--
            ``(1) Special rule for property financed by subsidized 
        energy financing or industrial development bonds.--
                    ``(A) Reduction of basis.--For purposes of applying 
                the energy percentage to any property, if such property 
                is financed in whole or in part by--
                            ``(i) subsidized energy financing, or
                            ``(ii) the proceeds of a private activity 
                        bond (within the meaning of section 141) the 
                        interest on which is exempt from tax under 
                        section 103,
                the amount taken into account as the basis of such 
                property shall not exceed the amount which (but for 
                this subparagraph) would be so taken into account 
                multiplied by the fraction determined under 
                subparagraph (B).
                    ``(B) Determination of fraction.--For purposes of 
                subparagraph (A), the fraction determined under this 
                subparagraph is 1 reduced by a fraction--
                            ``(i) the numerator of which is that 
                        portion of the basis of the property which is 
                        allocable to such financing or proceeds, and
                            ``(ii) the denominator of which is the 
                        basis of the property.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
            ``(2) Business use.--The rule similar to the rule of 
        section 25(B)(d)(5)(B) shall apply for purposes of determining 
        the business use of a vehicle.
            ``(3) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(4) Double benefit.--Property which would, but for this 
        paragraph, be eligible for credit under more than one provision 
        of this section shall be eligible only under one such 
        provision, the provision specified by the taxpayer.''.
    (b) Conforming Amendments.--
            (1) Section 48 of such Code is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT.

    ``(a) In General.--For purposes of section 46, the reforestation 
credit for any taxable year is 10 percent of the portion of the 
amortizable basis of any qualified timber property which was acquired 
during such taxable year and which is taken into account under section 
194 (after the application of section 194(b)(1)).
    ``(b) Definitions.--For purposes of this subpart, the terms 
`amortizable basis' and `qualified timber property' have the respective 
meanings given to such terms by section 194.''.
            (2) Subsection (d) of section 39 of such Code is amended by 
        adding at the end the following new paragraph:
            ``(10) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit determined 
        under section 48A may be carried back to a taxable year ending 
        before the date of the enactment of section 48A.''.
            (3) Paragraph (3) of section 50(c) of such Code is amended 
        by adding at the end the following flush sentence:
        ``In the case of the energy credit, the preceding sentence 
        shall apply only to so much of such credit as relates to solar 
        energy property and geothermal property (as such terms are 
        defined in section 48A(e)).''.
            (4) Subclause (III) of section 29(b)(3)(A)(i) of such Code 
        is amended by striking ``section 48(a)(4)(C)'' and inserting 
        ``section 48A(g)(1)(C)''.
            (5) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by striking ``section 48(a)(5)'' and inserting 
        ``section 48A(g)(3)''.
            (6) Subparagraph (B) of section 168(e)(3) of such Code is 
        amended--
                    (A) in clause (vi)(I)--
                            (i) by striking ``section 48(a)(3)'' and 
                        inserting ``paragraphs (1) and (2) of section 
                        48A(e)'', and
                            (ii) by striking ``clause (i)'' and 
                        inserting ``paragraph (1)(A)'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(d)(2)''.
            (7) Subparagraph (E) of section 168(e)(3) of such Code is 
        amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, and'', and by inserting after clause (iii) the following 
        new clause:
                            ``(iv) any combined heat and power system 
                        property (as defined in section 48A(e)(5)) for 
                        which a credit is allowed under section 48A and 
which, but for this clause, would have a recovery period of less than 
15 years.''.
            (8) The table contained in subparagraph (B) of section 
        168(g)(3) of such Code is amended by adding at the end the 
        following:

                ``(E)(iv)......................................   22''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 48 and inserting the following 
new items:

                              ``Sec. 48. Reforestation credit.
                              ``Sec. 48A. Energy credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 402. EXTENSION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Extension of Credit for Qualified Electric Vehicles.--
Subsection (f) of section 30 of the Internal Revenue Code of 1986 
(relating to termination) is amended by striking ``December 31, 2004'' 
and inserting ``December 31, 2006''.
    (b) Repeal of Phaseout.--Subsection (b) of section 30 of such Code 
(relating to limitations) is amended by striking paragraph (2) and 
redesignating paragraph (3) as paragraph (2).
    (c) No Double Benefit.--
            (1) Subsection (d) of section 30 of such Code (relating to 
        special rules) is amended by adding at the end the following 
        new paragraph:
            ``(5) No credit shall be allowed under subsection (a) with 
        respect to any vehicle if the taxpayer claims a credit for such 
        vehicle under section 25C(a)(1)(B) or 48A(f).''.
            (2) Paragraph (3) of section 30(d) of such Code (relating 
        to property used outside United States, etc., not qualified) is 
        amended by striking ``section 50(b)'' and inserting ``section 
        25C, 48A, or 50(b)''.
            (3) Paragraph (5) of section 179A(e) of such Code (relating 
        to property used outside United States, etc., not qualified) is 
        amended by striking ``section 50(b)'' and inserting ``section 
        25C, 48A, or 50(b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 403. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    (a) Extension.--Paragraph (3) of section 45(c) of the Internal 
Revenue Code of 1986 (relating to qualified facility) is amended by 
striking ``July 1, 1999'' and inserting ``July 1, 2004''.
    (b) Qualified Facilities Include All Biomass Facilities.--
            (1) In general.--Paragraph (1) of section 45(c) of such 
        Code (relating to definition of qualified energy resources) is 
        amended by striking ``and'' at the end of subparagraph (A), by 
        striking the period at the end of subparagraph (B), and by 
        inserting after subparagraph (B) the following:
                    ``(C) biomass (other than closed-loop biomass).''.
            (2) Biomass defined.--Paragraph (2) of section 45(c) of 
        such Code is amended to read as follows:
            ``(2) Biomass.--
                    ``(A) In general.--The term `biomass' means--
                            ``(i) closed-loop biomass, and
                            ``(ii) any solid, nonhazardous, cellulosic 
                        waste material, which is segregated from other 
                        waste materials, and which is derived from--
                                    ``(I) any of the following forest-
                                related resources: mill residues, 
                                precommercial thinnings, slash, and 
                                brush, but not including old-growth 
                                timber,
                                    ``(II) waste pallets, crates, and 
                                dunnage, and landscape or right-of-way 
                                tree trimmings, but not including 
                                unsegregated municipal solid waste 
                                (garbage) and post-consumer wastepaper, 
                                or
                                    ``(III) agriculture sources, 
                                including orchard tree crops, vineyard, 
                                grain, legumes, sugar, and other crop 
                                by-products or residues.
                    ``(B) Closed-loop biomass.--The term `closed-loop 
                biomass' means any organic material from a plant which 
                is planted exclusively for purposes of being used at a 
                qualified facility to produce electricity.''.
    (c) Electricity Produced From Biomass Co-fired in Coal Plants.--
            (1) Credit amount.--Paragraph (1) of section 45(a) of such 
        Code (relating to general rule) is amended by inserting ``(1.0 
        cents in the case of electricity produced from biomass co-fired 
        in a facility which produces electricity from coal) after ``1.5 
        cents''.
            (2) Qualified facility.--Paragraph (3) of section 45(c) of 
        such Code (relating to definitions) is amended by striking the 
        period at the end and inserting the following: ``, and any 
        facility using biomass other than closed loop biomass to 
        produce electricity which is owned by the taxpayer and which is 
        originally placed in service after June 30, 1999.''.
            (3) Adjustment for inflation.--
                    (A) In general.--Paragraph (2) of section 45(b) of 
                such Code (relating to credit and phaseout adjustment 
                based on inflation) is amended by striking ``1.5 cent 
                amount'' and inserting ``1.5 and 1.0 cent amounts''.
                    (B) Base year for inflation adjustment factor.--
                Subparagraph (B) of section 45(d)(2) of such Code 
                (relating to inflation adjustment factor) is amended by 
                adding at the end the following new sentence: ``In the 
                case of the 1.0 cents amount in subsection (a), the 
                first sentence of this subparagraph shall be applied by 
substituting `1999' for `1992'.''.
    (d) Credit Not To Apply to Electricity Sold to Utilities Under 
Certain Contracts.--Subsection (b) of section 45 of such Code (relating 
to limitations and adjustments) is amended by adding at the end the 
following new paragraph:
            ``(4) Credit not to apply to electricity sold to utilities 
        under certain contracts.--
                    ``(A) In general.--The credit determined under 
                subsection (a) shall not apply to electricity--
                            ``(i) produced at a qualified facility 
                        placed in service by the taxpayer after June 
                        30, 1999, and
                            ``(ii) sold to a utility pursuant to a 
                        contract originally entered into before January 
                        1, 1987 (whether or not amended or restated 
                        after that date).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the prices for energy and capacity 
                        from such facility are established pursuant to 
                        an amendment to the contract referred to in 
                        subparagraph (A)(ii),
                            ``(ii) such amendment provides that the 
                        prices set forth in the contract which exceed 
                        avoided cost prices determined at the time of 
                        delivery shall apply only to annual quantities 
                        of electricity (prorated for partial years) 
                        which do not exceed the greater of--
                                    ``(I) the average annual quantity 
                                of electricity sold to the utility 
                                under the contract during calendar 
                                years 1994, 1995, 1996, 1997, and 1998, 
                                or
                                    ``(II) the estimate of the annual 
                                electricity production set forth in the 
                                contract, or, if there is no such 
                                estimate, the greatest annual quantity 
                                of electricity sold to the utility 
                                under the contract in any of the 
                                calendar years 1996, 1997, or 1998, and
                            ``(iii) such amendment provides that energy 
                        and capacity in excess of the limitation in 
                        clause (ii) may be--
                                    ``(I) sold to the utility only at 
                                prices that do not exceed avoided cost 
                                prices determined at the time of 
                                delivery, or
                                    ``(II) sold to a third party 
                                subject to a mutually agreed upon 
                                advance notice to the utility.
                For purposes of this subparagraph, avoided cost prices 
                shall be determined as provided for in section 
                292.304(d)(1) of title 18, Code of Federal Regulations, 
                or any successor regulation.''.
    (e) Effective Date.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after June 30, 1999.
            (2) Adjustment for inflation.--The amendments made by 
        subsection (c)(3) shall apply to taxable years ending after 
        December 31, 1999.

SEC. 404. CREDIT FOR CERTAIN NONBUSINESS ENERGY PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25A the 
following new section:

``SEC. 25C. NONBUSINESS ENERGY PROPERTY.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter for the taxable year an amount equal to the sum of--
                    ``(A) the applicable percentage of residential 
                energy property expenditures made by the taxpayer 
                during such year,
                    ``(B) the credit amount (determined under section 
                48A(f)) for each vehicle purchased during the taxable 
                year which is a qualified hybrid vehicle (as defined in 
                section 48A(f)(2)), and
                    ``(C) the credit amount specified in the following 
                table for a new, highly energy-efficient principal 
                residence:

``New, Highly Energy-Efficient      Credit Amount:
        Principal Residence:
    30 percent property............
                                        $1,000.
    40 percent property............
                                        $1,500.
    50 percent property............
                                        $2,000.
            ``(2) Applicable percentage.--
                    ``(A) In general.--The applicable percentage shall 
                be determined in accordance with the following table:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description            Column B-- Applicable                   Column C--Period
-------------------------------------          Percentage          ---------------------------------------------
                                     ------------------------------                For the period:
           In the case of:              The applicable percentage  ---------------------------------------------
                                                   is:                  Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
20 percent energy-efficient building  20 percent                     1/1/2000              12/31/2003
 property...........................
10 percent energy-efficient building  10 percent                     1/1/2000              12/31/2001
 property...........................
Solar water heating property........  15 percent                     1/1/2000              12/31/2006
Photovoltaic property...............  15 percent                     1/1/2000              12/31/2006.
----------------------------------------------------------------------------------------------------------------

                    ``(B) Periods for which percentage not specified.--
                In the case of any residential energy property, the 
                applicable percentage shall be zero for any period for 
                which an applicable percentage is not specified for 
                such property under subparagraph (A).
    ``(b) Maximum Credit.--
            ``(1) In general.--In the case of property described in the 
        following table, the amount of the credit allowed under 
        subsection (a)(1)(A) for the taxable year for each item of such 
        property with respect to a dwelling unit shall not exceed the 
        amount specified for such property in such table:

      

------------------------------------------------------------------------
  ``Description of property item:    Maximum allowable credit amount is:
------------------------------------------------------------------------
20 percent energy-efficient             $500.
 building property (other than a
 fuel cell or natural gas heat
 pump).
20 percent energy-efficient         ....................................
 building property:
  fuel cell described in section        $500 per each kw/hr of capacity.
   48A(e)(3)(A).
  natural gas heat pump described       $1,000.
   in section 48A(e)(3)(D).
10 percent energy-efficient             $250.
 building property.
Solar water heating property......      $1,000.
Photovoltaic property.............      $2,000.
------------------------------------------------------------------------

            ``(2) Coordination of limitations.--If a credit is allowed 
        to the taxpayer for any taxable year by reason of an 
acquisition of a new, highly energy-efficient principal residence, no 
other credit shall be allowed under subsection (a)(1)(A) with respect 
to such residence during the 1-taxable year period beginning with such 
taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Residential Energy Property Expenditures.--The term 
        `residential energy property expenditures' means expenditures 
        made by the taxpayer for qualified energy property installed on 
        or in connection with a dwelling unit which--
                    ``(A) is located in the United States, and
                    ``(B) is used by the taxpayer as a residence.
        Such term includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property.
            ``(2) Qualified energy property.--
                    ``(A) In general.--The term `qualified energy 
                property' means--
                            ``(i) energy-efficient building property,
                            ``(ii) solar water heating property, and
                            ``(iii) photovoltaic property.
                    ``(B) Swimming pool, etc., used as storage medium; 
                solar panels.--For purposes of this paragraph, the 
                provisions of subparagraphs (D) and (E) section 
                48A(e)(1) shall apply.
            ``(3) Energy-efficient building property.--The term 
        `energy-efficient building property' has the meaning given to 
        such term by paragraphs (3) and (4) of section 48A(e).
            ``(4) Solar water heating property.--The term `solar water 
        heating property' means property which, when installed in 
        connection with a structure, uses solar energy for the purpose 
        of providing hot water for use within such structure.
            ``(5) Photovoltaic property.--The term `photovoltaic 
        property' has the meaning given to such term by section 
        48A(e)(1)(C).
            ``(6) New, highly energy-efficient principal residence.--
                    ``(A) In general.--Property is a new, highly 
                energy-efficient principal residence if--
                            ``(i) such property is located in the 
                        United States,
                            ``(ii) the original use of such property 
                        commences with the taxpayer and is, at the time 
                        of such use, the principal residence of the 
                        taxpayer, and
                            ``(iii) such property is certified before 
                        such use commences as being 50 percent 
                        property, 40 percent property, or 30 percent 
                        property.
                    ``(B) 50, 40, or 30 percent property.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), property is 50 percent 
                        property, 40 percent property, or 30 percent 
                        property if the projected energy usage of such 
                        property is reduced by 50 percent, 40 percent, 
                        or 30 percent, respectively, compared to the 
                        energy usage of a reference house that complies 
                        with minimum standard practice, such as the 
                        1998 International Energy Conservation Code of 
                        the International Code Council, as determined 
                        according to the requirements specified in 
                        clause (ii).
                            ``(ii) Procedures.--
                                    ``(I) In general.--For purposes of 
                                clause (i), energy usage shall be 
                                demonstrated either by a component-
                                based approach or a performance-based 
                                approach.
                                    ``(II) Component approach.--
                                Compliance by the component approach is 
                                achieved when all of the components of 
                                the house comply with the requirements 
                                of prescriptive packages established by 
                                the Secretary of Energy, in 
                                consultation with the Administrator of 
                                the Environmental Protection Agency, 
                                such that they are equivalent to the 
                                results of using the performance-based 
                                approach of subclause (III) to achieve 
                                the required reduction in energy usage.
                                    ``(III) Performance-based 
                                approach.--Performance-based compliance 
                                shall be demonstrated in terms of the 
                                required percentage reductions in 
                                projected energy use. Computer software 
                                used in support of performance-based 
                                compliance must meet all of the 
                                procedures and methods for calculating 
                                energy savings reductions that are 
                                promulgated by the Secretary of Energy. 
                                Such regulations on the specifications 
                                for software shall be based in the 1998 
                                California Residential Alternative 
                                Calculation Method Approval Manual, 
                                except that the calculation procedures 
                                shall be developed such that the same 
                                energy efficiency measures qualify a 
                                home for tax credits regardless of 
                                whether the home uses a gas or oil 
                                furnace or boiler, or an electric heat 
                                pump.
                                    ``(IV) Approval of software 
                                submissions.--The Secretary of Energy 
                                shall approve software submissions that 
                                comply with the calculation 
                                requirements of subclause (III).
                    ``(C) Determinations of Compliance.--A 
                determination of compliance made for the purposes of 
                this paragraph shall be filed with the Secretary of 
                Energy within 1 year of the date of such determination 
                and shall include the TIN of the certifier, the address 
                of the building in compliance, and the identity of the 
                person for whom such determination was performed. 
                Determinations of compliance filed with the Secretary 
                of Energy shall be available for inspection by the 
                Secretary.
                    ``(D) Compliance.--
                            ``(i) In general.--The Secretary of Energy 
                        in consultation with the Secretary of the 
                        Treasury shall establish requirements for 
                        certification and compliance procedures after 
                        examining the requirements for energy 
                        consultants and home energy ratings providers 
                        specified by the Mortgage Industry National 
                        Accreditation Procedures for Home Energy Rating 
                        Systems.
                            ``(ii) Individuals qualified to determine 
                        compliance.--Individuals qualified to determine 
                        compliance shall be only those individuals who 
                        are recognized by an organization certified by 
                        the Secretary of Energy for such purposes.
                    ``(D) Principal residence.--The term `principal 
                residence' has the same meaning as when used in section 
                121, except that the period for which a building is 
                treated as the principal residence of the taxpayer 
                shall also include the 60-day period ending on the 1st 
                day on which it would (but for this subparagraph) first 
                be treated as his principal residence.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which if jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following shall apply:
                    ``(A) The amount of the credit allowable under 
                subsection (a) by reason of expenditures made during 
                such calendar year by any of such individuals with 
                respect to such dwelling unit shall be determined by 
                treating all of such individuals as 1 taxpayer whose 
                taxable year is such calendar year.
                    ``(B) There shall be allowable with respect to such 
                expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having made his 
                proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Joint ownership of energy items.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a residential energy property expenditure 
                shall not be treated as failing to so qualify merely 
                because such expenditure was made with respect to 2 or 
                more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any expenditure described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made for 
                each dwelling unit.
            ``(5) Allocation in certain cases.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if less than 80 percent of the use of 
                an item is for nonbusiness purposes, only that portion 
                of the expenditures for such item which is properly 
                allocable to use for nonbusiness purposes shall be 
                taken into account. For purposes of this paragraph, use 
                for a swimming pool shall be treated as use which is 
                not for nonbusiness purposes.
                    ``(B) Special rule for vehicles.--For purposes of 
                this section and section 48A, a vehicle shall be 
                treated as used entirely for business or nonbusiness 
                purposes if the majority of the use of such vehicle is 
                for business or nonbusiness purposes, as the case may 
                be.
            ``(6) Double benefit; property used outside United States, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(1)(B) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30 or 48A,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(7) When expenditure made; amount of expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to an 
                item shall be treated as made when the original 
                installation of the item is completed.
                    ``(B) Expenditures part of building construction.--
                In the case of an expenditure in connection with the 
                construction of a structure, such expenditure shall be 
                treated as made when the original use of the 
constructed structure by the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(8) Property financed by subsidized energy financing.--
                    ``(A) Reduction of expenditures.--For purposes of 
                determining the amount of residential energy property 
                expenditures made by any individual with respect to any 
                dwelling unit, there shall not be taken in to account 
                expenditures which are made from subsidized energy 
                financing (as defined in section 48A(g)(1)).
                    ``(B) Dollar limits reduced.--The dollar amounts in 
                the table contained in subsection (b)(1) with respect 
                to each property purchased for such dwelling unit for 
                any taxable year of such taxpayer shall be reduced 
                proportionately by an amount equal to the sum of--
                            ``(i) the amount of the expenditures made 
                        by the taxpayer during such taxable year with 
                        respect to such dwelling unit and not taken 
                        into account by reason of subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year which is used to make 
                        residential energy property expenditures with 
                        respect to the dwelling unit and is not 
                        included in the gross income of such taxpayer.
    ``(e) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (26), by striking 
        the period at the end of paragraph (27) and inserting ``; 
        and'', and by adding at the end the following new paragraph:
            ``(28) to the extent provided in section 25C(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 25A the following new item:

                              ``Sec. 25C. Nonbusiness energy 
                                        property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures after December 31, 1999.

SEC. 405. EXTENSION OF WIND AND BIOMASS TAX CREDIT.

    (a) In General.--Paragraph (3) of section 45(c) of the Internal 
Revenue Code of 1986 (defining qualified facility) is amended to read 
as follows:
            ``(3) Qualified facility.--The term `qualified facility' 
        means any facility owned by the taxpayer which is originally 
        placed in service--
                    ``(A) in the case of a facility using wind to 
                produce electricity, after December 31, 1993, and 
                before July 1, 2004, and
                    ``(B) in the case of a facility using closed-loop 
                biomass to produce electricity, after December 31, 
                1992, and before July 1, 1999.''.
    (b) Credit Not To Apply to Electricity Sold to Utilities Under 
Certain Contracts.--Subsection (b) of section 45 of such Code is 
amended by adding at the end the following new paragraph:
            ``(4) Credit not to apply to electricity sold to utilities 
        under certain contracts.--
                    ``(A) In general.--The credit determined under 
                subsection (a) shall not apply to electricity--
                            ``(i) produced at a qualified facility 
                        placed in service by the taxpayer after June 
                        30, 1999, and
                            ``(ii) sold to a utility pursuant to a 
                        contract originally entered into before January 
                        1, 1987 (whether or not amended or restated 
                        after that date).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the prices for energy and capacity 
                        from such facility are established pursuant to 
                        an amendment to the contract referred to in 
                        subparagraph (A)(ii);
                            ``(ii) such amendment provides that the 
                        prices set forth in the contract which exceed 
                        avoided cost prices determined at the time of 
                        delivery shall apply only to annual quantities 
                        of electricity (prorated for partial years) 
                        which do not exceed the greater of--
                                    ``(I) the average annual quantity 
                                of electricity sold to the utility 
                                under the contract during calendar 
                                years 1994, 1995, 1996, 1997, and 1998, 
                                or
                                    ``(II) the estimate of the annual 
                                electricity production set forth in the 
                                contract, or, if there is no such 
                                estimate, the greatest annual quantity 
                                of electricity sold to the utility 
                                under the contract in any of the 
                                calendar years 1996, 1997, or 1998; and
                            ``(iii) such amendment provides that energy 
                        and capacity in excess of the limitation in 
                        clause (ii) may be--
                                    ``(I) sold to the utility only at 
                                prices that do not exceed avoided cost 
                                prices determined at the time of 
                                delivery, or
                                    ``(II) sold to a third party 
                                subject to a mutually agreed upon 
                                advance notice to the utility.
                For purposes of this subparagraph, avoided cost prices 
                shall be determined as provided for in 18 CFR 
                292.304(d)(1) or any successor regulation.''.

SEC. 406. KEROSENE TAX EQUALIZER ACT.

    (a) Vendor Refunds of Federal Excise Taxes on Undyed Kerosene Used 
in Unvented Heaters for Home Heating Purposes.--
            (1) In general.--Subparagraph (B) of section 6427(l)(5) of 
        the Internal Revenue Code of 1986 (relating to sales of 
        kerosene not for use in motor fuel) is amended by striking 
        ``or'' at the end of clause (i), by striking the period at the 
        end of clause (ii) and inserting ``, or'', and by adding at the 
        end the following new clause:
                            ``(iii) in a qualified residential sale (as 
                        defined in subparagraph (D)).''
            (2) Qualified residential sale.--Paragraph (5) of section 
        6427(l) of such Code is amended by adding at the end the 
        following new subparagraph:
                    ``(D) Qualified residential sale.--For purposes of 
                subparagraph (B)(iii), the term `qualified residential 
                sale' means any sale of kerosene if--
                            ``(i) the kerosene is delivered into a 
                        storage tank (of at least 50 but not more than 
                        200 gallons) located at a residence for use as 
                        a fuel in an unvented heater used for heating 
                        the residence, and
                            ``(ii) the vendor reasonably believes that 
                        the kerosene is being so used.
                Such term shall not include any sale which is more than 
                30 days after the date of the submission to Congress of 
                a study conducted by the Secretary which finds that 
                kerosene which is dyed pursuant to section 4082 may be 
                burned in unvented residential heaters without 
                endangering the health or safety of the residents.''
            (3) Refunds.--Subparagraph (A) of section 6427(f)(4) of 
        such Code is amended by adding at the end the following new 
        sentence: ``In a case to which subsection (l)(5)(B)(iii) 
        applies, clause (ii) shall be applied by substituting `1 month' 
        for `1 week' and paragraph (3)(B) shall be applied by 
        substituting `45 days' for `20 days'.''
            (4) Effective date.--The amendments made by this section 
        shall apply to sales after the date of the enactment of this 
        Act.
    (b) Study of Safety of Using Dyed Kerosene in Unvented Residential 
Heaters.--The Secretary of the Treasury or such Secretary's delegate 
shall conduct a study of whether kerosene which has been dyed for 
Federal tax purposes may be used as a fuel in unvented residential 
heaters without endangering the health or safety of the residents. The 
results of such study shall be submitted to each House of Congress not 
later than January 1, 2000.

                          TITLE V--ENVIRONMENT

SEC. 501. BETTER AMERICA BONDS TAX CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 30B. CREDIT TO HOLDERS OF BETTER AMERICA BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
Better America Bond on a credit allowance date of such bond which 
occurs during the taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for such taxable year an amount 
equal to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a Better America Bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any Better America Bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (1), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined under regulations 
        prescribed by the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Better America Bond.--For purposes of this section--
            ``(1) In general.--The term `Better America Bond' means any 
        bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for any qualified purpose,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which the 
                qualified purpose of the issue is to be carried out,
                    ``(C) the issuer designates such bond for purposes 
                of this section,
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 15 years,
                    ``(E) the requirements of section 147(f) are met 
                with respect to such issue, and
                    ``(F) except in the case of the proceeds of such 
                issue which are to be used for the qualified purpose 
                described in paragraph (2)(A)(iv), the payment of the 
                principal of such issue is secured by taxes of general 
                applicability imposed by a general purpose governmental 
                unit.
            ``(2) Qualified purpose.--
                    ``(A) In general.--The term `qualified purpose' 
                means any of the following:
                            ``(i) The acquisition of land for use as 
                        open space, wetlands, public parks, or 
                        greenways, and the provision of visitor 
                        facilities (such as campgrounds and hiking or 
                        biking trails) for land so used, but only if--
                                    ``(I) such land and facilities are 
                                to be owned by the issuer or a 
                                qualified owner, and
                                    ``(II) the initial owner of such 
                                land and facilities records pursuant to 
                                State law a qualified restrictive 
                                covenant with respect to such land and 
                                facilities.
                            ``(ii) The remediation of land acquired 
                        under clause (i) (or other publicly owned land) 
                        to enhance water quality by--
                                    ``(I) restoring hydrology or 
                                planting trees or other vegetation,
                                    ``(II) undertaking reasonable 
                                measures to control erosion,
                                    ``(III) restoring wetlands, or
                                    ``(IV) remediating conditions 
                                caused by the prior disposal of toxic 
                                or other waste.
                            ``(iii) The acquisition by the issuer or 
                        any qualified owner of any restriction on 
                        privately owned open land which prevents 
                        commercial development and any substantial 
                        change in the use or character of the land if 
                        such restriction would, if contributed by the 
                        owner of the open land to a qualified 
                        organization (as defined in section 170(h)(3)), 
                        be a qualified conservation contribution (as 
                        defined in section 170(h)).
                            ``(iv) The environmental assessment and 
                        remediation of real property owned by any State 
                        or local government if--
                                    ``(I) such property was acquired by 
                                such government as a result of being 
                                abandoned by the prior owner, and
                                    ``(II) such property is located in 
                                an area at or on which there has been a 
                                release (or threat of release) or 
                                disposal of any hazardous substance (as 
                                defined in section 198).
                    ``(B) Remediation of national priorities listed 
                sites not qualified purpose.--Subparagraph (A)(ii) 
                shall not apply to remediation of any site which is on, 
                or proposed for, the national priorities list under 
                section 105(a)(8)(B) of the Comprehensive Environmental 
                Response, Compensation, and Liability Act of 1980.
                    ``(C) Qualified owner.--For purposes of this 
                paragraph, the term `qualified owner' means any 
                organization described in section 501(c)(3) whose 
                exempt purpose includes environmental protection.
                    ``(D) Qualified restrictive covenant.--For purposes 
                of subparagraph (A)(i)(II), the term `qualified 
                restrictive covenant' means, with respect to land or 
                facilities, any covenant which prohibits the person who 
                owns such land or facilities at the end of the term of 
                the bond from selling or otherwise permitting a use of 
                such land or facilities which is not described in 
                subparagraph (A) unless--
                            ``(i) a reasonable period is allowed for a 
                        qualified owner to purchase such land or 
                        facilities,
                            ``(ii) the purchase price is not greater 
                        than the price originally paid in conjunction 
                        with the expenditure of bond proceeds, and
                            ``(iii) the purchaser records pursuant to 
                        State law a covenant with respect to the 
                        purchased land and facilities which protects in 
                        perpetuity the use of such land and facilities 
                        for a use described in subparagraph (A).
            ``(3) Public availability requirement, etc.--
                    ``(A) In general.--The term `Better America Bond' 
                shall not include any bond which is part of an issue 
                if--
                            ``(i) any portion of the proceeds of the 
                        issue are to be used for any private business 
                        use (as defined in section 141(b)(6)), or
                            ``(ii) the payment of the principal of, or 
                        the interest on, any portion of such proceeds 
                        is (under the terms of such issue or any 
                        underlying arrangement) directly or indirectly 
                        secured or to be derived as described in 
                        subparagraph (A) or (B) of section 141(b)(2).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to proceeds used for a qualified purpose described in 
                paragraph (2)(A)(iv).
    ``(d) Limitation on Amount of Bonds Designated.--
            ``(1) In general.--The maximum aggregate face amount of 
        bonds issued during any calendar year which may be designated 
        under subsection (c)(1) by any issuer shall not exceed the 
        limitation amount allocated under paragraph (3) for such 
        calendar year to such issuer.
            ``(2) National limitation on amount of bonds designated.--
        There is a national Better America Bond limitation for each 
        calendar year. Such limitation is--
                    ``(A) $1,900,000,000 for each of calendar years 
                2000, 2001, 2002, 2003, and 2004, and
                    ``(B) except as provided in paragraph (4), zero 
                after 2004.
            ``(3) Allocation of limitation among states and local 
        governments.--
                    ``(A) In general.--The national Better America Bond 
                limitation for any calendar year shall be allocated by 
the EPA Administrator to States and local governments having approved 
applications. As part of the competitive application process, the 
Environmental Protection Agency should, when possible, allocate such 
limitation on a per capita basis.
                    ``(B) Approved application.--For purposes of 
                subparagraph (A), the term `approved application' means 
                an application which is approved by the EPA 
                Administrator and includes such information as the EPA 
                Administrator shall specify.
            ``(4) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the amount allocated under paragraph (4) to 
                any State or local government, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (c)(1) pursuant 
                to such allocation,
        the limitation amount under paragraph (3) for such State or 
        local government for the following calendar year shall be 
        increased by the amount of such excess.
    ``(e) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(f) Other Definitions.--For purposes of this section--
            ``(1) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia, any possession of the United States, and any Indian 
        tribal government (within the meaning of section 7871).
            ``(4) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State, and
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the EPA 
                Administrator.
            ``(5) EPA administrator.--The term `EPA Administrator' 
        means the Administrator of the Environmental Protection Agency.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (e)) and the amount so 
included shall be treated as interest income.
    ``(h) Special Rules Relating to Arbitrage.--
            ``(1) In general.--A bond shall not be treated as failing 
        to meet the requirements of subsection (c)(1) solely by reason 
        of the fact that the proceeds of the issue of which such bond 
        is a part are invested for a temporary period (but not more 
        than 36 months) until such proceeds are needed for the purpose 
        for which such issue was issued.
            ``(2) Reasonable expectation and binding commitment 
        requirements.--Paragraph (1) shall apply to an issue only if, 
        as of the date of issuance--
                    ``(A) the issuer reasonably expects that--
                            ``(i) at least 95 percent of the proceeds 
                        of the issue will be spent for a qualified 
                        purpose within the 3-year period beginning on 
                        such date, and
                            ``(ii) property financed with such proceeds 
                        will be used for qualified purposes for at 
                        least 15 years after being so financed,
                    ``(B) there is a binding commitment with a third 
                party to spend at least 10 percent of the proceeds of 
                the issue for qualified purposes within the 6-month 
                period beginning on such date, and
                    ``(C) the issuer reasonably expects that the 
                remaining proceeds of the issue will be spent with due 
                diligence for qualified purposes.
            ``(3) Earnings on proceeds.--Any earnings on proceeds 
        during the temporary period shall be treated as proceeds of the 
        issue for purposes of applying subsection (c)(1) and paragraph 
        (1) of this subsection.
    ``(i) Denial of Deduction for Environmental Remediation 
Expenditures.--Expenditures financed by any Better America Bond shall 
not be allowed as a deduction under section 198.
    ``(j) Other Special Rules.--
            ``(1) Bonds held by regulated investment companies.--If any 
        Better America Bond is held by a regulated investment company, 
        the credit determined under subsection (a) shall be allowed to 
        shareholders of such company under procedures prescribed by the 
        Secretary.
            ``(2) Credits may be stripped.--Under regulations 
        prescribed by the Secretary--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a Better 
                America Bond and the entitlement to the credit under 
                this section with respect to such bond. In case of any 
such separation, the credit under this section shall be allowed to the 
person who on the credit allowance date holds the instrument evidencing 
the entitlement to the credit and not to the holder of the bond.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the Better America Bond as 
                if it were a stripped bond and to the credit under this 
                section as if it were a stripped coupon.
            ``(3) Treatment for estimated tax purposes.--Solely for 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a Better America 
        Bond on a credit allowance date shall be treated as if it were 
        a payment of estimated tax made by the taxpayer on such date.
            ``(4) Credit may be transferred.--Nothing in any law or 
        rule of law shall be construed to limit the transferability of 
        the credit allowed by this section through sale and repurchase 
        agreements.
            ``(5) Reporting.--Issuers of Better America Bonds shall 
        submit reports similar to the reports required under section 
        149(e).
    ``(k) Recapture of Portion of Credit Where Cessation of Qualified 
Use.--
            ``(1) In general.--If any bond which when issued purported 
        to be a Better America Bond ceases to meet the requirements of 
        subsection (c), the issuer shall pay to the United States (at 
        the time required by the Secretary) an amount equal to the 
        aggregate of the credits allowable under this section 
        (determined without regard to subsection (e)) for taxable years 
        ending during the calendar year in which such cessation occurs 
        and the 2 preceding calendar years.
            ``(2) Failure to pay.--If the issuer fails to timely pay 
        the amount required by paragraph (1) with respect to any issue, 
        the tax imposed by this chapter on each holder of any bond 
        which is part of such issue shall be increased (for the taxable 
        year of the holder in which such cessation occurs) by the 
        aggregate decrease in the credits allowed under this section to 
        such holder for taxable years beginning in such 3 calendar 
        years which would have resulted solely from denying any credit 
        under this section with respect to such issue for such taxable 
        years.
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (2) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under paragraph (2) shall not be treated as a tax 
                imposed by this chapter for purposes of determining--
                            ``(i) the amount of any credit allowable 
                        under this part, or
                            ``(ii) the amount of the tax imposed by 
                        section 55.
    ``(l) Termination.--This section shall not apply to any bond issued 
after December 31, 2004.''
    (b) Reporting.--Subsection (d) of section 6049 of such Code 
(relating to returns regarding payments of interest) is amended by 
adding at the end the following new paragraph:
            ``(8) Reporting of credit on better america bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 30B(g) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 30B(f)(1)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''
    (c) Conforming Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 30B. Credit to holders of Better 
                                        America Bonds.''
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 1999.
    (e) Guidelines for Applications.--Not later than January 1, 2000, 
guidelines specifying the criteria to be used in approving applications 
under section 30B(d)(3) of the Internal Revenue Code of 1986 (as added 
by this Act) shall be developed and published by the Administrator of 
the Environmental Protection Agency in the Federal Register.

SEC. 502. PERMANENT EXTENSION OF BROWNFIELDS TAX DEDUCTION AT 100 
              PERCENT.

    (a) In General.--Clause (ii) of section 198(c)(1)(A) of the 
Internal Revenue Code of 1986 (relating to qualified contaminated 
sites) is amended to read as follows:
                            ``(ii) which is within the United States, 
                        and''.
    (b) Conforming Amendment.--Paragraph (2) of section 198(c) of such 
Code is amended to read as follows:
            ``(2) National priorities listed sites not included.--Such 
        term shall not include any site which is on, or proposed for, 
        the national priorities list under section 105(a)(8)(B) of the 
        Comprehensive Environmental Response, Compensation, 
and Liability Act of 1980 (as in effect on the date of the enactment of 
this section).''
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after the date of the enactment 
of this Act in taxable years ending after such date.

SEC. 503. RESTORATION OF DEDUCTION FOR DEMOLITION OF CERTAIN 
              STRUCTURES.

    (a) In General.--So much of section 280B of the Internal Revenue 
Code of 1986 (relating to demolition of structures) as precedes 
paragraph (1) is amended to read as follows:

``SEC. 280B. DEMOLITION OF CERTIFIED HISTORIC STRUCTURES AND 
              HISTORICALLY RESIDENTIAL STRUCTURES.

    ``(a) In General.--In the case of the demolition of any certified 
historic structure or historically residential structure--''.
    (b) Certified Historic Structure; Historically Residential 
Structure.--Section 280B of such Code is amended by adding at the end 
the following new subsection:
    ``(b) Certified Historic Structure; Residential Structure.--For 
purposes of this section--
            ``(1) Certified historic structure.--The term `certified 
        historic structure' means--
                    ``(A) a certified historic structure (as defined in 
                section 47(c)(3)), and
                    ``(B) any building (and its structural components) 
                which is designated as a certified historic structure 
                by the appropriate agency of a State or local 
                government.
            ``(2) Historically residential structure.--The term 
        `historically residential structure' means any building (other 
        than a certified historic structure) and its structural 
        components if the first use of such building after its initial 
        construction was for residential purposes.''
    (c) Clerical Amendment.--The item relating to section 280B in the 
table of sections for part IX of subchapter B of chapter 1 of such Code 
is amended to read as follows:

                              ``Sec. 280B. Demolition of certified 
                                        historic structures and 
                                        historically residential 
                                        structures.''
    (d) Effective Date.--The amendments made by this section shall 
apply to demolitions commencing after the date of the enactment of this 
Act.

SEC. 504. INCREASE IN LAND DONATION TAX DEDUCTION FROM 30 PERCENT TO 50 
              PERCENT.

    (a) Modifications To Encourage Contributions of Capital Gain Real 
Property Made for Conservation Purposes and Qualified Conservation 
Contributions.--
            (1) Contributions of capital gain real property made for 
        conservation purposes and of qualified conservation 
        contributions not subject to special limitation on 
        contributions of capital gain property.--Subparagraph (C) of 
        section 170(b)(1) of the Internal Revenue Code of 1986 
        (relating to special limitation with respect to contributions 
        described in subparagraph (A) of capital gain property) is 
        amended by redesignating clause (iv) as clause (v) and by 
        inserting after clause (iii) the following new clause:
                            ``(iv) In the case of charitable 
                        contributions described in subparagraph (A) of 
                        capital gain property, clauses (i) and (ii) 
                        shall not apply to--
                                    ``(I) any qualified conservation 
                                contribution (as defined in section 
                                170(h)), or
                                    ``(II) any other contribution of 
                                capital gain property which is real 
                                property if the contribution is of the 
                                donor's entire interest in such 
                                property and is to a qualified 
                                organization (as defined in section 
                                170(h)(3)) which is organized for 
                                conservation purposes (as defined in 
                                section 170(h)(4)(A)) and which 
                                provides the taxpayer, at the time of 
                                such donation, a letter of intent which 
                                contains an acknowledgment of the 
                                donee's intent that the property is 
                                being acquired for any such 
                                conservation purpose.''.
            (2) Unlimited carryover for contributions of capital gain 
        real property for conservation purposes and of qualified 
        conservation contributions of capital gain property.--Paragraph 
        (1) of section 170(d) of such Code in amended by adding at the 
        end the following new subparagraph:
                    ``(C) Unlimited carryover for contributions of 
                capital gain real property for conservation purposes 
                and of qualified conservation contributions of capital 
                gain property.--The 5 taxable year limitation in 
                subparagraph (A) shall not apply to any charitable 
                contribution to which clauses (i) and (ii) of 
                subsection (b)(1)(C) do not apply by reason of clause 
                (iv) thereof. For purposes of this paragraph, the 
                excess described in the material preceding clause (i) 
                of subparagraph (A) shall be treated as attributable to 
                contributions described in the preceding sentence of 
                this subparagraph to the extent of such 
                contributions.''.
            (3) Effective date.--The amendment made by this section 
        shall apply to contributions made in taxable years beginning 
        after the date of the enactment of this Act.
    (b) Modification of Rules Relating to Estate Tax Exclusion for Land 
Subject to Qualified Conservation Easement.--
            (1) Repeal of certain restrictions on where land is 
        located.--Clause (i) of section 2031(c)(8)(A) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
                            ``(i) which is located in the United States 
                        or any possession of the United States,''.
            (2) Repeal of limitation on exclusion.--
                    (A) In general.--Paragraph (1) of section 2031(c) 
                of such Code is amended by striking ``the lesser of--'' 
                and all that follows and inserting ``the applicable 
                percentage of the value of land subject to a qualified 
                conservation easement, reduced by the amount of any 
                deduction under section 2055(f) with respect to such 
                land.''
                    (B) Conforming amendments.--
                            (i) Subsection (c) of section 2031 of such 
                        Code is amended by striking paragraph (3) and 
                        by redesignating paragraphs (4) through (10) as 
                        paragraphs (3) through (9), respectively.
                            (ii) Paragraphs (2) and (6) of section 
                        2031(c) of such Code, as redesignated by 
                        subparagraph (A), are each amended by striking 
                        ``paragraph (5)'' and inserting ``paragraph 
                        (4)''.
                            (iii) Paragraphs (1), (6), and (7)(A)(iii) 
                        of section 2031(c) of such Code, as 
                        redesignated by subparagraph (A), are each 
                        amended by striking ``paragraph (6)'' and 
                        inserting ``paragraph (5)''.
            (3) Date for determining value of land and easement.--
        Paragraph (2) of section 2032(c) of such Code (defining 
        applicable percentage) is amended by adding at the end the 
        following new sentence: ``The values taken into account under 
        the preceding sentence shall be such values as of the date of 
        the contribution referred to in paragraph (7)(B).''
            (4) Certain commercial recreational uses permitted.--
        Subparagraph (B) of section 2031(c)(7) of such Code, as 
        redesignated by subsection (b), is amended to read as follows:
                    ``(B) Qualified conservation easement.--
                            ``(i) In general.--The term `qualified 
                        conservation easement' means a qualified 
                        conservation contribution (as defined in 
                        section 170(h)(1)) of a qualified real property 
                        interest (as defined in section 170(h)(2)(C)), 
                        except that clause (iv) of section 170(h)(4)(A) 
                        shall not apply, and the restriction on the use 
                        of such interest described in section 
                        170(h)(2)(C) shall include a prohibition on 
                        more than a de minimis use for a commercial 
                        recreational activity.
                            ``(ii) Special rules.--For purposes of this 
                        paragraph--
                                    ``(I) Retained rights.--Rights 
                                retained in the conservation easement 
                                to lease the land for hunting and 
                                fishing, so long as such leases are not 
                                inconsistent with the conservation 
                                purpose of the easement, shall be 
                                deemed to be de minimis use.
                                    ``(II) Pre-effective date 
                                easements.--Easements otherwise 
                                qualifying under the provisions of this 
                                subsection that were donated on or 
                                before the date of the enactment of 
                                this subclause, shall be deemed to 
                                allow no more than de minimis use for a 
                                commercial recreational activity unless 
                                by their terms they expressly provide 
                                for commercial recreational activity in 
                                excess of that otherwise allowed by 
                                this subparagraph.
                                    ``(III) Authority to extinguish 
                                right of commercial recreation 
                                activity.--For purposes of this 
                                section, if the executor of an estate 
                                and every person in being who has an 
                                interest in the land execute an 
                                agreement to amend or extinguish any 
                                right under the easement of commercial 
                                recreation activity in the land so as 
                                to ensure that such land is used for no 
                                more than de minimis commercial 
                                recreational activity, such agreement 
                                shall be treated as in effect as of the 
                                date of the election described in 
                                paragraph (5).''
            (5) Exclusion applicable to sold easements.--Clause (i) of 
        section 2031(c)(7) of such Code, as amended by subsection (d), 
        is amended by adding at the end the following new sentence: ``A 
        transfer for value of a qualified real property interest (as 
        defined under section 170(h)(2)(C)) shall not fail to be 
        treated as a qualified conservation easement if such interest 
        would meet the requirements of the preceding sentence were it 
        donated to the purchaser and any reference in this section to a 
        contribution shall be treated as including a reference to such 
        a transfer.''
            (6) Effective date.--The amendments made by this section 
        shall take effect as if included in the amendments made by 
        section 508 of the Taxpayer Relief Act of 1997.

SEC. 505. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF AMORTIZABLE 
              REFORESTATION EXPENDITURES.

    (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) 
of the Internal Revenue Code of 1986 (relating to amortization of 
reforestation expenditures) is amended by striking ``$10,000 ($5,000'' 
and inserting ``$25,000 ($12,500''.
    (b) Temporary Suspension of Increased Dollar Limitation.--
Subsection (b) of section 194(b) of such Code (relating to amortization 
of reforestation expenditures) is amended by adding at the end the 
following new paragraph:
            ``(5) Suspension of dollar limitation.--Paragraph (1) shall 
        not apply to taxable years beginning after December 31, 1999, 
        and before January 1, 2004.
    (c) Conforming Amendment.--Paragraph (1) of section 48(b) of such 
Code is amended by striking ``section 194(b)(1)'' and inserting 
``section 194(b)(1) and without regard to section 194(b)(5)''.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

                     TITLE VI--ESTATE TAX REDUCTION

SEC. 601. REPEAL OF LIMITATION ON ESTATE TAX DEDUCTION FOR FAMILY-OWNED 
              BUSINESS INTERESTS.

    (a) In General.--Subsection (a) of section 2057 of the Internal 
Revenue Code of 1986 (relating to family-owned business interests) is 
amended to read as follows:
    ``(a) Allowance of Deduction.--For purposes of the tax imposed by 
section 2001, in the case of an estate of a decedent to which this 
section applies, the value of the taxable estate shall be determined by 
deducting from the value of the gross estate the adjusted value of the 
qualified family-owned business interests of the decedent which are 
described in subsection (b)(2).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.

SEC. 602. UNIFIED CREDIT INCREASED BY UNUSED UNIFIED CREDIT OF 
              PREDECEASED SPOUSE.

    (a) In General.--Section 2010 of the Internal Revenue Code of 1986 
(relating to unified credit against estate tax) is amended by 
redesignating subsections (c) and (d) as subsections (d) and (e), 
respectively, and by inserting after subsection (a) the following new 
subsection:
    ``(c) Increase in Credit for Unused Unified Credit of Predeceased 
Spouse.--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) shall be increased by the aggregate of the 
        amounts of the unused predeceased spouse credit.
            ``(2) Unused predeceased spouse credit.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--The term `unused predeceased 
                spouse credit' means, with respect to any predeceased 
                spouse of the decedent, the amount equal to the excess 
                of--
                            ``(i) the maximum amount allowable under 
                        subsection (a) to the estate of such spouse, 
                        over
                            ``(ii) the tax imposed by section 2001 
                        reduced by the credits against such tax other 
                        than the credit allowed by this section.
                    ``(B) Limitation based on credit equivalent of 
                value of property passing to decedent from predeceased 
                spouse.--The amount of the unused predeceased spouse 
                credit with respect to any predeceased spouse shall not 
                exceed the credit equivalent of the aggregate value of 
                property acquired from or passing from (within the 
                meaning of section 1014) the predeceased spouse to the 
                decedent.
                    ``(C) Credit equivalent.--For purposes of 
                subparagraph (B), the credit equivalent is the amount 
                of the tentative tax which would be determined under 
                the rate schedule set forth in section 2001(c) if the 
                amount with respect to which the tentative tax is to be 
                computed were the aggregate value of the property 
                referred to in subparagraph (B).
            ``(3) Limitation on aggregate increase where more than 1 
        predeceased spouse.--In no event may the amount of the increase 
        under paragraph (1) exceed the dollar amount contained in 
        subsection (a).
            ``(4) Predeceased spouse.--For purposes of this subsection, 
        the term `predeceased spouse' means, with respect to the 
        decedent, an individual who was married to the decedent on the 
        date of such individual's death.''
    (b) Gift Tax.--Section 2505 of such Code is amended by 
redesignating subsections (b) and (c) as subsections (c) and (d), 
respectively, and by inserting after subsection (a) the following new 
subsection:
    ``(b) Increase in Credit for Unused Unified Credit of Predeceased 
Spouse.--Rules similar to the rules of section 2010(c) shall apply with 
respect to calendar years beginning after the date of death of any 
predeceased spouse of the donor.''
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after the date of 
the enactment of this Act.

                     TITLE VII--FAMILY ENHANCEMENT

SEC. 701. NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST ALTERNATIVE 
              MINIMUM TAX.

    (a) In General.--Subsection (a) of section 26 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(a) Limitation Based on Amount of Tax.--The aggregate amount of 
credits allowed by this subpart for the taxable year shall not exceed 
the taxpayer's regular tax liability for the taxable year.''
    (b) Conforming Amendment.--Subsection (d) of section 24 of such 
Code is amended by striking paragraph (2) and by redesignating 
paragraph (3) as paragraph (2).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 702. ELIMINATION OF MARRIAGE PENALTY IN STANDARD DEDUCTION.

    (a) In General.--Paragraph (2) of section 63(c) of the Internal 
Revenue Code of 1986 (relating to standard deduction) is amended--
            (1) by striking ``$5,000'' in subparagraph (A) and 
        inserting ``twice the dollar amount in effect under 
        subparagraph (C) for the taxable year'',
            (2) by adding ``or'' at the end of subparagraph (B),
            (3) by striking ``in the case of'' and all that follows in 
        subparagraph (C) and inserting ``in any other case.'', and
            (4) by striking subparagraph (D).
    (b) Technical Amendment.--Subparagraph (B) of section 1(f)(6) of 
such Code is amended by striking ``(other than with'' and all that 
follows through ``shall be applied'' and inserting ``(other than 
sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 703. EXPANSION OF DEPENDENT CARE TAX CREDIT.

    (a) In General.--Paragraph (2) of section 21(a) of the Internal 
Revenue Code of 1986 (relating to expenses for household and dependent 
care services necessary for gainful employment) is amended to read as 
follows:
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means 50 
        percent reduced (but not below 20 percent) by 1 percentage 
        point for each $1,000 (or fraction thereof) by which the 
        taxpayer's adjusted gross income for the taxable year exceeds 
        $30,000.''
    (b) Minimum Credit Allowed for Stay-at-Home Parents.--Section 21(e) 
of such Code (relating to special rules) is amended by adding at the 
end the following:
            ``(11) Minimum credit allowed for stay-at-home parents.--
        Notwithstanding subsection (d), in the case of any taxpayer 
        with one or more qualifying individuals described in subsection 
        (b)(1)(A) under the age of 1 at any time during the taxable 
        year, such taxpayer shall be deemed to have employment-related 
        expenses with respect to such qualifying individuals in an 
        amount equal to the greater of--
                    ``(A) the amount of employment-related expenses 
                incurred for such qualifying individuals for the 
                taxable year (determined under this section without 
                regard to this paragraph), or
                    ``(B) $125 for each month in such taxable year 
                during which such qualifying individual is under the 
                age of 1.''.
    (c) Inflation Adjustment of Dollar Amounts.--
            (1) Section 21 of such Code is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2000, the $30,000 amount contained 
in subsection (a), the $2,400 amount in subsection (c), and the $125 
amount in subsection (e)(11) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 1999' for `calendar year 1992' in subparagraph 
        (B) thereof.
If the increase determined under the preceding sentence is not a 
multiple of $50 ($5 in the case of the amount in subsection (e)(11)), 
such amount shall be rounded to the next lowest multiple thereof.''
            (2) Paragraph (2) of section 21(c) of such Code is amended 
        by striking ``$4,800'' and inserting ``twice the dollar amount 
        applicable under paragraph (1)''.
            (3) Paragraph (2) of section 21(d) of such Code is amended 
        by striking ``less than--'' and all that follows through the 
        end of the first sentence and inserting ``less than \1/12\ of 
        the amount which applies under subsection (c) to the taxpayer 
        for the taxable year.''
    (d) Credit Allowed Based on Residency in Certain Cases.--Subsection 
(e) of section 21 of such Code is amended by adding at the end the 
following new paragraph:
            ``(12) Credit allowed based on residency in certain 
        cases.--In the case of a taxpayer--
                    ``(A) who does not satisfy the household 
                maintenance test of subsection (a) for any period, but
                    ``(B) whose principal place of abode for such 
                period is also the principal place of abode of any 
                qualifying individual,
                then such taxpayer shall be treated as satisfying such 
                test for such period but the amount of credit allowable 
                under this section with respect to such individual 
                shall be determined by allowing only \1/12\ of the 
                limitation under subsection (c) for each full month 
                that the requirement of subparagraph (B) is met.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 704. EMPLOYER-PROVIDED CHILD CARE SERVICES.

    (a) General Rule.--Subpart D of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45F. EMPLOYER EXPENSES IN PROVIDING DEPENDENT CARE SERVICES.

    ``(a) General Rule.--For purposes of section 38, the employer day 
care center credit determined under this section for the taxable year 
is the amount determined under subsection (b) with respect to each 
qualified day care center of the taxpayer.
    ``(b) Credit Per Facility.--For purposes of this section--
            ``(1) In general.--The amount determined under this 
        subsection for any taxable year with respect to any qualified 
        day care facility of the taxpayer is 50 percent of the excess 
        (if any) of--
                    ``(A) the expenses paid or incurred by the taxpayer 
                during the taxable year in providing dependent care 
                services at such facility for employees, over
                    ``(B) the aggregate amount received or accrued 
                during the taxable year by the employer for such 
                services.
            ``(2) Depreciation allowances.--For purposes of paragraph 
        (1), depreciation allowances under section 167 shall be treated 
        as expenses.
    ``(c) Qualified Day Care Center.--For purposes of this section, the 
term `qualified day care center' means any day care center--
            ``(1) which is operated by the taxpayer exclusively for 
        purposes of providing dependent care services to employees,
            ``(2) which is located on the business premises of the 
        taxpayer or on a site adjacent to such premises,
            ``(3) which complies with all applicable laws and 
        regulations of a State or unit of local government, and
            ``(4) the operation of which is part of a dependent care 
        assistance program (as defined in section 129(d)).''
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code is amended by striking ``plus'' at the end of 
paragraph (13), by striking the period at the end of paragraph (14) and 
inserting ``, plus'', and by adding at the end thereof the following 
new paragraph:
            ``(15) the employer day care center credit determined under 
        section 45F(a).''
    (c) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end thereof the following new subsection:
    ``(d) Credit for Employer Day Care Center Expenses.--No deduction 
shall be allowed for that portion of the expenses referred to in 
section 45F(b)(1)(A) otherwise allowable as a deduction for the taxable 
year which is equal to the amount of the credit determined for such 
taxable year under section 45F(a).''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 45F. Employer expenses in 
                                        providing dependent care 
                                        services.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

                        TITLE VIII--HEALTH CARE

SEC. 801. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

    (a) Allowance of Credit.--
            (1) In general.--Section 24(a) of the Internal Revenue Code 
        of 1986 (relating to allowance of child tax credit) is amended 
        to read as follows:
    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) $500 multiplied by the number of qualifying children 
        of the taxpayer, plus
            ``(2) $1,000 multiplied by the number of applicable 
        individuals with respect to whom the taxpayer is an eligible 
        caregiver for the taxable year.
In any case in which the applicable individual and the eligible 
caregiver are the same individual, the credit allowed by paragraph (2) 
with respect to such individual shall not exceed the aggregate amount 
paid by the taxpayer during the taxable year (not compensated for by 
insurance or otherwise) for qualified long-term care services (as 
defined in section 7702B(c)) for such individual.''
            (2) Additional credit for taxpayer with 3 or more separate 
        credit amounts.--So much of section 24(d) of such Code as 
        precedes paragraph (1)(A) thereof is amended to read as 
        follows:
    ``(d) Additional Credit for Taxpayers With 3 or More Separate 
Credit Amounts.--
            ``(1) In general.--If the sum of the number of qualifying 
        children of the taxpayer and the number of applicable 
        individuals with respect to which the taxpayer is an eligible 
        caregiver is 3 or more for any taxable year, the aggregate 
        credits allowed under subpart C shall be increased by the 
        lesser of--''.
            (3) Conforming amendments.--
                    (A) The heading for section 32(n) of such Code is 
                amended by striking ``Child'' and inserting ``Family 
                Care''.
                    (B) The heading for section 24 is amended to read 
                as follows:

``SEC. 24. FAMILY CARE CREDIT.''

                    (C) The table of sections for subpart A of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 24 and inserting 
                the following new item:

                              ``Sec. 24. Family care credit.''.
    (b) Definitions.--Section 24(c) of such Code (defining qualifying 
child) is amended to read as follows:
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying child.--
                    ``(A) In general.--The term `qualifying child' 
                means any individual if--
                            ``(i) the taxpayer is allowed a deduction 
                        under section 151 with respect to such 
                        individual for the taxable year,
                            ``(ii) such individual has not attained the 
                        age of 17 as of the close of the calendar year 
                        in which the taxable year of the taxpayer 
                        begins, and
                            ``(iii) such individual bears a 
                        relationship to the taxpayer described in 
                        section 32(c)(3)(B).
                    ``(B) Exception for certain noncitizens.--The term 
                `qualifying child' shall not include any individual who 
                would not be a dependent if the first sentence of 
                section 152(b)(3) were applied without regard to all 
                that follows `resident of the United States'.
            ``(2) Applicable individual.--
                    ``(A) In general.--The term `applicable individual' 
                means, with respect to any taxable year, any individual 
                who has been certified, before the due date for filing 
                the return of tax for the taxable year (without 
                extensions), by a physician (as defined in section 
                1861(r)(1) of the Social Security Act) as being an 
                individual with long-term care needs described in 
                subparagraph (B) for a period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
                Such term shall not include any individual otherwise 
                meeting the requirements of the preceding sentence 
                unless within the 39\1/2\ month period ending on such 
                due date (or such other period as the Secretary 
                prescribes) a physician (as so defined) has certified 
                that such individual meets such requirements.
                    ``(B) Individuals with long-term care needs.--An 
                individual is described in this subparagraph if the 
                individual meets any of the following requirements:
                            ``(i) The individual is at least 6 years of 
                        age and--
                                    ``(I) is unable to perform (without 
                                substantial assistance from another 
                                individual) at least 3 activities of 
                                daily living (as defined in section 
                                7702B(c)(2)(B)) due to a loss of 
                                functional capacity, or
                                    ``(II) requires substantial 
                                supervision to protect such individual 
                                from threats to health and safety due 
                                to severe cognitive impairment and is 
                                unable to preform, without reminding or 
                                cuing assistance, at least 1 activity 
                                of at least 1 activity of daily living 
                                (as so defined) or to the extent 
                                provided in regulations prescribed by 
                                the Secretary (in consultation with the 
                                Secretary of Health and Human 
                                Services), is unable to engage in age 
                                appropriate activities.
                            ``(ii) The individual is at least 2 but not 
                        6 years of age and is unable due to a loss of 
                        functional capacity to perform (without 
                        substantial assistance from another individual) 
                        at least 2 of the following activities: eating, 
                        transferring, or mobility.
                            ``(iii) The individual is under 2 years of 
                        age and requires specific durable medical 
                        equipment by reason of a severe health 
                        condition or requires a skilled practitioner 
                        trained to address the individual's condition 
                        to be available if the individual's parents or 
                        guardians are absent.
            ``(3) Eligible caregiver.--
                    ``(A) In general.--A taxpayer shall be treated as 
                an eligible caregiver for any taxable year with respect 
                to the following individuals:
                            ``(i) The taxpayer.
                            ``(ii) The taxpayer's spouse.
                            ``(iii) An individual with respect to whom 
                        the taxpayer is allowed a deduction under 
                        section 151 for the taxable year.
                            ``(iv) An individual who would be described 
                        in clause (iii) for the taxable year if section 
                        151(c)(1)(A) were applied by substituting for 
                        the exemption amount an amount equal to the sum 
                        of the exemption amount, the standard deduction 
                        under section 63(c)(2)(C), and any additional 
                        standard deduction under section 63(c)(3) which 
                        would be applicable to the individual if clause 
                        (iii) applied.
                            ``(v) An individual who would be described 
                        in clause (iii) for the taxable year if--
                                    ``(I) the requirements of clause 
                                (iv) are met with respect to the 
                                individual, and
                                    ``(II) the requirements of 
                                subparagraph (B) are met with respect 
                                to the individual in lieu of the 
                                support test of section 152(a).
                    ``(B) Residency test.--The requirements of this 
                subparagraph are met if an individual has as his 
                principal place of abode the home of the taxpayer and--
                            ``(i) in the case of an individual who is 
                        an ancestor or descendant of the taxpayer or 
                        the taxpayer's spouse, is a member of the 
                        taxpayer's household for over half the taxable 
                        year, or
                            ``(ii) in the case of any other individual, 
                        is a member of the taxpayer's household for the 
                        entire taxable year.
                    ``(C) Special rules where more than 1 eligible 
                caregiver.--
                            ``(i) In general.--If more than 1 
                        individual is an eligible caregiver with 
                        respect to the same applicable individual for 
                        taxable years ending with or within the same 
                        calendar year, a taxpayer shall be treated as 
                        the eligible caregiver if each such individual 
                        (other than the taxpayer) files a written 
                        declaration (in such form and manner as the 
                        Secretary may prescribe) that such individual 
                        will not claim such applicable individual for 
                        the credit under this section.
                            ``(ii) No agreement.--If each individual 
                        required under clause (i) to file a written 
                        declaration under clause (i) does not do so, 
                        the individual with the highest modified 
                        adjusted gross income (as defined in section 
                        32(c)(5)) shall be treated as the eligible 
                        caregiver.
                            ``(iii) Married individuals filing 
                        separately.--In the case of married individuals 
                        filing separately, the determination under this 
                        subparagraph as to whether the husband or wife 
                        is the eligible caregiver shall be made under 
                        the rules of clause (ii) (whether or not 1 of 
                        them has filed a written declaration under 
                        clause (i)).''.
    (c) Identification Requirements.--
            (1) In general.--Section 24(e) of such Code is amended by 
        adding at the end the following new sentence: ``No credit shall 
        be allowed under this section to a taxpayer with respect to any 
        applicable individual unless the taxpayer includes the name and 
        taxpayer identification number of such individual, and the 
        identification number of the physician certifying such 
        individual, on the return of tax for the taxable year.''.
            (2) Assessment.--Section 6213(g)(2)(I) of such Code is 
        amended--
                    (A) by inserting ``or physician identification'' 
                after ``correct TIN'', and
                    (B) by striking ``child'' and inserting ``family 
                care''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 802. CREDIT FOR EMPLOYER HEALTH CARE COSTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. CREDIT TO EMPLOYERS MAINTAINING SELF-INSURED HEALTH PLAN 
              FOR COST OF PROVIDING HEALTH COVERAGE FOR EMPLOYEES.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the health coverage cost credit determined under 
this section for the taxable year is an amount equal to 3 percent of 
the amount paid or incurred by the taxpayer during the taxable year for 
health coverage for such employer's employees and their spouses and 
dependents.
    ``(b) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means any employer who, throughout the taxable 
year, maintains a group health plan for such employer's employees and 
their spouses and dependents which is not provided through insurance.
    ``(c) Special Rules.--
            ``(1) Only nongovernmental coverage taken into account.--
        Amounts paid or incurred for coverage under Medicare or any 
        other government program shall not be taken into account under 
        subsection (a).
            ``(2) Denial of double benefit.--No deduction shall be 
        allowed for that portion of the amount taken into account under 
        subsection (a) (which is otherwise allowable as a deduction for 
        the taxable year) equal to the amount of the credit determined 
        for such taxable year under subsection (a).''
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 of such Code 
        is amended by striking ``plus'' at the end of paragraph (14), 
        by striking the period at the end of paragraph (15) and 
        inserting ``, plus'', and by adding at the end the following 
        new paragraph:
            ``(16) in the case of a eligible employer (as defined in 
        section 45G(b)), the health coverage cost credit determined 
        under section 45G(a).''
            (2) Denial of carrybacks to pre-effective date years.--
        Subsection (d) of section 39 of such Code is amended by adding 
        at the end the following new paragraph:
            ``(11) No carryback of section 45g credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the health coverage cost 
        credit determined under section 45G may be carried back to a 
        taxable year beginning on or before the date of the enactment 
        of section 45G.''
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 45G. Credit to employers 
                                        maintaining self-insured health 
                                        plan for cost of providing 
                                        health coverage for 
                                        employees.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 803. EMERGENCY MEDICAL SERVICES ENHANCEMENT ACT.

    (a) General Rule.--Subsection (e) of section 150 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(e) Bonds of Certain Volunteer Fire Departments or Emergency 
Service Organizations.--For purposes of this part and section 103--
            ``(1) In general.--A bond of a volunteer fire or other 
        emergency services organization shall be treated as a bond of a 
        political subdivision of a State if--
                    ``(A) such organization is a qualified volunteer 
                fire or other emergency services organization with 
                respect to an area within the jurisdiction of such 
                political subdivision, and
                    ``(B) such bond is issued as part of an issue 95 
                percent or more of the net proceeds of which are to be 
                used for the acquisition, construction, reconstruction, 
                or improvement of--
                            ``(i) a firehouse or other building used or 
                        to be used by such organization in providing 
                        qualified services (including land which is 
                        functionally related and subordinate thereto), 
                        or
                            ``(ii) a firetruck, ambulance, or other 
                        vehicle used or to be used by such organization 
                        in providing qualified services.
            ``(2) Qualified volunteer fire or other emergency services 
        organization.--For purposes of this subsection, the term 
        `qualified volunteer fire or other emergency services 
        organization' means, with respect to a political subdivision of 
        a State, any organization--
                    ``(A) which is organized and operated to provide 
                qualified services for persons in an area (within the 
                jurisdiction of such political subdivision) which is 
                not provided with any other qualified services of the 
                type provided by such organization, and
                    ``(B) which is required (by written agreement) by 
                the political subdivision to furnish qualified services 
                in such area.
        For purposes of subparagraph (A), other qualified services 
        provided in an area shall be disregarded in determining whether 
        an organization is a qualified volunteer fire or other 
        emergency services organization if such other qualified 
        services are provided by a qualified volunteer fire or other 
        emergency services organization (determined with the 
        application of this sentence) and such organization and the 
        provider of such other services have been continuously 
        providing qualified services to such area since January 1, 
        1999.
            ``(3) Treatment as private activity bonds only for certain 
        purposes.--Bonds which are part of an issue which meets the 
        requirements of paragraph (1) shall not be treated as private 
        activity bonds except for purposes of sections 147(f) and 
        149(d).
            ``(4) Qualified services.--For purposes of this subsection, 
        the term `qualified services' means any firefighting, rescue, 
or emergency medical services.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 804. DEDUCTION FOR HEALTH INSURANCE COSTS FOR SELF-EMPLOYED 
              INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section an 
        amount equal to 100 percent of the amount paid during the 
        taxable year for insurance which constitutes medical care for 
        the taxpayer, his spouse, and dependents.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1998.

                           TITLE IX--HOUSING

SEC. 901. EXTENSION OF FIRST-TIME DISTRICT OF COLUMBIA HOME BUYER TAX 
              CREDIT.

    Subsection (i) of section 1400C of the Internal Revenue Code of 
1986 is amended by striking ``2001'' and inserting ``2006''.

SEC. 902. INCREASE STATE CEILING IN LOW-INCOME HOUSING TAX CREDIT.

    (a) In General.--Clause (i) of section 42(h)(3)(C) of the Internal 
Revenue Code of 1986 (relating to State housing credit ceiling) is 
amended by striking ``$1.25'' and inserting ``$1.75''.
    (b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) of such Code (relating to housing credit 
dollar amount for agencies) is amended by adding at the end the 
following new subparagraph:
                    ``(H) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2000, the dollar amount 
                        contained in subparagraph (C)(i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 1999' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any increase under 
                        clause (i) is not a multiple of 5 cents, such 
                        increase shall be rounded to the next lowest 
                        multiple of 5 cents.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar years after 1999.

                     TITLE X--RESEARCH AND BUSINESS

SEC. 1001. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) General Rule.--Paragraph (1) of section 179(b) of the Internal 
Revenue Code of 1986 (relating to dollar limitation) is amended to read 
as follows:
            ``(1) Dollar limitation.--The aggregate cost which may be 
        taken into account under subsection (a) for any taxable year 
        shall not exceed $25,000.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1999.

SEC. 1002. MEDICAL INNOVATION TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 41 the following:

``SEC. 41A. CREDIT FOR MEDICAL INNOVATION EXPENSES.

    ``(a) General Rule.--For purposes of section 38, the medical 
innovation credit determined under this section for the taxable year 
shall be an amount equal to 20 percent of the excess (if any) of--
            ``(1) the qualified medical innovation expenses for the 
        taxable year, over
            ``(2) the medical innovation base period amount.
    ``(b) Qualified Medical Innovation Expenses.--For purposes of this 
section--
            ``(1) In general.--The term `qualified medical innovation 
        expenses' means the amounts which are paid or incurred by the 
        taxpayer during the taxable year directly or indirectly to any 
        qualified academic institution for clinical testing research 
        activities.
            ``(2) Clinical testing research activities.--
                    ``(A) In general.--The term `clinical testing 
                research activities' means human clinical testing 
                conducted at any qualified academic institution in the 
                development of any product, which occurs before--
                            ``(i) the date on which an application with 
                        respect to such product is approved under 
                        section 505(b), 506, or 507 of the Federal 
                        Food, Drug, and Cosmetic Act,
                            ``(ii) the date on which a license for such 
                        product is issued under section 351 of the 
                        Public Health Service Act, or
                            ``(iii) the date classification or approval 
                        of such product which is a device intended for 
                        human use is given under section 513, 514, or 
                        515 of the Federal Food, Drug, and Cosmetic 
                        Act.
                    ``(B) Product.--The term `product' means any drug, 
                biologic, or medical device.
            ``(3) Qualified academic institution.--The term `qualified 
        academic institution' means any of the following institutions:
                    ``(A) Educational institution.--A qualified 
                organization described in section 170(b)(1)(A)(iii) 
                which is owned or affiliated with an institution of 
                higher education as described in section 3304(f).
                    ``(B) Teaching hospital.--A teaching hospital 
                which--
                            ``(i) is publicly supported or owned by an 
                        organization described in section 501(c)(3), 
                        and
                            ``(ii) is affiliated with an organization 
                        meeting the requirements of subparagraph (A).
                    ``(C) Foundation.--A medical research organization 
                described in section 501(c)(3) (other than a private 
                foundation) which is affiliated with, or owned by--
                            ``(i) an organization meeting the 
                        requirements of subparagraph (A), or
                            ``(ii) a teaching hospital meeting the 
                        requirements of subparagraph (B).
                    ``(D) Charitable research hospital.--A hospital 
                that is designated as a cancer center by the National 
                Cancer Institute.
            ``(4) Exclusion for amounts funded by grants, etc.--The 
        term `qualified medical innovation expenses' shall not include 
        any amount to the extent such amount is funded by any grant, 
        contract, or otherwise by another person (or any governmental 
        entity).
    ``(c) Medical Innovation Base Period Amount.--For purposes of this 
section, the term `medical innovation base period amount' means the 
average annual qualified medical innovation expenses paid by the 
taxpayer during the 3-taxable year period ending with the taxable year 
immediately preceding the first taxable year of the taxpayer beginning 
after December 31, 1998.
    ``(d) Special Rules.--
            ``(1) Limitation on foreign testing.--No credit shall be 
        allowed under this section with respect to any clinical testing 
        research activities conducted outside the United States.
            ``(2) Certain rules made applicable.--Rules similar to the 
        rules of subsections (f) and (g) of section 41 shall apply for 
        purposes of this section.
            ``(3) Election.--This section shall apply to any taxpayer 
        for any taxable year only if such taxpayer elects to have this 
        section apply for such taxable year.
            ``(4) Coordination with credit for increasing research 
        expenditures and with credit for clinical testing expenses for 
        certain drugs for rare diseases.--Any qualified medical 
        innovation expense for a taxable year to which an election 
        under this section applies shall not be taken into account for 
        purposes of determining the credit allowable under section 41 
        or 45C for such taxable year.
    ``(e) Termination.--This section shall not apply to any expense 
paid or incurred after the date specified in section 41(h)(1)(B).''.
    (b) Credit To Be Part of General Business Credit.--
            (1) In general.--Section 38(b) of such Code (relating to 
        current year business credits) is amended by striking ``plus'' 
        at the end of paragraph (15), by striking the period at the end 
        of paragraph (16) and inserting ``, plus'', and by adding at 
        the end the following:
            ``(17) the medical innovation expenses credit determined 
        under section 41A(a).''.
            (2) Transition rule.--Section 39(d) of such Code is amended 
        by adding at the end the following new paragraph:
            ``(12) No carryback of section 41a credit before 
        enactment.--No portion of the unused business credit for any 
        taxable year which is attributable to the medical innovation 
        credit determined under section 41A may be carried back to a 
        taxable year beginning before January 1, 1999.''.
    (c) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end the following new subsection:
    ``(d) Credit for Increasing Medical Innovation Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified medical innovation expenses (as 
        defined in section 41A(b)) otherwise allowable as a deduction 
        for the taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 41A(a).
            ``(2) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (2), (3), and (4) of subsection (c) shall apply 
        for purposes of this subsection.''
    (d) Deduction for Unused Portion of Credit.--Section 196(c) of such 
Code (defining qualified business credits) is amended by redesignating 
paragraphs (5) through (8) as paragraphs (6) through (9), respectively, 
and by inserting after paragraph (4) the following new paragraph:
            ``(5) the medical innovation expenses credit determined 
        under section 41A(a) (other than such credit determined under 
        the rules of section 280C(d)(2)),''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
after the item relating to section 41 the following:

                              ``Sec. 41A. Credit for medical innovation 
                                        expenses.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 1003. PERMANENT EXTENSION OF RESEARCH CREDIT.

    (a) Credit Made Permanent.--
            (1) In general.--Section 41 of the Internal Revenue Code of 
        1986 (relating to credit for increasing research activities) is 
        amended by striking subsection (h).
            (2) Conforming amendment.--Paragraph (1) of section 45C(b) 
        of such Code is amended by striking subparagraph (D).
    (b) Increase in Alternative Incremental Credit Rates.--Subparagraph 
(A) of section 41(c)(4) of such Code is amended--
            (1) by striking ``1.65 percent'' in clause (i) and 
        inserting ``2.65 percent'',
            (2) by striking ``2.2 percent'' in clause (ii) and 
        inserting ``3.2 percent'', and
            (3) by striking ``2.75 percent'' in clause (iii) and 
        inserting ``3.75 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after June 30, 1999.

                     TITLE XI--RETIREMENT SECURITY

SEC. 1101. ADJUSTMENT IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE 
              SOCIAL SECURITY EARNINGS TEST.

    (a) Increase in Monthly Exempt Amount for Individuals Who Have 
Attained Retirement Age.--Section 203(f)(8)(D) of the Social Security 
Act (42 U.S.C. 403(f)(8)(D)) is amended--
            (1) in clause (iii), by inserting ``and'' at the end; and
            (2) by striking clauses (iv) through (vii) and inserting 
        the following new clause:
                            ``(iv) for each month of any taxable year 
                        ending after 1999 and before 2001, $2,500.''.
    (b) Conforming Amendments.--
            (1) Section 203(f)(8)(B)(ii) of such Act (42 U.S.C. 
        403(f)(8)(B)(ii)) is amended--
                    (A) by striking ``after 2001 and before 2003'' and 
                inserting ``after 1999 and before 2001''; and
                    (B) in subclause (II), by striking ``2001'' and 
                inserting ``1998''.
            (2) The second sentence of section 223(d)(4)(A) of such Act 
        (42 U.S.C. 423(d)(4)(A)) is amended by inserting ``and section 
        1101 of the Pro-Family, Pro-Growth, Pro-Reform Tax Reduction 
        Act of 1999'' after ``1996''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after 1999.

SEC. 1102. SMALL BUSINESS CREDIT FOR PENSION PLAN START-UP COSTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45H. SMALL EMPLOYER PENSION PLAN START-UP COSTS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan start-up cost credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the qualified start-up costs paid or incurred by the 
taxpayer during the taxable year.
    ``(b) Dollar Limitation.--The amount of the credit determined under 
this section for any taxable year shall not exceed--
            ``(1) $1,000 for the first taxable year ending after the 
        date the employer established the qualified employer plan to 
        which such costs relate,
            ``(2) $500 for each of the second and third taxable years 
        ending after such date, and
            ``(3) zero for each taxable year thereafter.
    ``(c) Eligible Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible employer' has the 
        meaning given such term by section 408(p)(2)(C)(i).
            ``(2) Employers maintaining qualified plans during 1998 not 
        eligible.--Such term shall not include an employer if such 
        employer (or any predecessor employer) maintained a qualified 
        plan (as defined in section 408(p)(2)(D)(ii)) with respect to 
        which contributions were made, or benefits were accrued, for 
        service in 1998. If only individuals other than employees 
        described in subparagraph (A) or (B) of section 410(b)(3) are 
        eligible to participate in the qualified employer plan referred 
        to in subsection (d)(1), then the preceding sentence shall be 
        applied without regard to any qualified plan in which only 
        employees so described are eligible to participate.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualified start-up costs.--
                    ``(A) In general.--The term `qualified start-up 
                costs' means any ordinary and necessary expenses of an 
                eligible employer which--
                            ``(i) are paid or incurred in connection 
                        with the establishment of a qualified employer 
                        plan in which at least 2 individuals are 
                        eligible to participate, and
                            ``(ii) are of a nonrecurring nature.
                    ``(B) Plan must be established before january 1, 
                2002.--Such term shall not include any expense in 
                connection with a plan established after December 31, 
                2001.
            ``(2) Qualified employer plan.--The term `qualified 
        employer plan' has the meaning given to such term by section 
        4972(d).
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
subsection (n) or (o) of section 414, shall be treated as 1 person.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowable under this chapter for any qualified start-up costs 
        for which a credit is determined under subsection (a).
            ``(3) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of such Code (defining current year business credit) is amended 
by striking ``plus'' at the end of paragraph (16), by striking the 
period at the end of paragraph (17) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(18) in the case of an eligible employer (as defined in 
        section 45H(c)), the small employer pension plan start-up cost 
        credit determined under section 45H(a).''.
    (c) Conforming Amendments.--
            (1) Section 39(d) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(13) No carryback of small employer pension plan start-up 
        cost credit before effective date.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the small employer pension plan start-up cost credit determined 
        under section 45H may be carried back to a taxable year ending 
        on or before the date of the enactment of section 45H.''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 45H. Small employer pension plan 
                                        start-up costs.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years ending after the date 
of the enactment of this Act.

SEC. 1103. INCREASE IN TAXPAYER IRA CONTRIBUTIONS.

    (a) Increase in Maximum Amount of Deduction.--Subparagraph (A) of 
section 219(b)(1) of the Internal Revenue Code of 1986 (relating to 
maximum amount of deduction) is amended by striking ``$2,000'' and 
inserting ``$5,000''.
    (b) Conforming Amendments.--Subsections (a)(1), (b)(2), (j), and 
(p)(8) of section 408 of such Code are each amended by striking 
``$2,000'' each place it appears and inserting ``$5,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

    TITLE XII--NATIONAL COMMISSION ON TAX SIMPLIFICATION AND REFORM

SEC. 1201. ESTABLISHMENT.

    (a) There is established the National Commission on Tax 
Simplification and Reform. The Commission shall be composed of 15 
members appointed or designated by the President and selected as 
follows:
            (1) Five members selected by the President from among 
        officers or employees of the Executive branch, private citizens 
        of the United States, or both. Not more than three of the 
        members selected by the President shall be members of the same 
        political party.
            (2) Five members selected by the Majority Leader of the 
        Senate from among members of the Senate, private citizens of 
        the United States, or both. Not more than three of the members 
        selected by the Majority Leader shall be members of the same 
        political party.
            (3) Five members selected by the Speaker of the House of 
        Representatives from among members of the House, private 
        citizens of the United States, or both. Not more than three of 
        the members selected by the Speaker shall be members of the 
        same political party.
    (b) The President shall designate a Chairman from among the members 
of the Commission.

SEC. 1202. FUNCTIONS.

    (a) The Commission shall review the Internal Revenue Code of 1986, 
identify areas where such Code is overly complex and can be simplified, 
analyze potential solutions to such Code's complexities, and make 
appropriate recommendations to the Secretary of the Treasury, the 
President, and to Congress.
    (b) The Commission shall make its report to the President not later 
than 1 year after the date of the enactment of this Act.

SEC. 1203. ADMINISTRATION.

    (a) The heads of Executive agencies shall, to the extent permitted 
by law, provide the Commission such information as it may require for 
the purpose of carrying out its functions.
    (b) Members of the Commission shall serve without any additional 
compensation for their work on the Commission. However, members 
appointed from among private citizens of the United States may be 
allowed travel expenses, including per diem in lieu of subsistence, as 
authorized by law for persons serving intermittently in the government 
service (5 U.S.C. 5701-5707), to the extent funds are available 
therefor.
    (c) The Commission shall have a staff headed by an Executive 
Director. Any expenses of the Commission shall be paid from such funds 
as may be available to the Secretary of the Treasury.

SEC. 1204. GENERAL.

     (a) Notwithstanding any Executive order, the responsibilities of 
the President under the Federal Advisory Committee Act, as amended, 
except that of reporting annually to the Congress, which are applicable 
to the Commission, shall be performed by the Secretary of the Treasury 
in accordance with the guidelines and procedures established by the 
Administrator of General Services.
    (b) The Commission shall terminate thirty days after submitting its 
report.

    TITLE XIII--AMOUNT OF REVENUES RESERVED FOR SOCIAL SECURITY AND 
                                MEDICARE

SEC. 1301. AMOUNT OF REVENUES RESERVED FOR SOCIAL SECURITY AND 
              MEDICARE.

    This Act reserves 77 percent of the combined on- and off-budget 
surpluses for the purposes of ensuring Social Security and Medicare 
solvency and longevity.
                                 <all>