[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 596 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 596

To amend the Internal Revenue Code of 1986 to encourage the investment 
 of foreign earnings within the United States for productive business 
                     investments and job creation.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 11, 2003

 Mr. Ensign (for himself, Mrs. Boxer, Mr. Smith, Mr. Allen, Mr. Enzi, 
 and Mr. Bayh) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to encourage the investment 
 of foreign earnings within the United States for productive business 
                     investments and job creation.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Invest in the U.S.A. Act of 2003''.

SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION AMOUNT.

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

``SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN DISTRIBUTION 
              AMOUNT.

    ``(a) Toll Tax Imposed on Excess Qualified Foreign Distribution 
Amount.--If a corporation elects the application of this section, a tax 
shall be imposed on the taxpayer in an amount equal to 5.25 percent 
of--
            ``(1) the taxpayer's excess qualified foreign distribution 
        amount, and
            ``(2) the amount determined under section 78 which is 
        attributable to such excess qualified foreign distribution 
        amount.
Such tax shall be imposed in lieu of the tax imposed under section 11 
or 55 on the amounts described in paragraphs (1) and (2) for such 
taxable year.
    ``(b) Excess Qualified Foreign Distribution Amount.--For purposes 
of this section--
            ``(1) In general.--The term `excess qualified foreign 
        distribution amount' means the excess (if any) of--
                    ``(A) dividends received by the taxpayer during the 
                taxable year which are--
                            ``(i) from 1 or more corporations which are 
                        controlled foreign corporations in which the 
                        taxpayer is a United States shareholder on the 
                        date such dividends are paid, and
                            ``(ii) described in a domestic reinvestment 
                        plan approved by the taxpayer's president, 
                        chief executive officer, or comparable official 
                        before the payment of such dividends and 
                        subsequently approved by the taxpayer's board 
                        of directors, management committee, executive 
                        committee, or similar body, which plan shall 
                        provide for the reinvestment of such dividends 
                        in the United States, including as a source for 
                        the funding of worker hiring and training; 
                        infrastructure; research and development; 
                        capital investments; or the financial 
                        stabilization of the corporation for the 
                        purposes of job retention or creation, over
                    ``(B) the base dividend amount.
            ``(2) Base dividend amount.--The term `base dividend 
        amount' means an amount designated under subsection (c)(7), but 
        not less than the average amount of dividends received during 
        the fixed base period from 1 or more corporations which are 
        controlled foreign corporations in which the taxpayer is a 
        United States shareholder on the date such dividends are paid.
            ``(3) Fixed base period.--
                    ``(A) In general.--The term `fixed base period' 
                means each of 3 taxable years which are among the 5 
                most recent taxable years of the taxpayer ending on or 
                before December 31, 2002, determined by disregarding--
                            ``(i) the 1 taxable year for which the 
                        taxpayer had the highest amount of dividends 
                        from 1 or more corporations which are 
                        controlled foreign corporations relative to the 
                        other 4 taxable years, and
                            ``(ii) the 1 taxable year for which the 
                        taxpayer had the lowest amount of dividends 
                        from such corporations relative to the other 4 
                        taxable years.
                    ``(B) Shorter period.--If the taxpayer has fewer 
                than 5 taxable years ending on or before December 31, 
                2002, then in lieu of applying subparagraph (A), the 
                fixed base period shall mean such shorter period 
                representing all of the taxable years of the taxpayer 
                ending on or before December 31, 2002.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Dividends.--The term `dividend' means a dividend as 
        defined in section 316, except that the term shall also include 
        amounts described in section 951(a)(1)(B), and shall exclude 
        amounts described in sections 78 and 959.
            ``(2) Controlled foreign corporations and united states 
        shareholders.--The term `controlled foreign corporation' shall 
        have the same meaning as under section 957(a) and the term 
        `United States shareholder' shall have the same meaning as 
        under section 951(b).
            ``(3) Foreign tax credits.--The amount of any income, war, 
        profits, or excess profit taxes paid (or deemed paid under 
        sections 902 and 960) or accrued by the taxpayer with respect 
        to the excess qualified foreign distribution amount for which a 
        credit would be allowable under section 901 in the absence of 
        this section, shall be reduced by 85 percent.
            ``(4) Foreign tax credit limitation.--For all purposes of 
        section 904, there shall be disregarded 85 percent of--
                    ``(A) the excess qualified foreign distribution 
                amount,
                    ``(B) the amount determined under section 78 which 
                is attributable to such excess qualified foreign 
                distribution amount, and
                    ``(C) the amounts (including assets, gross income, 
                and other relevant bases of apportionment) which are 
                attributable to the excess qualified foreign 
                distribution amount which would, determined without 
                regard to this section, be used to apportion the 
                expenses, losses, and deductions of the taxpayer under 
                section 861 and 864 in determining its taxable income 
                from sources without the United States.
        For purposes of applying subparagraph (C), the principles of 
        section 864(e)(3)(A) shall apply.
            ``(5) Treatment of acquisitions and dispositions.--Rules 
        similar to the rules of section 41(f)(3) shall apply in the 
        case of acquisitions or dispositions of controlled foreign 
        corporations occurring on or after the first day of the 
        earliest taxable year taken into account in determining the 
        fixed base period.
            ``(6) Treatment of consolidated groups.--Members of an 
        affiliated group of corporations filing a consolidated return 
        under section 1501 shall be treated as a single taxpayer in 
        applying the rules of this section.
            ``(7) Designation of dividends.--Subject to subsection 
        (b)(2), the taxpayer shall designate the particular dividends 
        received during the taxable year from 1 or more corporations 
        which are controlled foreign corporations in which it is a 
        United States shareholder which are dividends excluded from the 
        excess qualified foreign distribution amount. The total amount 
        of such designated dividends shall equal the base dividend 
        amount.
            ``(8) Treatment of expenses, losses, and deductions.--Any 
        expenses, losses, or deductions of the taxpayer allowable under 
        subchapter B--
                    ``(A) shall not be applied to reduce the amounts 
                described in subsection (a)(1), and
                    ``(B) shall be applied to reduce other income of 
                the taxpayer (determined without regard to the amounts 
                described in subsection (a)(1)).
    ``(d) Election.--
            ``(1) In general.--An election under this section shall be 
        made on the taxpayer's timely filed income tax return for the 
        taxable year (determined by taking extensions into account) 
        ending 120 days or more after the date of the enactment of this 
        section, and, once made, may be revoked only with the consent 
        of the Secretary.
            ``(2) All controlled foreign corporations.--The election 
        shall apply to all corporations which are controlled foreign 
        corporations in which the taxpayer is a United States 
        shareholder during the taxable year.
            ``(3) Consolidated groups.--If a taxpayer is a member of an 
        affiliated group of corporations filing a consolidated return 
        under section 1501 for the taxable year, an election under this 
        section shall be made by the common parent of the affiliated 
        group which includes the taxpayer, and shall apply to all 
        members of the affiliated group.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary and appropriate to carry out the purposes of this 
section, including regulations under section 55 and regulations 
addressing corporations which, during the fixed base period or 
thereafter, join or leave an affiliated group of corporations filing a 
consolidated return.''.
    (b) Conforming Amendment.--The table of sections for subpart F of 
part III of subchapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 965. Toll tax imposed on excess 
                                        qualified foreign distribution 
                                        amount.''.
    (c) Effective Date.--The amendments made by this section shall 
apply only to the first taxable year of the electing taxpayer ending 
120 days or more after the date of the enactment of this Act.
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