109 HR 5378 IH: Corporate Welfare Reduction and Job Preservation Act of 2006 U.S. House of Representatives 2006-05-11 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 5378 IN THE HOUSE OF REPRESENTATIVES May 11, 2006 Ms. McKinney introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on International Relations and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to reduce by 50 percent certain tax benefits allowable to profitable large corporations which make certain workforce reductions.

1.

Short title

This Act may be cited as the Corporate Welfare Reduction and Job Preservation Act of 2006.

2.

Congressional findings

The Congress finds the following: (1)Corporations are subject to a tax rate of up to 34 percent or 35 percent. (2)Over the past several years, one of the most serious problems affecting the middle-class has been corporate downsizing. Many large, wealthy, and profitable corporations have reduced the number of their American employees by transferring those jobs to foreign countries or have reduced the number of their employees in order to realize an immediate short-term profit or increase in stock value.

3.

Reduction of tax benefits for profitable large corporations which reduce workforce

(a)

In General

Subchapter C of chapter 1 of the Internal Revenue Code of 1986 (relating to corporate distributions and adjustments) is amended by adding at the end the following new part: VII

REDUCTION OF TAX BENEFITS FOR PROFITABLE LARGE CORPORATIONS WHICH REDUCE WORKFORCE

Sec. 386. Reduction of tax benefits for profitable large corporations which reduce workforce.

386.

Reduction of tax benefits for profitable large corporations which reduce workforce

(a)

In General

For any taxable year, if any profitable large corporation reduces by 15 percent or more the number of employees who perform any task or function at any facility in the United States, the amount of each facility-related tax benefit shall be reduced by 50 percent. (b)

Definitions and Special Rules

For purposes of this section— (1)

Facility-related tax benefit

(A)

In general

The term facility-related tax benefit means— (i)any tax benefit to the extent attributable to a facility described in subsection (a), or (ii)to the extent that a tax benefit is not attributable to any facility, a pro rata portion of such tax benefit (as determined under regulations prescribed by the Secretary). (B)

Exception

Such term shall not include— (i)any exclusion from gross income under section 127 or 129 or any other deduction for the cost of employee health care, child care, job training, or retraining, or (ii)any other tax benefit (other than wages) which the Secretary determines by regulation to be a tax benefit for costs incurred primarily for the benefit of employees rather than the employer. (2)

Large corporation

The term large corporation means a corporation or partnership which is not a small-business concern (within the meaning of section 3 of the Small Business Act, as in effect on the date of the enactment of this section). (3)

Profitable

Any large corporation shall be treated as profitable, for any taxable year, if the sum of taxable income (if any) for the 5-taxable-year period ending with the preceding taxable year (or, if shorter, the period consisting of all preceding taxable years of such large corporation) equals or exceeds the sum of the net operating losses (if any) attributable to such period. (4)

Related persons

(A)

In general

All related persons shall be treated as one person. (B)

Related persons defined

The term related persons means— (i)persons bearing a relationship described in section 267 or 707(b), and (ii)persons treated as a single employer under subsection (a) or (b) of section 52. (5)

Tax benefit

The term tax benefit means a credit, deduction, or exclusion allowable under this title.

(b)

Transmission of Data by Secretary of Labor

The Secretary of Labor shall transmit to the Secretary of the Treasury, not less than annually, a list of corporations and partnerships described in section 386(a) of the Internal Revenue Code of 1986 (as added by this section). (c)

Clerical Amendment

The table of parts for subchapter C of chapter 1 of such Code is amended by adding at the end the following new item: Part VII. Reduction of tax benefits for profitable large corporations which reduce workforce (d)

Effective Date

This section and the amendments made by this section shall apply to taxable years beginning after December 31, 2006.

4.

Acceleration of loans made by certain Government entities as penalty against profitable large corporations which reduce workforce

(a)

OPIC Loans

Section 235 of the Foreign Assistance Act of 1961 (22 U.S.C. 2195) is amended by adding at the end the following: (g)

Limitations on Assistance to Profitable Large Corporations That Reduce Workforce

(1)

In general

If a facility-related tax benefit of an entity for a taxable year is reduced by reason of section 386(a) of the Internal Revenue Code of 1986, then— (A)the entity shall immediately repay to the Corporation the amount of any loan made by the Corporation to the entity under section 234; (B)any insurance policy provided by the Corporation to the entity under such section is rescinded; and (C)until the Secretary of the Treasury determines that the activity on the basis of which the facility-related tax benefit of the entity was so reduced has ceased, the Corporation may not, during the immediately succeeding taxable year of the entity, extend credit, participate in an extension of credit, or provide any insurance, directly to the entity under such section. (2)

Effect of failure to repay loan

Interest shall accrue on any amount required by paragraph (1)(A) to be repaid to the Corporation at a rate of 10 percent per month. . (b)

Export-Import Bank Loans

Section 2 of the Export-Import Bank Act of 1945 (12 U.S.C. 635) is amended by adding at the end the following: (g)

Limitations on Assistance to Profitable Large Corporations That Reduce Workforce

(1)

In general

If a facility-related tax benefit of an entity for a taxable year is reduced by reason of section 386(a) of the Internal Revenue Code of 1986, then— (A)the entity shall immediately repay to the Bank the amount of any loan made by the Bank to the entity; (B)any insurance policy provided by the Bank to the entity is rescinded; and (C)until the Secretary of the Treasury determines that the activity on the basis of which the facility-related tax benefit of the entity was so reduced has ceased, the Bank may not, during the immediately succeeding taxable year of the entity, extend credit, participate in an extension of credit, or provide any insurance, directly to the entity. (2)

Effect of failure to repay loan

Interest shall accrue on any amount required by paragraph (1)(A) to be repaid to the Bank at a rate of 10 percent per month. .