[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6474 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 6474

   To adopt the seven immediate reforms recommended by the National 
 Commission on Fiscal Responsibility and Reform to reduce spending and 
              make the Federal Government more efficient.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 20, 2012

 Mr. Ross of Florida introduced the following bill; which was referred 
 to the Committee on Ways and Means, and in addition to the Committees 
 on Oversight and Government Reform, House Administration, Rules, and 
the Budget, 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 adopt the seven immediate reforms recommended by the National 
 Commission on Fiscal Responsibility and Reform to reduce spending and 
              make the Federal Government more efficient.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) In General.--This Act may be cited as the ``Implementation of 
Simpson-Bowles Spending Reductions Act of 2012''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                     TITLE I--REDUCED EXPENDITURES

Sec. 101. Reduction in appropriations to the White House and Congress.
Sec. 102. No cost of living adjustment in pay of Members of Congress.
Sec. 103. Pay freeze for Federal employees.
Sec. 104. Reduction in Federal workforce.
Sec. 105. Reduction in Government travel costs.
Sec. 106. Limitation on Government printing costs.
Sec. 107. Reduction in Federal vehicle costs.
Sec. 108. Sale of excess Federal property.
Sec. 109. Prohibition on earmarks.
                          TITLE II--TAX REFORM

                         Subtitle A--Tax Rates

Sec. 201. Individual rates.
Sec. 202. Repeal of alternative minimum tax on individuals.
Sec. 203. Permanent repeal of personal exemption phaseout.
Sec. 204. Permanent repeal of phaseout of overall limitation on 
                            itemized deductions.
Sec. 205. Corporate income tax rate reduced to flat rate of 20 percent.
Sec. 206. Renewed temporary dividends received deduction.
              Subtitle B--Elimination of Tax Expenditures

Sec. 211. Termination of credit for increasing research activities.
Sec. 212. Termination of deduction for intangible drilling and 
                            development costs.
Sec. 213. Repeal of domestic production activities deduction with 
                            respect to production of coal, lignite, or 
                            oil shale.
Sec. 214. Repeal percentage depletion for oil and natural gas wells.
Sec. 215. Termination of credit for electricity produced from certain 
                            renewable resources.
Sec. 216. Termination of energy credit.
Sec. 217. Repeal of credit for alcohol used as fuel.
Sec. 218. Repeal of credit for alcohol fuel, biodiesel, and alternative 
                            fuel mixtures.
Sec. 219. Repeal of credit for biodiesel and renewable diesel used as 
                            fuel.
Sec. 220. Repeal of credit for certain plug-in electric vehicles.
Sec. 221. Early termination of credit for qualified fuel cell motor 
                            vehicles.
Sec. 222. Repeal of deduction for energy conservation subsidies 
                            provided by public utilities.
Sec. 223. Repeal of qualifying advanced coal project credit.
Sec. 224. Repeal of qualifying gasification project credit.
Sec. 225. Repeal of special allowance for cellulosic biofuel plant 
                            property.
Sec. 226. Repeal of election to expense certain refineries.
Sec. 227. Repeal of 2-year amortization of geological and geophysical 
                            expenditures.
Sec. 228. Repeal of deduction for energy efficient commercial building 
                            property.
Sec. 229. Repeal of credit for construction of new energy efficient 
                            homes.
Sec. 230. Repeal of credit for energy efficient appliances.
Sec. 231. Repeal of credit for residential energy efficient property.
Sec. 232. Repeal of advanced energy project credit.
Sec. 233. Repeal of credit for carbon dioxide sequestration.
Sec. 234. Repeal of low-income housing credit.
Sec. 235. Repeal of Hope and Lifetime Learning Credits.
Sec. 236. Repeal of work opportunity tax credit.
Sec. 237. Repeal of credit for expenses for household and dependent 
                            care services necessary for gainful 
                            employment.
Sec. 238. Repeal of credit for adoption expenses.
Sec. 239. Repeal of credit for expenditures to provide access to 
                            disabled individuals.
Sec. 240. Repeal of earned income tax credit.
Sec. 241. Repeal of energy conservation subsidies provided by public 
                            utilities.
Sec. 242. Repeal of election to expense certain refinery property.
Sec. 243. Repeal of deduction for endangered species recovery 
                            expenditures.
Sec. 244. Repeal of exclusion of cancellation of indebtedness income of 
                            solvent farmers.
Sec. 245. Repeal of alternative minimum tax treatment of certain 
                            property and casualty insurance companies.
Sec. 246. Repeal of small life insurance company deduction.
Sec. 247. Termination of $25,000 exemption from passive loss rules for 
                            rental real estate activities.
Sec. 248. Repeal of discharge of indebtedness exclusion.
Sec. 249. Repeal of certain exceptions for imputed interest rules.
Sec. 250. Treatment of capital gains and dividends as ordinary income.
Sec. 251. Termination of partial exclusion for gain from certain small 
                            business stock.
Sec. 252. Termination of treatment of losses on small business stock as 
                            ordinary.
Sec. 253. Repeal of student loan interest deduction.
Sec. 254. Repeal of deduction of tuition and related expenses.
Sec. 255. Repeal of gross income exclusion for United States savings 
                            bonds used to pay higher education 
                            expenses.
Sec. 256. Elimination of personal exemption for students age 19 and 
                            older.
Sec. 257. Elimination of above the line deduction for certain expenses 
                            of elementary and secondary school 
                            teachers.
Sec. 258. Elimination of gross income exclusion for discharge of 
                            certain student loan debt.
Sec. 259. Repeal of exclusion from gross income for rental value of 
                            parsonages.
Sec. 260. Repeal of exclusion from gross income for benefits provided 
                            to volunteer firefighters and emergency 
                            medical responders.
Sec. 261. Repeal of special treatment of Blue Cross and Blue Shield 
                            organizations, etc.
Sec. 262. Sense of the House regarding a territorial tax system.
Sec. 263. Temporary dividends received deduction allowed for 2011 or 
                            2012.
                Subtitle C--Phaseout of Tax Expenditures

Sec. 271. Five-year phaseout of certain tax expenditures.
                       Subtitle D--Special Status

Sec. 381. Termination of qualified energy conservation bonds.
Sec. 382. Termination of new clean renewable energy bonds.
Sec. 383. Termination of exempt facility bond treatment for water, 
                            sewage, and solid waste facilities.
Sec. 384. Termination of expensing and amortization of reforestation 
                            expenditures and expensing of timber-
                            growing costs.
Sec. 385. Termination of deferral of gain on sales of stock in 
                            agricultural refiners and processors to 
                            eligible farm cooperatives.
Sec. 386. Termination of election to expense certain depreciable 
                            business assets.
Sec. 387. Termination of qualified small issue bonds.
Sec. 388. Termination of exempt facility bond treatment for qualified 
                            highway or surface freight transfer 
                            facilities.
Sec. 389. Termination of exempt facility bond treatment for airports, 
                            docks, and wharves.
Sec. 390. Termination of tribal economic development bonds.
Sec. 391. Termination of exclusion from gross income of United States 
                            savings bonds interest used to pay higher 
                            education expenses.
Sec. 392. Termination of qualified zone academy bonds.
Sec. 393. Termination of exempt facility bond treatment for qualified 
                            public educational facilities.
Sec. 394. Termination of hospital bonds.

                     TITLE I--REDUCED EXPENDITURES

SEC. 101. REDUCTION IN APPROPRIATIONS TO THE WHITE HOUSE AND CONGRESS.

    (a) Appropriations to the White House.--Notwithstanding any other 
provision of law, the total amount of funds appropriated to the 
appropriations account under the heading ``The White House'' under the 
heading ``EXECUTIVE OFFICE OF THE PRESIDENT AND FUNDS APPROPRIATED TO 
THE PRESIDENT'' for each of fiscal years 2012 through 2016 may not 
exceed 85 percent of the total amount of funds appropriated to that 
account for fiscal year 2011.
    (b) Appropriations to Congress.--Notwithstanding any other 
provision of law, the total amount of funds appropriated under the 
headings ``SENATE'' and ``HOUSE OF REPRESENTATIVES'' for each of fiscal 
years 2012 through 2016 may not exceed 85 percent of the total amount 
of funds appropriated under those headings for fiscal year 2011.

SEC. 102. NO COST OF LIVING ADJUSTMENT IN PAY OF MEMBERS OF CONGRESS.

    Notwithstanding any other provision of law, no adjustment shall be 
made under section 601(a) of the Legislative Reorganization Act of 1946 
(2 U.S.C. 31) (relating to cost of living adjustments for Members of 
Congress) during fiscal years 2013, 2014, and 2015.

SEC. 103. PAY FREEZE FOR FEDERAL EMPLOYEES.

    Section 147 of the Continuing Appropriations Act, 2011 (Public Law 
111-242) is amended--
            (1) in subsection (b)(1), by striking ``December 31, 2012'' 
        and inserting ``December 31, 2015''; and
            (2) in subsection (c), by striking ``December 31, 2012'' 
        and inserting ``December 31, 2015''.

SEC. 104. REDUCTION IN FEDERAL WORKFORCE.

    (a) Definition.--For the purpose of this section--
            (1) the term ``total number of Federal employees'' means 
        the total number of Federal employees in all agencies;
            (2) the term ``Federal employee'' means an employee as 
        defined by section 2105 of title 5, United States Code; and
            (3) the term ``agency'' means an Executive agency as 
        defined by section 105 of title 5, United States Code, 
        excluding the Government Accountability Office.
    (b) Limitation.--The President, through the Office of Management 
and Budget (in consultation with the Office of Personnel Management), 
shall take appropriate measures to ensure that, effective beginning in 
fiscal year 2015, the total number of Federal employees (as determined 
under subsection (c)) shall not exceed 90 percent of the total number 
of Federal employees as of September 30, 2011 (as so determined).
    (c) Monitoring and Notification.--The Office of Management and 
Budget (in consultation with the Office of Personnel Management)--
            (1) shall continuously monitor all agencies and make a 
        determination, as of September 30, 2011, and the last day of 
        each quarter of each fiscal year beginning thereafter, as to 
        whether or not the total number of Federal employees exceeds 
        the maximum number allowable under subsection (b); and
            (2) whenever a determination under paragraph (1) is made 
        that the total number of Federal employees exceeds the maximum 
        number allowable under subsection (b), shall provide written 
        notice to that effect to the President and Congress within 14 
        days after the last day of the quarter to which such 
        determination relates.
    (d) Compliance.--Whenever, with respect to the quarter ending on 
September 30, 2014, or any subsequent quarter, the Office of Management 
and Budget provides written notice under subsection (c)(2) that the 
total number of Federal employees exceeds the maximum number allowable 
under subsection (b), no agency may thereafter appoint any employee to 
fill any vacancy within such agency until the Office of Management and 
Budget provides written notice to the President and Congress of a 
determination under subsection (c)(1) that the total number of Federal 
employees no longer exceeds the maximum number allowable under 
subsection (b). Any notice under the preceding sentence shall be 
provided within 14 days after the last day of the quarter to which the 
determination relates.
    (e) Waiver.--
            (1) Emergencies.--This section may be waived upon a 
        determination by the President that--
                    (A) the existence of a state of war or other 
                national security concern so requires; or
                    (B) the existence of an extraordinary emergency 
                threatening life, health, public safety, property, or 
                the environment so requires.
            (2) Agency efficiency or critical mission.--This section 
        may be waived, with respect to a particular position or 
        category of positions in an agency, upon a determination by the 
        President that the efficiency of the agency or the performance 
        of a critical agency mission so requires.
    (f) Replacement Rate.--To the extent necessary to achieve the 
workforce reduction required by subsection (b), the Office of 
Management and Budget (in consultation with the Office of Personnel 
Management) shall take appropriate measures to ensure that agencies 
shall appoint no more than 1 employee for every 3 employees retiring or 
otherwise separating from Government service after the date of the 
enactment of this Act. This subsection shall cease to apply after 
September 30, 2014.
    (g) Counting Rule.--For purposes of this section, any determination 
of the number of employees in an agency shall be expressed on a full-
time equivalent basis.
    (h) Limitation on Procurement of Service Contracts.--The President, 
through the Office of Management and Budget (in consultation with the 
Office of Personnel Management), shall take appropriate measures to 
ensure that there is no increase in the procurement of service 
contracts by reason of the enactment of this Act, except in cases in 
which a cost comparison demonstrates that such contracts would be to 
the financial advantage of the Government.

SEC. 105. REDUCTION IN GOVERNMENT TRAVEL COSTS.

    (a) Definition.--In this section, the term ``agency'' means an 
executive agency as defined under section 105 of title 5, United States 
Code.
    (b) Reduction.--Notwithstanding any other provision of law, the 
total amount of funds appropriated to the appropriations account 
providing for travel expenses for each agency for each of fiscal years 
2012, 2013, 2014, 2015, and 2016 may not exceed 80 percent of the total 
amount of funds appropriated to each of those appropriations accounts 
for fiscal year 2011.

SEC. 106. LIMITATION ON GOVERNMENT PRINTING COSTS.

    Not later than 180 days after the date of enactment of this Act, 
the Director of the Office of Management and Budget shall coordinate 
with the heads of Federal departments and independent agencies to--
            (1) determine which Government publications could be 
        available on Government websites and no longer printed and to 
        devise a strategy to reduce overall Government printing costs 
        over the 10-year period beginning with fiscal year 2012, except 
        that the Director shall ensure that essential printed documents 
        prepared for social security recipients, medicare 
        beneficiaries, and other populations in areas with limited 
        internet access or use continue to remain available;
            (2) establish government-wide Federal guidelines on 
        employee printing;
            (3) issue on the Office of Management and Budget's public 
        website the results of a cost-benefit analysis on implementing 
        a digital signature system and on establishing employee 
        printing identification systems, such as the use of individual 
        employee cards or codes, to monitor the amount of printing done 
        by Federal employees; except that the Director of the Office of 
        Management and Budget shall ensure that Federal employee 
        printing costs unrelated to national defense, homeland 
        security, border security, national disasters, and other 
        emergencies do not exceed $860,000,000 annually; and
            (4) issue guidelines requiring every department, agency, 
        commission or office to list at a prominent place near the 
        beginning of each publication distributed to the public and 
        issued or paid for by the Federal Government--
                    (A) the name of the issuing agency, department, 
                commission or office;
                    (B) the total number of copies of the document 
                printed;
                    (C) the collective cost of producing and printing 
                all of the copies of the document; and
                    (D) the name of the firm publishing the document.

SEC. 107. REDUCTION IN FEDERAL VEHICLE COSTS.

    Notwithstanding any other provision of law, for fiscal year 2012 
and each fiscal year thereafter, the amount made available to the 
General Services Administration for the acquisition of new vehicles for 
the Federal fleet shall not exceed an amount equal to 80 percent of the 
amount made available for the acquisition of those vehicles for fiscal 
year 2010.

SEC. 108. SALE OF EXCESS FEDERAL PROPERTY.

    (a) In General.--Chapter 5 of subtitle I of title 40, United States 
Code, is amended by adding at the end the following:

         ``SUBCHAPTER VII--EXPEDITED DISPOSAL OF REAL PROPERTY

``Sec. 621. Definitions
    ``In this subchapter:
            ``(1) Director.--The term `Director' means the Director of 
        the Office of Management and Budget.
            ``(2) Landholding agency.--The term `landholding agency' 
        means a landholding agency (as defined in section 501(i) of the 
        McKinney-Vento Homeless Assistance Act (42 U.S.C. 11411(i))).
            ``(3) Real property.--
                    ``(A) In general.--The term `real property' means--
                            ``(i) a parcel of real property under the 
                        administrative jurisdiction of the Federal 
                        Government that is--
                                    ``(I) excess;
                                    ``(II) surplus;
                                    ``(III) underperforming; or
                                    ``(IV) otherwise not meeting the 
                                needs of the Federal Government, as 
                                determined by the Director; and
                            ``(ii) a building or other structure 
                        located on real property described in clause 
                        (i).
                    ``(B) Exclusion.--The term `real property' excludes 
                any parcel of real property, and any building or other 
                structure located on real property, that is to be 
                closed or realigned under the Defense Authorization 
                Amendments and Base Closure and Realignment Act (10 
                U.S.C. 2687 note; Public Law 100-526).
``Sec. 622. Disposal program
    ``(a) In General.--Except as provided in subsection (e), the 
Director shall, by sale or auction, dispose of a quantity of real 
property with an aggregate value of not less than $100,000,000 that, as 
determined by the Director, is not being used, and will not be used, to 
meet the needs of the Federal Government for the period of fiscal years 
2011 through 2015.
    ``(b) Recommendations.--The head of each landholding agency shall 
recommend to the Director real property for disposal under subsection 
(a).
    ``(c) Selection of Properties.--After receiving recommendations of 
candidate real property under subsection (b), the Director--
            ``(1) with the concurrence of the head of each landholding 
        agency, may select the real property for disposal under 
        subsection (a); and
            ``(2) shall notify the recommending landholding agency head 
        of the selection of the real property.
    ``(d) Website.--The Director shall ensure that all real properties 
selected for disposal under this section are listed on a website that 
shall--
            ``(1) be updated routinely; and
            ``(2) include the functionality to allow any member of the 
        public, at the option of the member, to receive updates of the 
        list through electronic mail.
    ``(e) Transfer of Property.--The Director may transfer real 
property selected for disposal under this section to the Department of 
Housing and Urban Development if the Secretary of Housing and Urban 
Development determines that the real property is suitable for use in 
assisting the homeless.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 5 of subtitle I of title 40, United States Code, is amended by 
inserting after the item relating to section 611 the following:

          ``subchapter vii--expedited disposal of real property

``Sec. 621. Definitions.
``Sec. 622. Disposal program.''.

SEC. 109. PROHIBITION ON EARMARKS.

    Section 312 of the Congressional Budget Act of 1974 is amended by 
inserting at the end the following:
    ``(g) Prohibition on Earmarks.--
            ``(1) Bills and joint resolutions.--
                    ``(A) In general.--It shall not be in order in the 
                Senate or the House of Representatives to consider a 
                bill, resolution, or amendment that includes an 
                earmark, limited tax benefit, or limited tariff 
                benefit.
                    ``(B) Procedure.--In the Senate, a point of order 
                under this paragraph may be raised by a Senator as 
                provided in section 313(e) of the Congressional Budget 
                Act of 1974.
            ``(2) Conference report.--
                    ``(A) In general.--It shall not be in order in the 
                Senate or the House of Representatives to vote on the 
                adoption of a report of a committee of conference if 
                the report includes an earmark, limited tax benefit, or 
                limited tariff benefit.
                    ``(B) Procedure.--When the Senate is considering a 
                conference report on, or an amendment between the 
                Houses in relation to, an appropriations act, upon a 
                point of order being made by any Senator pursuant to 
                this paragraph, and such point of order being 
                sustained, such material contained in such conference 
                report shall be deemed stricken, and the Senate shall 
                proceed to consider the question of whether the Senate 
                shall recede from its amendment and concur with a 
                further amendment, or concur in the House amendment 
                with a further amendment, as the case may be, which 
                further amendment shall consist of only that portion of 
                the conference report or House amendment, as the case 
                may be, not so stricken. Any such motion in the Senate 
                shall be debatable under the same conditions as was the 
                conference report. In any case in which such point of 
                order is sustained against a conference report (or 
                Senate amendment derived from such conference report by 
                operation of this subsection), no further amendment 
                shall be in order.
            ``(3) Waiver.--Any Senator may move to waive any or all 
        points of order under this subsection by an affirmative vote of 
        two-thirds of the Members, duly chosen and sworn.
            ``(4) Definitions.--For the purpose of this subsection--
                    ``(A) the term `earmark' means a provision or 
                report language included primarily at the request of a 
                Senator or Member of the House of Representatives 
                providing, authorizing, or recommending a specific 
                amount of discretionary budget authority, credit 
                authority, or other spending authority for a contract, 
                loan, loan guarantee, grant, loan authority, or other 
                expenditure with or to an entity, or targeted to a 
                specific State, locality or Congressional district, 
                other than through a statutory or administrative 
                formula-driven or competitive award process;
                    ``(B) the term `limited tax benefit' means any 
                revenue provision that--
                            ``(i) provides a Federal tax deduction, 
                        credit, exclusion, or preference to a 
                        particular beneficiary or limited group of 
                        beneficiaries under the Internal Revenue Code 
                        of 1986; and
                            ``(ii) contains eligibility criteria that 
                        are not uniform in application with respect to 
                        potential beneficiaries of such provision; and
                    ``(C) the term `limited tariff benefit' means a 
                provision modifying the Harmonized Tariff Schedule of 
                the United States in a manner that benefits 10 or fewer 
                entities.
            ``(5) Application.--This subsection shall not apply to any 
        authorization of appropriations to a Federal entity if such 
        authorization is not specifically targeted to a State, locality 
        or congressional district.''.

                          TITLE II--TAX REFORM

                         Subtitle A--Tax Rates

SEC. 201. INDIVIDUAL RATES.

    (a) In General.--Section 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(j) Post-2012 Rate Table.--
            ``(1) In general.--In the case of taxable years beginning 
        after December 31, 2012, the following table shall apply in 
        lieu of the tables under subsections (a), (b), (c), (d), and 
        (e):

``If taxable income is:             The tax is:
    Not over $100,000..............
                                        10% of taxable income
    Over $100,000..................
                                        $10,000, plus 20% of the excess 
                                                over $100,000.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning after 2013, the Secretary shall prescribe, in 
                the same manner as under subsection (f), a table which 
                shall apply in lieu of the table under paragraph (1), 
                except that subsection (f)(3)(B) shall be applied by 
                substituting `2012' for `1992'.''.
    (b) Maximum Capital Gains Rate.--Paragraph (1) of section 1(b) of 
such Code is amended to read as follows:
            ``(1) In general.--If a taxpayer has a net capital gain for 
        any taxable year, the tax imposed by this section for such 
        taxable year shall not exceed the sum of--
                    ``(A) a tax computed at the rates and in the same 
                manner as if this subsection had not been enacted on 
                taxable income reduced by the net capital gain;
                    ``(B) 0 percent of so much of the net capital gain 
                as does not exceed $1,000,000; and
                    ``(C) 20 percent of so much of net capital gain as 
                exceeds $1,000,000.''.

SEC. 202. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDIVIDUALS.

    (a) In General.--Section 55(a) of the Internal Revenue Code of 1986 
(relating to alternative minimum tax imposed) is amended by adding at 
the end the following new flush sentence:
``For purposes of this title, the tentative minimum tax on any taxpayer 
other than a corporation for any taxable year beginning after December 
31, 2011, shall be zero.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2011.

SEC. 203. PERMANENT REPEAL OF PERSONAL EXEMPTION PHASEOUT.

    Section 901 of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 shall not apply to the amendments made by section 102 of 
such Act.

SEC. 204. PERMANENT REPEAL OF PHASEOUT OF OVERALL LIMITATION ON 
              ITEMIZED DEDUCTIONS.

    Section 901 of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 shall not apply to the amendments made by section 103 of 
such Act.

SEC. 205. CORPORATE INCOME TAX RATE REDUCED TO FLAT RATE OF 20 PERCENT.

    (a) In General.--Paragraph (1) of section 11(b) of the Internal 
Revenue Code of 1986 is amended by striking ``shall be the sum of--'' 
and all that follows through the period at the end and inserting 
``shall be 20 percent of taxable income.''.
    (b) Personal Service Corporations.--Paragraph (2) of section 11(b) 
of such Code is amended by striking ``35 percent'' and inserting ``20 
percent''.
    (c) Conforming Amendments.--
            (1) Subsection (a) of section 1201 of such Code is 
        amended--
                    (A) by striking ``35 percent (determined without 
                regard to the last 2 sentences of section 11(b))'' and 
                inserting ``20 percent'', and
                    (B) by striking ``35 percent'' each place it 
                appears (other than in the matter preceding paragraph 
                (1)) and inserting ``20 percent''.
            (2) Paragraphs (1), (2), and (6) of section 1445(e) of such 
        Code are each amended by striking ``35 percent'' and inserting 
        ``20 percent''.
    (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. 206. RENEWED TEMPORARY DIVIDENDS RECEIVED DEDUCTION.

    (a) Election.--Subsection (f) of section 965 of the Internal 
Revenue Code of 1986 (relating to election) is amended to read as 
follows:
    ``(f) Election.--The taxpayer may elect to apply this section to--
            ``(1) the taxpayer's last taxable year which begins before 
        the date of the enactment of this subsection, or
            ``(2) the taxpayer's first taxable year which begins during 
        the 1-year period beginning on such date.
Such election may be made for a taxable year only if made on or before 
the due date (including extensions) for filing the return of tax for 
such taxable year.''.
    (b) Limitation.--Paragraph (1) of section 965(b) of such Code is 
amended to read as follows:
            ``(1) In general.--The amount of dividends taken into 
        account under subsection (a) shall not exceed the sum of the 
        current and accumulated earnings and profits described in 
        section 959(c)(3) for the year a deduction is claimed under 
        subsection (a), without diminution by reason of any 
        distributions made during the election year, for all controlled 
        foreign corporations of the United States shareholder.''.
    (c) Failure To Maintain Employment Levels.--Paragraph (4) of 
section 965(b) of such Code (relating to limitations) is amended to 
read as follows:
            ``(4) Reduction in benefits for failure to maintain 
        employment levels.--
                    ``(A) In general.--If, during the period consisting 
                of the calendar month in which the taxpayer first 
                receives a distribution described in subsection (a)(1) 
                and the succeeding 23 calendar months, the taxpayer 
                does not maintain an average employment level at least 
                equal to the taxpayer's prior average employment, an 
                additional amount equal to $25,000 multiplied by the 
                number of employees by which the taxpayer's average 
                employment level during such period falls below the 
                prior average employment (but not exceeding the 
                aggregate amount allowed as a deduction pursuant to 
                subsection (a)(1)) shall be taken into income by the 
                taxpayer during the taxable year that includes the 
                final day of such period.
                    ``(B) Average employment level.--For purposes of 
                this paragraph, the taxpayer's average employment level 
                for a period shall be the average number of full-time 
                United States employees of the taxpayer, measured at 
                the end of each month during the period.
                    ``(C) Prior average employment.--For purposes of 
                this paragraph, the taxpayer's `prior average 
                employment' shall be the average number of full-time 
                United States employees of the taxpayer during the 
                period consisting of the 24 calendar months immediately 
                preceding the calendar month in which the taxpayer 
                first receives a distribution described in subsection 
                (a)(1).
                    ``(D) Full-time united states employee.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `full-time 
                        United States employee' means an individual who 
                        provides services in the United States as a 
                        full-time employee, based on the employer's 
                        standards and practices; except that regardless 
                        of the employer's classification of the 
                        employee, an employee whose normal schedule is 
                        40 hours or more per week is considered a full-
                        time employee.
                            ``(ii) Exception for changes in ownership 
                        of trades or businesses.--Such term does not 
                        include--
                                    ``(I) any individual who was an 
                                employee, on the date of acquisition, 
                                of any trade or business acquired by 
                                the taxpayer during the 24-month period 
                                referred to in subparagraph (A); and
                                    ``(II) any individual who was an 
                                employee of any trade or business 
                                disposed of by the taxpayer during the 
                                24-month period referred to in 
                                subparagraph (A) or the 24-month period 
                                referred to in subparagraph (C).
                    ``(E) Aggregation rules.--In determining the 
                taxpayer's average employment level and prior average 
                employment, all domestic members of a controlled group 
                shall be treated as a single taxpayer.''.
    (d) Threshold Period.--Section 965 of such Code is amended by 
striking ``June 30, 2003'' each place it occurs and inserting ``June 
30, 2011''.
    (e) Base Period.--Paragraph (2) of subsection 965(c) of such Code 
is amended by inserting at the end of subparagraph (A) the following 
flush sentence:
``For purposes of this paragraph, taxable years shall not include any 
year for which an election under section 965 was in effect.''.
    (f) Indebtedness Determination Date.--Subparagraph (B) of section 
965(b)(3) of such Code is amended by striking ``October 3, 2004'' and 
inserting ``January 19, 2012''.
    (g) Conforming Amendments.--
            (1) Subsection 965(c) of such Code, as amended by 
        subsection (e), is amended by striking paragraph (1) and 
        redesignating paragraphs (2), (3), (4), and (5) as paragraphs 
        (1), (2), (3), and (4), respectively.
            (2) Paragraph 965(c)(4) of such Code, as redesignated by 
        paragraph (1), is amended to read as follows:
            ``(4) Controlled groups.--All United States shareholders 
        which are members of an affiliated group filing a consolidated 
        return under section 1501 shall be treated as one United States 
        shareholder.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.

              Subtitle B--Elimination of Tax Expenditures

SEC. 211. TERMINATION OF CREDIT FOR INCREASING RESEARCH ACTIVITIES.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 41 of the Internal Revenue Code of 1986 
is hereby repealed.

SEC. 212. TERMINATION OF DEDUCTION FOR INTANGIBLE DRILLING AND 
              DEVELOPMENT COSTS.

    (a) In General.--Section 263(c) is amended by adding at the end the 
following new sentence: ``This subsection shall not apply to any 
taxable year beginning after the date of the enactment of this 
sentence.''.
    (b) Conforming Amendments.--Paragraphs (2) and (3) of section 
291(b) are each amended by striking ``section 263(c), 616(a),'' and 
inserting ``section 616(a)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

SEC. 213. REPEAL OF DOMESTIC PRODUCTION ACTIVITIES DEDUCTION WITH 
              RESPECT TO PRODUCTION OF COAL, LIGNITE, OR OIL SHALE.

    (a) In General.--Subparagraph (B) of section 199(c)(4), as amended 
by this Act, is amended by striking ``or'' at the end of clause (iii), 
by striking the period at the end of clause (iv) and inserting ``, 
or'', and by adding at the end the following new clause:
    ``(v) the lease, rental, license, sale, exchange, or other 
disposition of coal, lignite, or oil shale.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 214. REPEAL PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS WELLS.

    (a) In General.--Section 613A is amended by adding at the end the 
following new subsection:
    ``(f) Termination.--After the date of the enactment of the 
Implementation of Simpson-Bowles Spending Reductions Act of 2012, this 
section and section 611 shall not apply to any oil or gas well.''.
    (b) Conforming Amendment.--Section 613A(c)(1) is amended by 
striking ``subsection (d)'' and inserting ``subsections (d) and (f)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 215. TERMINATION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    Effective for property placed in service after the date of the 
enactment of this Act, section 45 is repealed.

SEC. 216. TERMINATION OF ENERGY CREDIT.

    Effective for property placed in service after the date of the 
enactment of this Act, section 48 is repealed.

SEC. 217. REPEAL OF CREDIT FOR ALCOHOL USED AS FUEL.

    Effective for fuel sold or used after the date of the enactment of 
this Act, section 40 is repealed.

SEC. 218. REPEAL OF CREDIT FOR ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE 
              FUEL MIXTURES.

    Effective for fuel sold and used after the date of the enactment of 
this Act, section 6426 is repealed.

SEC. 219. REPEAL OF CREDIT FOR BIODIESEL AND RENEWABLE DIESEL USED AS 
              FUEL.

    Effective for fuel produced, and sold or used, after the date of 
the enactment of this Act, section 40A is repealed.

SEC. 220. REPEAL OF CREDIT FOR CERTAIN PLUG-IN ELECTRIC VEHICLES.

    Effective for property placed in service after the date of the 
enactment of this Act, section 30 is repealed.

SEC. 221. EARLY TERMINATION OF CREDIT FOR QUALIFIED FUEL CELL MOTOR 
              VEHICLES.

    Effective for property placed in service after the date of the 
enactment of this Act, section 30B is repealed.

SEC. 222. REPEAL OF DEDUCTION FOR ENERGY CONSERVATION SUBSIDIES 
              PROVIDED BY PUBLIC UTILITIES.

    Effective for amounts received after the date of the enactment of 
this Act, section 136 is repealed.

SEC. 223. REPEAL OF QUALIFYING ADVANCED COAL PROJECT CREDIT.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 48A is repealed.

SEC. 224. REPEAL OF QUALIFYING GASIFICATION PROJECT CREDIT.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 48B is repealed.

SEC. 225. REPEAL OF SPECIAL ALLOWANCE FOR CELLULOSIC BIOFUEL PLANT 
              PROPERTY.

    (a) In General.--Section 168 is amended by striking subsection (l).
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act.

SEC. 226. REPEAL OF ELECTION TO EXPENSE CERTAIN REFINERIES.

    Effective for property placed in service after the date of the 
enactment of this Act, section 179C is repealed.

SEC. 227. REPEAL OF 2-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
              EXPENDITURES.

    (a) In General.--Paragraphs (1) and (4) of section 167(h) are each 
amended by striking ``24-month'' and inserting ``7-year''.
    (b) Conforming Amendment.--Subsection (h) of section 167 is amended 
by striking paragraph (5).
    (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. 228. REPEAL OF DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL BUILDING 
              PROPERTY.

    Effective for property placed in service after the date of the 
enactment of this Act, section 179D is repealed.

SEC. 229. REPEAL OF CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT 
              HOMES.

    Effective for homes acquired after the date of the enactment of 
this Act, section 45L is repealed.

SEC. 230. REPEAL OF CREDIT FOR ENERGY EFFICIENT APPLIANCES.

    Effective for property placed in service after the date of the 
enactment of this Act, section 25C is repealed.

SEC. 231. REPEAL OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    Effective for property placed in service after the date of the 
enactment of this Act, section 25D is repealed.

SEC. 232. REPEAL OF ADVANCED ENERGY PROJECT CREDIT.

    Effective for property placed in service after the date of the 
enactment of this Act, section 48C is repealed.

SEC. 233. REPEAL OF CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

    Effective for carbon dioxide captured after the date of the 
enactment of this Act, section 45Q is repealed.

SEC. 234. REPEAL OF LOW-INCOME HOUSING CREDIT.

    Effective for property placed in service after the date of the 
enactment of this Act, section 42 is repealed.

SEC. 235. REPEAL OF HOPE AND LIFETIME LEARNING CREDITS.

    Effective for amounts paid or incurred after the date of the 
enactment of this Act, section 25A is repealed.

SEC. 236. REPEAL OF WORK OPPORTUNITY TAX CREDIT.

    Effective for wages paid after the date of the enactment of this 
Act, section 51 is repealed.

SEC. 237. REPEAL OF CREDIT FOR EXPENSES FOR HOUSEHOLD AND DEPENDENT 
              CARE SERVICES NECESSARY FOR GAINFUL EMPLOYMENT.

    Effective for expenses paid after the date of the enactment of this 
Act, section 21 is repealed.

SEC. 238. REPEAL OF CREDIT FOR ADOPTION EXPENSES.

    Effective for expenses paid or incurred after the date of the 
enactment of this Act, section 23 is repealed.

SEC. 239. REPEAL OF CREDIT FOR EXPENDITURES TO PROVIDE ACCESS TO 
              DISABLED INDIVIDUALS.

    Effective for expenditures paid or incurred after the date of the 
enactment of this Act, section 44 is repealed.

SEC. 240. REPEAL OF EARNED INCOME TAX CREDIT.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 32 is repealed.

SEC. 241. REPEAL OF ENERGY CONSERVATION SUBSIDIES PROVIDED BY PUBLIC 
              UTILITIES.

    Effective for amounts received after the date of the enactment of 
this Act, section 136 is repealed.

SEC. 242. REPEAL OF ELECTION TO EXPENSE CERTAIN REFINERY PROPERTY.

    Effective for property placed in service after the date of the 
enactment of this Act, sections 168(l) and 179C are repealed.

SEC. 243. REPEAL OF DEDUCTION FOR ENDANGERED SPECIES RECOVERY 
              EXPENDITURES.

    (a) In General.--Subsections (a) and (c)(1) of section 175 are each 
amended by striking ``, or for endangered species recovery''.
    (b) Conforming Amendments.--
            (1) The heading for section 175 is amended by striking ``; 
        endangered species recovery expenditures''.
            (2) Paragraph (1) of section 175(c) is amended by striking 
        the second sentence.
            (3) Subparagraph (A) of section 175(c)(3) is amended--
                    (A) by striking ``or the recovery plan pursuant to 
                the Endangered Species Act of 1973'', and
                    (B) by striking ``, or endangered species recovery 
                plan'' in the heading thereof.
    (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.

SEC. 244. REPEAL OF EXCLUSION OF CANCELLATION OF INDEBTEDNESS INCOME OF 
              SOLVENT FARMERS.

    (a) In General.--Paragraph (1) of section 108(a) is amended by 
striking subparagraph (C) and by redesignating subparagraphs (D) and 
(E) as subparagraphs (C) and (D) respectively.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 108(a)(2) is amended by 
        striking ``(D), and (E)'' and inserting ``and (D)''.
            (2) Subparagraph (B) of section 108(a)(2) is amended--
                    (A) by striking ``Subparagraphs (C) and (D)'' and 
                inserting ``Subparagraph (C)'', and
                    (B) by striking ``qualified farm exclusion and''.
            (3) Paragraph (1) of section 108(b) is amended by striking 
        ``(B), or (C)'' and inserting ``or (B)''.
            (4) Subsection (c) of section 108 is amended by striking 
        ``under subparagraph (D)'' each place is appears and inserting 
        ``under subparagraph (C)''.
            (5) Section 108 is amended by striking subsection (g) and 
        by redesignating subsections (h) and (i) as subsections (g) and 
        (h), respectively.
    (c) Effective Date.--The amendments made by this section shall 
apply to discharges of indebtedness after the date of the enactment of 
this Act.

SEC. 245. REPEAL OF ALTERNATIVE MINIMUM TAX TREATMENT OF CERTAIN 
              PROPERTY AND CASUALTY INSURANCE COMPANIES.

    (a) In General.--Clause (i) of section 56(g)(4)(B) is amended by 
striking the last sentence.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 246. REPEAL OF SMALL LIFE INSURANCE COMPANY DEDUCTION.

    (a) In General.--Section 806 is repealed.
    (b) Conforming Amendments.--
            (1) Section 804 is amended by striking ``means--'' and all 
        that follows through the period at the end and inserting the 
        following: ``means the general deductions provided in section 
        805.''.
            (2) Subparagraph (B) of section 453B(e)(2) is amended by 
        inserting ``, as in effect on the day before the date of the 
        enactment of the Implementation of Simpson-Bowles Spending 
        Reductions Act of 2012'' after ``section 806(b)(3)''.
            (3) Subclause (II) of section 465(c)(7)(D)(v) is amended by 
        inserting ``, as in effect on the day before the date of the 
        enactment of the Implementation of Simpson-Bowles Spending 
        Reductions Act of 2012'' after ``section 806(b)(3)''.
            (4) Subparagraph (A) of section 815(c)(2) is amended by 
        striking clause (ii), by inserting ``and'' at the end of clause 
        (i), and by redesignating clause (iii) as clause (ii).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 247. TERMINATION OF $25,000 EXEMPTION FROM PASSIVE LOSS RULES FOR 
              RENTAL REAL ESTATE ACTIVITIES.

    (a) In General.--Section 469 is amended by striking subsection (i).
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 248. REPEAL OF DISCHARGE OF INDEBTEDNESS EXCLUSION.

    Effective for discharges of indebtedness occurring on or after the 
date of the enactment of this Act, section 108 is repealed.

SEC. 249. REPEAL OF CERTAIN EXCEPTIONS FOR IMPUTED INTEREST RULES.

    (a) Determination of Issue Price in the Case of Certain Debt 
Instruments Issued for Property.--Paragraph (3) of section 1274(c)(3) 
is amended by striking subparagraphs (A), (B), and (C).
    (b) Special Rule for Certain Transactions Where Stated Principal 
Amount Does Not Exceed Certain Amount.--Section 1274A is amended by 
adding at the end the following new subsection:
    ``(f) Termination.--This section shall not apply to any sales or 
exchanges after the date of the enactment of this Act.''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to sales or exchanges after the date of the enactment of this 
Act.

SEC. 250. TREATMENT OF CAPITAL GAINS AND DIVIDENDS AS ORDINARY INCOME.

    (a) Acceleration of JGTRRA Sunset.--Section 303 of the Jobs and 
Growth Tax Relief Reconciliation Act of 2003, as amended by section 
102(a) of the Tax Relief, Unemployment Insurance Reauthorization, and 
Job Creation Act of 2010, is amended by striking ``December 31, 2012'' 
and inserting ``December 31, 2011''.
    (b) Treatment of Capital Gains and Dividends as Ordinary Income.--
Section 1(h), after the application of subsection (a), is amended by 
adding at the end the following new paragraph:
            ``(11) Termination.--This subsection shall not apply to 
        taxable years beginning after the date of the enactment of the 
        Implementation of Simpson-Bowles Spending Reductions Act of 
        2012.''.

SEC. 251. TERMINATION OF PARTIAL EXCLUSION FOR GAIN FROM CERTAIN SMALL 
              BUSINESS STOCK.

    Section 1202 is amended by adding at the end the following new 
subsection:
    ``(l) Termination.--This section shall not apply to any sale or 
exchange of stock after the date of the enactment of the Implementation 
of Simpson-Bowles Spending Reductions Act of 2012.''.

SEC. 252. TERMINATION OF TREATMENT OF LOSSES ON SMALL BUSINESS STOCK AS 
              ORDINARY.

    Section 1244 is amended by adding at the end the following new 
subsection:
    ``(f) Termination.--This section shall not apply to any sale or 
exchange of stock after the date of the enactment of the Implementation 
of Simpson-Bowles Spending Reductions Act of 2012.''.

SEC. 253. REPEAL OF STUDENT LOAN INTEREST DEDUCTION.

    Effective for any loan interest paid after the date of the 
enactment of this Act, section 221 is repealed.

SEC. 254. REPEAL OF DEDUCTION OF TUITION AND RELATED EXPENSES.

    Effective for amounts paid after the date of the enactment of this 
Act, section 222 is repealed.

SEC. 255. REPEAL OF GROSS INCOME EXCLUSION FOR UNITED STATES SAVINGS 
              BONDS USED TO PAY HIGHER EDUCATION EXPENSES.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 135 is repealed.

SEC. 256. ELIMINATION OF PERSONAL EXEMPTION FOR STUDENTS AGE 19 AND 
              OLDER.

    (a) In General.--Subparagraph (A) of section 152(c)(3) is amended--
            (1) by striking clause (ii),
            (2) by striking ``, or'' at the end of clause (i) and 
        inserting a period, and
            (3) by striking ``child and'' and all that follows through 
        ``(i) has not attained'' and inserting ``child and has not 
        attained''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 257. ELIMINATION OF ABOVE THE LINE DEDUCTION FOR CERTAIN EXPENSES 
              OF ELEMENTARY AND SECONDARY SCHOOL TEACHERS.

    (a) In General.--Paragraph (2) of section 62(a) is amended by 
striking subparagraph (D) and by redesignating subparagraph (E) as 
subparagraph (D).
    (b) Conforming Amendments.--
            (1) Section 62 is amended by striking subsection (d) and 
        redesignating subsection (e) as subsection (d).
            (2) Paragraph (20) of section 62(a) is amended by striking 
        ``subsection (e)'' and inserting ``subsection (d)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

SEC. 258. ELIMINATION OF GROSS INCOME EXCLUSION FOR DISCHARGE OF 
              CERTAIN STUDENT LOAN DEBT.

    Section 108 is amended by adding at the end the following new 
paragraph:
            ``(5) Termination.--This subsection shall not apply to 
        discharges of indebtedness after the date of the enactment of 
        the Implementation of Simpson-Bowles Spending Reductions Act of 
        2012.''.

SEC. 259. REPEAL OF EXCLUSION FROM GROSS INCOME FOR RENTAL VALUE OF 
              PARSONAGES.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 107 is repealed.

SEC. 260. REPEAL OF EXCLUSION FROM GROSS INCOME FOR BENEFITS PROVIDED 
              TO VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL 
              RESPONDERS.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 139B is repealed.

SEC. 261. REPEAL OF SPECIAL TREATMENT OF BLUE CROSS AND BLUE SHIELD 
              ORGANIZATIONS, ETC.

    Effective for taxable years beginning after the date of the 
enactment of this Act, section 833 is repealed.

SEC. 262. SENSE OF THE HOUSE REGARDING A TERRITORIAL TAX SYSTEM.

    It is the sense of the House that the Committee on Ways and Means 
of the House of Representatives should report legislation that will 
transition the United States to a territorial tax system.

SEC. 263. TEMPORARY DIVIDENDS RECEIVED DEDUCTION ALLOWED FOR 2011 OR 
              2012.

    (a) Election.--Subsection (f) of section 965 of the Internal 
Revenue Code of 1986 (relating to election) is amended to read as 
follows:
    ``(f) Election.--The taxpayer may elect to apply this section to--
            ``(1) the taxpayer's last taxable year which begins before 
        the date of the enactment of this subsection, or
            ``(2) the taxpayer's first taxable year which begins during 
        the 1-year period beginning on such date.
Such election may be made for a taxable year only if made on or before 
the due date (including extensions) for filing the return of tax for 
such taxable year.''.
    (b) Limitation.--Paragraph (1) of section 965(b) of such Code is 
amended to read as follows:
            ``(1) In general.--The amount of dividends taken into 
        account under subsection (a) shall not exceed the sum of the 
        current and accumulated earnings and profits described in 
        section 959(c)(3) for the year a deduction is claimed under 
        subsection (a), without diminution by reason of any 
        distributions made during the election year, for all controlled 
        foreign corporations of the United States shareholder.''.
    (c) Failure To Maintain Employment Levels.--Paragraph (4) of 
section 965(b) of such Code (relating to limitations) is amended to 
read as follows:
            ``(4) Reduction in benefits for failure to maintain 
        employment levels.--
                    ``(A) In general.--If, during the period consisting 
                of the calendar month in which the taxpayer first 
                receives a distribution described in subsection (a)(1) 
                and the succeeding 23 calendar months, the taxpayer 
                does not maintain an average employment level at least 
                equal to the taxpayer's prior average employment, an 
                additional amount equal to $25,000 multiplied by the 
                number of employees by which the taxpayer's average 
                employment level during such period falls below the 
                prior average employment (but not exceeding the 
                aggregate amount allowed as a deduction pursuant to 
                subsection (a)(1)) shall be taken into income by the 
                taxpayer during the taxable year that includes the 
                final day of such period.
                    ``(B) Average employment level.--For purposes of 
                this paragraph, the taxpayer's average employment level 
                for a period shall be the average number of full-time 
                United States employees of the taxpayer, measured at 
                the end of each month during the period.
                    ``(C) Prior average employment.--For purposes of 
                this paragraph, the taxpayer's `prior average 
                employment' shall be the average number of full-time 
                United States employees of the taxpayer during the 
                period consisting of the 24 calendar months immediately 
                preceding the calendar month in which the taxpayer 
                first receives a distribution described in subsection 
                (a)(1).
                    ``(D) Full-time united states employee.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `full-time 
                        United States employee' means an individual who 
                        provides services in the United States as a 
                        full-time employee, based on the employer's 
                        standards and practices; except that regardless 
                        of the employer's classification of the 
                        employee, an employee whose normal schedule is 
                        40 hours or more per week is considered a full-
                        time employee.
                            ``(ii) Exception for changes in ownership 
                        of trades or businesses.--Such term does not 
                        include--
                                    ``(I) any individual who was an 
                                employee, on the date of acquisition, 
                                of any trade or business acquired by 
                                the taxpayer during the 24-month period 
                                referred to in subparagraph (A); and
                                    ``(II) any individual who was an 
                                employee of any trade or business 
                                disposed of by the taxpayer during the 
                                24-month period referred to in 
                                subparagraph (A) or the 24-month period 
                                referred to in subparagraph (C).
                    ``(E) Aggregation rules.--In determining the 
                taxpayer's average employment level and prior average 
                employment, all domestic members of a controlled group 
                shall be treated as a single taxpayer.''.
    (d) Threshold Period.--Section 965 of such Code is amended by 
striking ``June 30, 2003'' each place it occurs and inserting ``June 
30, 2010''.
    (e) Base Period.--Paragraph (2) of subsection 965(c) of such Code 
is amended by inserting at the end of subparagraph (A) the following 
flush sentence:
``For purposes of this paragraph, taxable years shall not include any 
year for which an election under section 965 was in effect.''.
    (f) Indebtedness Determination Date.--Subparagraph (B) of section 
965(b)(3) of such Code is amended by striking ``October 3, 2004'' and 
inserting ``January 19, 2011''.
    (g) Conforming Amendments.--
            (1) Subsection 965(c) of such Code, as amended by 
        subsection (e), is amended by striking paragraph (1) and 
        redesignating paragraphs (2), (3), (4), and (5) as paragraphs 
        (1), (2), (3), and (4), respectively.
            (2) Paragraph 965(c)(4) of such Code, as redesignated by 
        paragraph (1), is amended to read as follows:
            ``(4) Controlled groups.--All United States shareholders 
        which are members of an affiliated group filing a consolidated 
        return under section 1501 shall be treated as one United States 
        shareholder.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after the date of the enactment of 
this Act.

                Subtitle C--Phaseout of Tax Expenditures

SEC. 271. FIVE-YEAR PHASEOUT OF CERTAIN TAX EXPENDITURES.

    (a) In General.--Effective for taxable years beginning after 
December 31, 2012, the amount allowable as a credit, exclusion from 
gross income, exemption from taxation, or deduction for the taxable 
year under the tax provisions specified in subsection (c) (determined 
without regard to this section) shall be reduced by the applicable 
percentage of the amount so allowable.
    (b) Applicable Percentage.--For purposes if this section, the 
applicable percentage shall be determined in accordance with the 
following table:

In the case of taxable years        The applicable percentage shall be: 
  beginning in:
        2013...............................................         20 
        2014...............................................         40 
        2015...............................................         60 
        2016...............................................         80 
        2017 and thereafter................................        100.
    (c) Specified Provisions.--For purposes of this section, the tax 
provisions specified in this subsection are as follows:
            (1) Section 911 of the Internal Revenue Code of 1986 
        (relating to citizens or residents of the United States living 
        abroad).
            (2) Section 912 of such Code (relating to exemption for 
        certain allowances).
            (3) Section 41 of such Code (relating to credit for 
        increasing research activities).
            (4) Section 631(c) of such Code (relating to disposal of 
        coal or domestic iron ore with a retained economic interest).
            (5) Section 451(i) of such Code (relating to special rule 
        for sales or dispositions to implement Federal Energy 
        Regulatory Commission or State Electric Restructuring Policy).
            (6) Section 613 of such Code (relating to percentage 
        depletion) in the case of nonfuel minerals.
            (7) Section 631(a) of such Code (relating to election to 
        consider cutting as sale or exchange).
            (8) Section 512(b)(19) of such Code (relating to treatment 
        of gain or loss on sale or exchange of certain brownfield 
        sites).
            (9) Section 501(c)(14) of such Code (relating to credit 
        unions without capital stock organized and operated for mutual 
        purposes and without profit) and section 122 of the Federal 
        Credit Union Act.
            (10) The exclusion from gross income of income on life 
        insurance contracts (as determined under section 7702(g) of the 
        Internal Revenue Code of 1986).
            (11) Section 103(a) of such Code, to the extent the 
        interest is attributable to a qualified mortgage bond (as 
        defined in section 143(a) of such Code), a qualified veterans' 
        mortgage bond (as defined is section 143(b) of such Code), or 
        an issue described in section 142(a)(7) of such Code.
            (12) Section 199 of such Code (relating to include 
        attributable to domestic production activities).
            (13) Section 181 of such Code (relating to treatment of 
        certain qualified film and television productions).
            (14) Section 7518 of such Code (relating to tax incentives 
        relating to merchant marine capital construction funds) and 
        chapter 535 of title 46, United States Code.
            (15) Section 132(a)(5) of such Code (relating to qualified 
        transportation fringe) to the extent attributable to a transit 
        pass (as defined in section 132(f)(5) of such Code) or 
        qualified parking (as so defined).
            (16) Section 45G(a) of such Code (relating to railroad 
        track maintenance credit).
            (17) Section 46(a) of such Code (relating to rehabilitation 
        credit).
            (18) Section 45D of such Code (relating to new markets tax 
        credit).
            (19) Section 131 of such Code (relating to certain foster 
        care payments).
            (20) Section 213 of such Code (relating to medical, dental, 
        etc., payments).
            (21) Section 36B of such Code (relating to refundable 
        credit for coverage under a qualified health plan).
            (22) Section 45R of such Code (relating to employee health 
        insurance expenses of small employers).
            (23) Section 45C of such Code (relating to clinical testing 
        expenses for certain drugs for rare diseases or conditions).
            (24) Section 35 of such Code (relating to health insurance 
        costs of eligible individuals).
            (25) Means-tested payments otherwise excludable under the 
        general welfare doctrine.
            (26) Section 79 of such Code (relating to group-term life 
        insurance purchased for employees).
            (27) Section 106 of such Code (relating to contributions by 
        employer to accident and health plans) to the extent 
        attributable to employer provided coverage under an accident or 
        disability insurance plan.
            (28) Section 165 of such Code (relating to losses) to the 
        extent the loss is described in section 165(c)(3) of such Code.
            (29) Section 164(a)(1) of such Code (relating to real 
        property taxes) to the extent not attributable to real property 
        used in a trade or business or the principal residence of the 
        taxpayer (within the meaning of section 121 of such Code).

                       Subtitle D--Special Status

SEC. 381. TERMINATION OF QUALIFIED ENERGY CONSERVATION BONDS.

    Subsection (a) of section 54D is amended by striking ``and'' at the 
end of paragraph (2), by striking the period at the end of paragraph 
(3) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(4) the bond is issued before the date of the enactment 
        of the Implementation of Simpson-Bowles Spending Reductions Act 
        of 2012.''.

SEC. 382. TERMINATION OF NEW CLEAN RENEWABLE ENERGY BONDS.

    Subsection (a) of section 54C is amended by striking ``and'' at the 
end of paragraph (2), by striking the period at the end of paragraph 
(3) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(4) the bond is issued before the date of the enactment 
        of the Implementation of Simpson-Bowles Spending Reductions Act 
        of 2012.''.

SEC. 383. TERMINATION OF EXEMPT FACILITY BOND TREATMENT FOR WATER, 
              SEWAGE, AND SOLID WASTE FACILITIES.

    (a) In General.--Subsection (a) of section 142 is amended by 
striking paragraphs (4), (5), and (6).
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 384. TERMINATION OF EXPENSING AND AMORTIZATION OF REFORESTATION 
              EXPENDITURES AND EXPENSING OF TIMBER-GROWING COSTS.

    (a) Reforestation Expenditures.--Section 194 is amended by adding 
at the end the following new subsection:
    ``(e) Termination.--This section shall not apply to amount paid or 
incurred after the date of the enactment of the Implementation of 
Simpson-Bowles Spending Reductions Act of 2012.''.
    (b) Expensing of Timber Growing Costs.--Subsection (c) of section 
263A is amended by striking paragraph (5).
    (c) Effective Date.--The amendment made by this section shall apply 
to expenses paid or incurred after the date of the enactment of this 
Act.

SEC. 385. TERMINATION OF DEFERRAL OF GAIN ON SALES OF STOCK IN 
              AGRICULTURAL REFINERS AND PROCESSORS TO ELIGIBLE FARM 
              COOPERATIVES.

    Subsection (g) of section 1042 is amended by adding at the end the 
following new paragraph:
            ``(5) Termination.--This subsection shall not apply to any 
        sales after the date of the enactment of the Implementation of 
        Simpson-Bowles Spending Reductions Act of 2012.''.

SEC. 386. TERMINATION OF ELECTION TO EXPENSE CERTAIN DEPRECIABLE 
              BUSINESS ASSETS.

    (a) In General.--Subparagraph (D) of section 179(b)(1) is amended 
by striking ``$25,000'' and inserting ``$0''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2012.

SEC. 387. TERMINATION OF QUALIFIED SMALL ISSUE BONDS.

    Paragraph (1) of section 144(a) is amended by inserting ``before 
the date of the enactment of the Implementation of Simpson-Bowles 
Spending Reductions Act of 2012'' after ``any bond issued''.

SEC. 388. TERMINATION OF EXEMPT FACILITY BOND TREATMENT FOR QUALIFIED 
              HIGHWAY OR SURFACE FREIGHT TRANSFER FACILITIES.

    (a) In General.--Subsection (a) of section 142 is amended by 
striking paragraph (15).
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

SEC. 389. TERMINATION OF EXEMPT FACILITY BOND TREATMENT FOR AIRPORTS, 
              DOCKS, AND WHARVES.

    (a) In General.--Subsection (a) of section 142 is amended by 
striking paragraphs (1) and (2).
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 390. TERMINATION OF TRIBAL ECONOMIC DEVELOPMENT BONDS.

    Subparagraph (A) of section 7871(f)(3) is amended by inserting 
``before the date of the enactment of the Implementation of Simpson-
Bowles Spending Reductions Act of 2012'' after ``any bond issued''.

SEC. 391. TERMINATION OF EXCLUSION FROM GROSS INCOME OF UNITED STATES 
              SAVINGS BONDS INTEREST USED TO PAY HIGHER EDUCATION 
              EXPENSES.

    Subparagraph (A) of section 135(c)(1) is amended by inserting ``and 
before the date of the enactment of the Implementation of Simpson-
Bowles Spending Reductions Act of 2012'' after ``December 31, 1989,''.

SEC. 392. TERMINATION OF QUALIFIED ZONE ACADEMY BONDS.

    Subsection (a) of section 54E is amended by striking ``and'' at the 
end of paragraph (2), by striking the period at the end of paragraph 
(3), and inserting ``, and'', and by adding at the end the following 
new paragraph:
            ``(4) the bond is issued before the date of the enactment 
        of the Implementation of Simpson-Bowles Spending Reductions Act 
        of 2012.''.

SEC. 393. TERMINATION OF EXEMPT FACILITY BOND TREATMENT FOR QUALIFIED 
              PUBLIC EDUCATIONAL FACILITIES.

    (a) In General.--Subsection (a) of section 142 is amended by 
striking paragraph (13).
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 394. TERMINATION OF HOSPITAL BONDS.

    (a) In General.--Paragraph (1) of section 145(a) is amended by 
striking ``or a governmental unit'' and inserting ``, or a governmental 
unit, other than a hospital''.
    (b) Conforming Amendments.--
            (1) Section 145 is amended by striking subsection (c) and 
        by redesignating subsections (d) and (e) as subsections (c) and 
        (d), respectively.
            (2) Subsection (b) of section 145 is amended by striking 
        ``nonhospital'' each place it appears.
            (3) Paragraph (1) of section 145(b) is amended by striking 
        ``(other than a qualified hospital bond)''.
            (4) Paragraph (2) of section 145(b) is amended--
                    (A) by striking ``other than a qualified hospital 
                bond'' in subparagraph (B), and
                    (B) by striking subparagraph (C).
            (5) The heading for subsection (b) of section 145 is 
        amended by striking ``on Bonds Other Than Hospital Bonds''.
            (6) The heading for paragraph (2) of section 145(b) is 
        amended by striking ``nonhospital''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.
                                 <all>