1.This Act may be cited as the
Detroit Economic Competitiveness
Act
.
2.
(a)Subchapter A of
chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
9512.
(a)There is established in the Treasury of the United
States a trust fund to be known as the Detroit Jobs Trust Fund,
consisting of such amounts as may be appropriated or credited to such fund as
provided in this section or section 9602(b).
(b)There are hereby
appropriated to the Detroit Jobs Trust Fund amounts equivalent to receipts in
the Treasury of taxes (including all income, excise, and employment taxes
whether imposed with respect to individuals or businesses) imposed under this
title (with respect to periods after the date of the enactment of this section)
which are (as determined by the Secretary) attributable to Detroit, Michigan.
The city of Detroit, Michigan, shall provide the Secretary such information as
the Secretary may request for purposes of making the determinations required
under this subsection. For purposes of this subsection, the taxes imposed on a
corporation or other business entity shall not be treated as attributable to
Detroit, Michigan, merely because the headquarters of such corporation or
entity is located in Detroit, Michigan.
(c)
(1)Except as otherwise provided in this subsection, amounts
in the Detroit Jobs Trust Fund shall (without need of any further
appropriation) be distributed annually by the Secretary to the city of Detroit,
Michigan, to carry out the purposes described in paragraph (2).
(2)Amounts distributed to the city of Detroit,
Michigan, under this section shall be used for the following purposes and in
the following order of priority:
(A)First, of the
amounts distributed with respect the annual period not in excess of the Detroit
income tax suspension hold harmless amount, for any purpose determined by the
city government of Detroit, Michigan.
(B)Second, for
payment of principal and interest on any general obligation issued by the city
of Detroit, Michigan (to the extent of such obligations).
(C)Third, for payment
of principal and interest on obligations to which section 103 applies and the
proceeds of which were used for the public schools of the city of Detroit,
Michigan (to the extent of such obligations).
(D)Fourth, for jobs
development, public safety, education, business infrastructure, or public
infrastructure (to the extent consistent with the plan described in paragraph
(4)).
(3)Restriction on
distributionsNo distribution shall be made by the Secretary
under paragraph (1) unless—
(A)the city of
Detroit, Michigan, does not impose an income tax with respect to the period to
which such distribution relates,
(B)such city has
reduced the aggregate property taxes imposed by an amount not less than the
reduction in the payment obligations of such city by reason of the payments
described in paragraph (2),
(C)all prior
distributions made to the city under paragraph (2) were used by the city in a
manner consistent with the requirements of paragraph (2), and
(D)such city has
provided such information to the Comptroller General of the United States as
the Comptroller General may request to carry out section 2(b) of the
Detroit Economic Competitiveness
Act.
(4)A plan is described in this paragraph if such
plan—
(A)is a 5-year plan
describing development goals for Detroit, Michigan, and detailing how
distributions for purposes described in paragraph (2)(D) will be spent,
(B)has been approved
by simple majority vote of the City Council of Detroit, Michigan (after
consultation with the Detroit Board of Education), and
(C)has been submitted
to, and approved by, the Secretary of the Treasury, the Secretary of Housing
and Urban Development, and the Secretary of Education.
No
distribution shall be made under paragraph (1) for a purpose described in
paragraph (2)(D) unless a plan described in this paragraph is in effect and all
prior such distributions for such purposes were used in accordance with such
plan.(5)Special rules
during period of plan developmentDuring the period during which
the plan described in paragraph (4) is developed (but not in excess of the
5-month period beginning on the date of the first distribution under paragraph
(1)), amounts distributed may be used concurrently for the purposes described
in subparagraphs (A), (B), and (C) of paragraph (2).
(6)Detroit income
tax suspension hold harmless amount
(A)For purposes of
paragraph (2)(A), the term Detroit income tax suspension hold harmless
amount means the amount (as determined by the Secretary) of revenue
collected by the city of Detroit pursuant to the income tax imposed by such
city during the calendar year preceding the calendar year which includes the
date of the enactment of this section.
(B)For provision which requires suspension of the Detroit
income tax, see paragraph (3)(A).
(C)Tax returns may
still be requiredThe city of Detroit, Michigan, shall not be
treated as failing to satisfy the requirement of paragraph (3)(A) with respect
to any period merely because taxpayers are required to file tax returns and
report income with respect to such period.
(7)Amounts made
available not to reduce other fundingAmounts distributed to the city of Detroit,
Michigan, under this section shall supplement, and not supplant, any other
funding (including any Federal funding) for such city.
(d)No
amount shall be distributed from, or appropriated to, the Detroit Jobs Trust
Fund after the 5-year period beginning on the date of the enactment of this
section. Any amounts remaining in such Trust Fund at the end of such period
shall be transferred to the general fund of the Treasury. The 5-year period
specified in this subsection shall not be renewed or
extended.
.
(b)The Comptroller General of the United States shall submit
an annual report to Congress which—
(1)describes the
manner and purposes for which distributions made from the Detroit Jobs Trust
Fund have been used,
(2)describes the
extent to which progress has been made toward meeting the development goals
under the plan described in section 9512(c)(4) of the Internal Revenue Code of
1986 (as added by this section) and whether such progress is consistent with
meeting such goals, and
(3)includes any
recommendations the Comptroller General may have regarding improvements to the
program described in section 9512 of such Code.
The first
such annual report shall be submitted not later than 90 days after the 1-year
period beginning on the date of the enactment of this Act and the last such
annual report shall be submitted not later than 90 days after the date on which
the Detroit Jobs Trust Fund terminates pursuant to section 9512(d) of such
Code.(c)The table of sections for subchapter A of chapter 98 of
the Internal Revenue Code of 1986 is amended by adding at the end the following
new item:
Sec. 9512. Detroit Jobs Trust
Fund.
.
3.Zero capital gains
rate for certain new investments in Detroit, Michigan
(a)Subchapter Y of
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end
the following new part:
IVCertain new
investments in Detroit, Michigan
Sec. 1400V. Zero capital gains rate for certain new investments
in Detroit, Michigan.
1400V.Zero capital
gains rate for certain new investments in Detroit, Michigan
(a)Gross income does not include any qualified capital gain
from the sale or exchange of a specified new investment held for more than 1
year.
(b)For purposes of this section—
(1)The term specified new investment
means—
(A)any qualified
stock,
(B)any qualified
partnership interest, and
(C)any qualified
business property.
(2)
(A)Except as provided in subparagraph (B), the term
qualified stock means any stock in a domestic corporation
if—
(i)such stock is
acquired by the taxpayer during the 1-year period beginning on the date of the
enactment of this section, at its original issue (directly or through an
underwriter) from the corporation solely in exchange for cash,
(ii)as of the time
such stock was issued, such corporation was a specified Detroit business (or,
in the case of a new corporation, such corporation was being organized for
purposes of being a specified Detroit business), and
(iii)during
substantially all of the taxpayer’s holding period for such stock, such
corporation qualified as a specified Detroit business.
(B)A
rule similar to the rule of section 1202(c)(3) shall apply for purposes of this
paragraph.
(3)Qualified
partnership interestThe term qualified partnership
interest means any capital or profits interest in a domestic partnership
if—
(A)such interest is
acquired by the taxpayer during the 1-year period beginning on the date of the
enactment of this section, from the partnership solely in exchange for
cash,
(B)as of the time
such interest was acquired, such partnership was a specified Detroit business
(or, in the case of a new partnership, such partnership was being organized for
purposes of being a specified Detroit business), and
(C)during
substantially all of the taxpayer’s holding period for such interest, such
partnership qualified as a specified Detroit business.
A rule
similar to the rule of paragraph (2)(B) shall apply for purposes of this
paragraph.(4)Qualified
business property
(A)The term qualified business property means
tangible property if—
(i)such property was
acquired by the taxpayer by purchase (as defined in section 179(d)(2)) during
the 1-year period beginning on the date of the enactment of this
section,
(ii)the original use
of such property in Detroit, Michigan, commences with the taxpayer, and
(iii)during
substantially all of the taxpayer’s holding period for such property,
substantially all of the use of such property was in a specified Detroit
business of the taxpayer.
(B)Special rule for
substantial improvementsThe requirements of clauses (i) and (ii)
of subparagraph (A) shall be treated as satisfied with respect to—
(i)property which is
substantially improved by the taxpayer before the end of the period described
in subparagraph (A)(i), and
(ii)any land on which
such property is located.
The
determination of whether a property is substantially improved shall be made
under clause (ii) of section 1400B(b)(4)(B), except that the date of the
enactment of section 1400V
shall be substituted for December 31,
1997
in such clause.(c)For purposes of this section—
(1)Except as otherwise provided in this subsection, the term
qualified capital gain means any gain recognized on the sale or
exchange of—
(A)a capital asset,
or
(B)property used in
the trade or business (as defined in section 1231(b)).
(2)Gain before
enactment not qualifiedThe term qualified capital
gain shall not include any gain attributable to periods before the date
of the enactment of this section.
(3)Rules similar to the rules of paragraphs (3), (4), and (5)
of section 1400B(e) shall apply for purposes of this subsection.
(d)Specified
Detroit businessFor purposes of this section, the term
specified Detroit business means any enterprise zone business (as
defined in section 1397C), determined—
(1)without regard to
subsections (b)(6) and (c)(5) thereof,
(2)by substituting
80 percent
for 50 percent
in subsections (b)(2)
and (c)(1) thereof,
(3)by treating
Detroit, Michigan, as an empowerment zone (and by treating no area other than
Detroit, Michigan, as an empowerment zone).
(e)For purposes of this section, rules similar to the rules of
paragraphs (6) and (7) of subsection (b), and subsections (f) and (g), of
section 1400B shall apply; except that for such purposes section 1400B(g)(2)
shall be applied by substituting before the date of the enactment of
section 1400V
for before January 1, 1998, or after December 31,
2014
.
(f)The
Secretary shall prescribe such regulations as may be appropriate to carry out
the purposes of this section, including regulations to prevent the abuse of the
purposes of this
section.
.
(b)The table of parts for subchapter Y of chapter 1 of
such Code is amended by adding at the end the following new item:
Part IV. Certain new investments in Detroit,
Michigan
.
(c)The amendments made by this section shall apply to property
acquired after the date of the enactment of this Act.