[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5158 Introduced in House (IH)]

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114th CONGRESS
  2d Session
                                H. R. 5158

To amend the Internal Revenue Code of 1986 to provide a conditional 10 
              percent rate of tax for certain businesses.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 29, 2016

 Mr. McKinley introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide a conditional 10 
              percent rate of tax for certain businesses.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Make America Competitive Act of 
2016''.

SEC. 2. ELECTED 10-PERCENT RATE.

    (a) In General.--
            (1) Corporate rate.--Section 11(b) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(3) Making america competitive again rate.--
        Notwithstanding paragraphs (1) and (2), the amount of the tax 
        imposed by subsection (a) on the taxable income of a 
        corporation which has in effect for the taxable year an 
        election under section 5 of the Make America Competitive Again 
        Act shall be determined at a rate of 10 percent.''.
            (2) Individual rate.--Section 1 of such Code is amended by 
        adding at the end the following new subsection:
    ``(j) Making America Competitive Again Rate.--
            ``(1) In general.--If a taxpayer has qualified business 
        income 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 portion of such taxable 
                income that is attributable to qualified business 
                income, plus
                    ``(B) 10 percent of the portion of taxable income 
                that is attributable qualified business income.
            ``(2) Qualified business income.--For purposes of this 
        section, the term `qualified business income' means income of 
        the individual that is derived from a partnership, S 
        corporation, or sole proprietorship which has in effect for the 
        taxable year an election under section 5 of the Make America 
        Competitive Again Act.
            ``(3) Portion of taxable income attributable.--For purposes 
        of this subsection, the portion of taxable income that is 
        attributable to qualified business income shall be an amount 
        that bears the same ratio to taxable income as--
                    ``(A) qualified business income (reduced by any 
                deductions properly allocable thereto), bears to
                    ``(B) gross income (reduced by deductions properly 
                allocable thereto).
        For purposes of the preceding sentence, the Secretary shall by 
        regulation prescribe methods for the proper allocation of 
        deductions.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 3. ELECTED REPATRIATION OF FOREIGN EARNINGS IN UNITED STATES.

    (a) In General.--Section 965(a)(1) of the Internal Revenue Code of 
1986 is amended by inserting ``, which has in effect for the taxable 
year an election under section 5 of the Make America Competitive Again 
Act,'' after ``which is a United States shareholder''.
    (b) Repatriation Subject to 5-Percent Tax Rate.--Section 965(a)(1) 
of such Code is amended by striking ``85 percent'' and inserting ``85.7 
percent''.
    (c) Permanent Extension To Elect Repatriation.--Section 965(f) of 
such Code is amended to read as follows:
    ``(f) Election.--The taxpayer may elect to apply this section to 
any taxable year only if made on or before the due date (including 
extensions) for filing the return of tax for such taxable year.''.
    (d) Repatriation Includes Current and Accumulated Foreign 
Earnings.--Section 965(b)(1) 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.''.
    (e) Conforming Amendments.--
            (1) Section 965(b) of such Code is amended by striking 
        paragraphs (2) and (4) and by redesignating paragraph (3) as 
        paragraph (2).
            (2) Section 965(c) of such Code is amended by striking 
        paragraphs (1) and (2) and by redesignating paragraphs (3), 
        (4), and (5) as paragraphs (1), (2), and (3), respectively.
            (3) Section 965(c)(3) of such Code, as redesignated by 
        subparagraph (B), is amended to read as follows:
            ``(3) 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.''.
            (4) The heading for section 965 of such Code is amended by 
        striking ``temporary''.
            (5) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 of such Code is amended by striking 
        ``Temporary dividends'' and inserting ``Dividends''.
    (f) Transfers to Highway Trust Fund.--Section 9503(f) of such Code 
is amended by redesignating paragraph (10) as paragraph (11) and by 
inserting after paragraph (9) the following new paragraph:
            ``(10) Transfer of revenues from repatriation holiday.--
        There is hereby appropriated to the Highway Account (as defined 
        in subsection (e)(5)(B)) in the Highway Trust Fund such amounts 
        as the Secretary from time to time estimates are equal to the 
        amount of revenue received in the Treasury after the date of 
        the enactment of this paragraph from income taxes imposed on 
        dividends which are taken into account under section 965.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 4. ELECTED WAIVER OF CERTAIN TAX EXPENDITURES.

    (a) Domestic Productions Activities Deduction.--
            (1) In general.--Section 199 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(e) Waiver in Case of Make America Competitive Again Election.--
Subsection (a) shall not apply to a taxpayer for any taxable year for 
which such taxpayer has in effect an election under section 5 of the 
Make America Competitive Again Act.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 2015.
    (b) Like-Kind Exchanges.--
            (1) In general.--Section 1031 of such Code is amended by 
        adding at the end the following new subsection:
    ``(j) Waiver in Case of Make America Competitive Again Election.--
Subsection (a) shall not apply to any exchange during any taxable year 
for which the taxpayer has in effect an election under section 5 of the 
Make America Competitive Again Act.''.
            (2) Effective date.--The amendment made by this section 
        shall apply to taxable years beginning after December 31, 2015.
    (c) Installment Sales.--
            (1) In general.--Section 453 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(m) Waiver in Case of Make America Competitive Again Election.--
            ``(1) In general.--Subsection (a) shall not apply with 
        respect to any taxable year for which the taxpayer has in 
        effect an election under section 5 of the Make America 
        Competitive Again Act.
            ``(2) Prior dispositions.--If the taxpayer makes an 
        election under such section 5 for a taxable year for which 
        income from a disposition of property in a prior taxable year 
        would (but for this subsection) be taken into account under the 
        installment method, the remaining unrecognized income from such 
        disposition shall be recognized by the taxpayer in the year of 
        such election.''.
            (2) Effective date.--The amendment made by this section 
        shall apply to taxable years beginning after December 31, 2015.

SEC. 5. MAKE AMERICA COMPETITIVE AGAIN ELECTION.

    (a) In General.--An eligible employer shall be treated as having in 
effect an election under this section for a taxable year if such 
employer elects the application of this section (at such time and in 
such form and manner as the Secretary of the Treasury shall by 
regulation prescribe) and meets the requirements of paragraphs (1) 
through (4) of subsection (b).
    (b) Requirements for Election.--
            (1) Health insurance.--
                    (A) In general.--The requirements of this paragraph 
                shall be treated as met for a taxable year if the 
                employer offers to each full-time employee (and any 
                dependents) the opportunity to enroll in a group health 
                plan or group health insurance coverage for all months 
                ending during the taxable year, unless the required 
                contribution (as defined in section 5000A(e)(1)(B) of 
                the Internal Revenue Code of 1986) of any such employee 
                with respect to such plan exceeds 9.5 percent of the 
                taxpayer's modified adjusted gross income.
                    (B) Modified adjusted gross income.--The term 
                ``modified adjusted gross income'' means adjusted gross 
                income increased by--
                            (i) any amount excluded from gross income 
                        under section 911,
                            (ii) any amount of interest received or 
                        accrued by the taxpayer during the taxable year 
                        which is exempt from tax, and
                            (iii) an amount equal to the portion of the 
                        taxpayer's social security benefits (as defined 
                        in section 86(d) of such Code) which is not 
                        included in gross income under section 86 for 
                        the taxable year.
            (2) Defined contribution plan.--
                    (A) In general.--The requirements of this paragraph 
                shall be treated as met for a taxable year if the 
                employer offers to all its full-time employees a 
                defined contribution plan (within the meaning of 
                section 414(i) of the Internal Revenue Code of 1986) 
                under which the employer makes matching contributions 
                on behalf of each employee in an amount not less that 
                50 percent of so much of elective contributions of the 
                employee as do not exceed 6 percent of compensation.
                    (B) Age and service exception.--In the case of an 
                employer that maintains a qualified plan or arrangement 
                which excludes employees who have not satisfied the 
                minimum age and service requirements for participation 
                in the plan, such employee who has not satisfied such 
                requirements.
            (3) Pay increases.--
                    (A) In general.--The requirements of this paragraph 
                shall be treated as met if the average increase in 
                wages paid by the employer to each applicable employee 
                for the calendar year ending with or within the taxable 
                year, compared with wages paid by the employer to each 
                such applicable employee for the preceding calendar 
                year, is at least 3 percent.
                    (B) Applicable employee.--For purposes of this 
                paragraph, the term ``applicable employee'' means, with 
                respect to any employer, a full-time employee who is 
                not in the group consisting of the top 10 percent of 
                employees when ranked on the basis of compensation paid 
                during such year.
                    (C) Wages.--For purposes of this paragraph, the 
                term ``wages'' shall have the meaning given such term 
                by section 3121 of the Internal Revenue Code of 1986 
                (determined without regard to any dollar limitation 
                contained in such section).
                    (D) Special rules.--
                            (i) Commissioned employees.--In the case of 
                        any employee who is paid solely on a commission 
                        basis, the employer shall be treated as meeting 
                        the requirements of subparagraph (A) only if 
                        the employer pays the employee (on a 
                        noncommission basis) an amount equal to 3 
                        percent of such employees wages for the 
                        preceding calendar year.
                            (ii) New employees.--An employer shall not 
                        be treated as meeting the requirements of 
                        subparagraph (A) with respect to any employee 
                        who was not employed by the employer during the 
                        preceding calendar year unless the employee's 
                        increase in wages paid by the employer for the 
                        calendar year is at least $2,500.
                            (iii) Cost-of-living adjustment.--In the 
                        case of calendar years beginning after December 
                        31, 2017, the $2,500 amount under clause (ii) 
                        shall be increased by an amount equal to--
                                    (I) such dollar amount, multiplied 
                                by
                                    (II) the cost-of-living adjustment 
                                determined under section 1(f)(3) for 
                                the calendar year, determined by 
                                substituting ``calendar year 2016'' for 
                                ``calendar year 1992'' in subparagraph 
                                (B) thereof.
            (4) Defined benefit plan; additional social security 
        contributions.--
                    (A) In general.--The requirements of this paragraph 
                shall be treated as met for a taxable year if, on 
                behalf of each full-time employee to whom the employer 
                does not offer a defined benefit plan (within the 
                meaning of section 414(j) of the Internal Revenue Code 
                of 1986), the employer makes contributions to the 
                Secretary of the Treasury in an amount equal to 4.5 
                percent of the wages (as defined in section 3121(a) of 
                such Code) paid by the employer with respect to 
                employment (as defined in section 3121(b) of such Code) 
                during the calendar year. Such contributions shall be 
                made at the same time and in the same manner as the tax 
                imposed on the employer under section 3111 of such 
                Code.
                    (B) Special rule for highly compensated 
                employees.--In the case of an employee whose wages (as 
                defined in section 3121(a) of such Code, determined 
                without regard to any dollar limitation contained in 
                such section) paid by the employer with respect to 
                employment (as defined in section 3121(b) of such Code) 
                exceed $500,000 for the calendar year, the employer 
                shall make contributions to the Secretary of the 
                Treasury in an amount equal to 4.5 percent of such 
                excess, of which--
                            (i) 2.5 percent of such excess shall be 
                        treated for purposes of section 6 of this Act 
                        as a contribution made under subparagraph (A), 
                        and
                            (ii) 2.0 percent of such excess shall be 
                        transferred to the Federal Old-Age and 
                        Survivors Insurance Trust Fund without any 
                        corresponding increase in the primary insurance 
                        amount of such individual.
                    (C) Independent contractors.--In the case of an 
                individual who receives remuneration from another 
                person for services provided, other than as an 
                employee, on more than 130 days during the calendar 
                year, for purposes of subparagraph (A), for such 
                calendar year such other person shall treat such 
                individual as an employee and such remuneration shall 
                be treated as wages paid with respect to employment.
    (c) Definitions and Special Rule.--For purposes of this section--
            (1) Eligible employer.--The term ``eligible employer'' 
        means, with respect to any taxable year, an employer which has 
        at least 5 full-time employees for the taxable year.
            (2) Full-time employee.--The term ``full-time employee'' 
        means, with respect to any month, an employee who is employed 
        on average at least 30 hours of service per week.
            (3) United states employees only.--Subsection (b) shall be 
        applied without regard to any employees whose essential job 
        function is outside the United States.
            (4) Controlled groups.--All employees who are treated as 
        employed by a single employer under subsection (b), (c), (m), 
        or (o) of section 414 shall be treated as employed by a single 
        employer.
            (5) Collective bargaining employees excluded.--The employer 
        may exclude from the requirements and determinations made under 
        this section employees subject to a collective bargaining 
        agreement.

SEC. 6. ADDITIONAL SOCIAL SECURITY ACCOUNT FUND.

    (a) In General.--There is established in the Treasury of the United 
States a fund to be known as the ``Additional Social Security Account 
Fund''.
    (b) Amounts Held by Fund.--Such Fund shall consist of amounts 
equivalent to the sum of all amounts paid under section 5(b)(4)(A) of 
the Make America Competitive Again Act (and any net investment earnings 
attributable thereto), less any transfer under subsection (c) or any 
distribution permitted under this section.
    (c) Transfer of Elected Amounts to Trust Fund.--The Secretary of 
the Treasury shall transfer from such Fund to the Federal Old-Age and 
Survivors Insurance Trust Fund any amounts paid under section 
5(b)(4)(A) with respect to which the individual on whose behalf such 
amount were paid has elected to be so transferred and treated under 
section 215(j) of the Social Security Act (42 U.S.C. 415(j)), as added 
by this Act. Any such election shall be made at such time and in such 
form and manner as the Secretary shall prescribe and shall be 
irrevocable.
    (d) Management of Fund and Accounts.--
            (1) In general.--The Secretary shall establish an 
        Additional Social Security Account program, under which--
                    (A) amounts in the Fund (and earnings attributable 
                thereto) shall be separately accounted for and held for 
                the exclusive benefit of each individual on whose 
                behalf such amounts were contributed, and
                    (B) distributions may be made by such individuals 
                under rules prescribed by the Secretary similar to the 
                rules applicable to a qualified cash or deferred 
                arrangements (within the meaning of section 401(k) of 
                the Internal Revenue Code of 1986).
    (e) Tax Treatment of Fund.--
            (1) In general.--For purposes of the Internal Revenue Code 
        of 1986, the Additional Social Security Account Fund shall be 
        treated as a trust described in section 401(a) of such Code 
        which is exempt from taxation under section 501(a) of such 
        Code, and any distribution from the Fund under the Additional 
        Social Security Account program shall be treated in the same 
        manner as a distribution from such a trust.
            (2) No distributions during first 10 years of fund.--No 
        distributions may be made from the Fund earlier than 10 years 
        after the date of the enactment of this Act.
            (3) Rollovers prohibited.--An eligible rollover 
        distribution (as defined in section 402(c)(4) of such Code) 
        shall not include any amount distributed from the Additional 
        Social Security Account.
    (f) Investment of Fund.--The Secretary shall appoint a Board, which 
shall provide for the investment of amounts which are held on behalf of 
individuals in the Additional Social Security Account Fund. The Board 
shall provide by regulation for the prudent direction of investments of 
such amounts by such individuals in conservative and age appropriate 
options.
    (g) Transfer at Death.--Individuals may designate one or more 
beneficiaries (under such rules as the Secretary shall prescribe) to 
provide for disposition at death of any remaining amounts in the Fund 
held on such individual's behalf.

SEC. 7. INCREASE OF PRIMARY INSURANCE AMOUNT AS A RESULT OF CERTAIN 
              EMPLOYER CONTRIBUTIONS.

    Section 215 of the Social Security Act (42 U.S.C. 415) is amended 
by adding at the end the following:
    ``(j)(1) In the case of an individual on whose behalf of 
contributions have been made under section 5(b)(4)(A) of the Make 
America Competitive Act of 2016, and who has made an election under 
section 6(c) of such Act with respect to such contributions, the 
primary insurance amount of such individual otherwise determined under 
this section (without regard to this subsection) shall be computed or 
recomputed, for months beginning after each such contribution, by 
increasing such primary insurance amount as specified under paragraph 
(2).
    ``(2) The increase specified under this paragraph shall be 
determined under regulations issued by the Commissioner of Social 
Security.''.
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