[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2534 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 2534

To amend the Internal Revenue Code of 1986 to reduce the rate of tax on 
              domestic manufacturing income to 20 percent.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 18, 2017

 Mr. Kind (for himself, Mr. Pascrell, and Ms. DelBene) 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 reduce the rate of tax on 
              domestic manufacturing income to 20 percent.

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

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Rebuilding 
American Manufacturing Act of 2017''.
    (b) Findings.--Congress finds the following:
            (1) American manufacturing is vital to our economy, and 
        those who produce American goods and hire American workers 
        should be a priority.
            (2) Manufacturing is an essential source of innovation that 
        is critical to our continued prosperity in an increasingly 
        competitive global economy.
            (3) Approximately 12 million Americans are employed by the 
        manufacturing industry.
            (4) The manufacturing industry provides stable jobs with 
        sustainable wages to Americans in every State.
            (5) Manufacturing jobs provide, on average, wages that are 
        above the national average and provide a gateway to the middle 
        class.
            (6) The effective tax rate of domestic manufacturers ranges 
        from 27 to 31 percent, depending on location and the size of 
        equipment used in production.
            (7) Tax reform must make the United States more 
        competitive, boost economic growth, and foster the creation of 
        sustainable American jobs.
            (8) Tax reform should particularly focus on those companies 
        that grow, build, and create goods in the United States.
            (9) The tax rate of domestic manufacturers should reflect 
        the industry's contributions of employment, growth, innovation, 
        and competition in the United States.

SEC. 2. 20-PERCENT INCOME TAX RATE FOR DOMESTIC MANUFACTURING INCOME.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 200. DOMESTIC MANUFACTURING INCOME.

    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction an amount equal to 50.5 percent (43 percent in the case of a 
C corporation) of the lesser of--
            ``(1) the domestic manufacturing income of the taxpayer for 
        the taxable year, or
            ``(2) taxable income (determined without regard to this 
        section and section 199) for the taxable year.
    ``(b) Limitation Based on Domestic Investment.--For purposes of 
this section--
            ``(1) In general.--The amount of the deduction allowable 
        under subsection (a) for any taxable year shall not exceed 25 
        percent of the taxpayer's qualifying domestic investment for 
        the taxable year.
            ``(2) Qualifying domestic investment amount.--The term 
        `qualifying domestic investment' means, with respect to any 
        taxpayer for any taxable year, the sum of--
                    ``(A) the W-2 wages of such taxpayer for such 
                taxable year,
                    ``(B) the sum of the deductions allowable under 
                sections 167, 169, 179, and 179D to such taxpayer for 
                such taxable year, plus
                    ``(C) the deduction allowable under section 174 to 
                such taxpayer for such taxable year.
            ``(3) W-2 wages.--The term `W-2 wages' means, with respect 
        to any person for any taxable year, the sum of the amounts 
        described in paragraphs (3) and (8) of section 6051(a) paid by 
        such person with respect to employment of employees by such 
        person during the calendar year ending during such taxable 
        year. Such term shall not include any amount which is not 
        properly included in a return filed with the Social Security 
        Administration on or before the 60th day after the due date 
        (including extensions) for such return.
            ``(4) Limitation to amounts attributable to domestic 
        production.--The term `qualifying domestic investment' shall 
        not include any amount which is not properly allocable to 
        domestic manufacturing gross receipts for purposes of 
        subsection (c) (and shall include any amount which is so 
        allocable under subsection (c)(4)).
            ``(5) Acquisitions and dispositions.--The Secretary shall 
        provide for the application of this subsection in cases where 
        the taxpayer acquires, or disposes of, the major portion of a 
        trade or business or the major portion of a separate unit of a 
        trade or business during the taxable year.
    ``(c) Domestic Manufacturing Income.--For purposes of this 
section--
            ``(1) In general.--The term `domestic manufacturing income' 
        for any taxable year means an amount equal to the excess (if 
        any) of--
                    ``(A) the taxpayer's domestic manufacturing gross 
                receipts for such taxable year, over
                    ``(B) the sum of--
                            ``(i) the cost of goods sold that are 
                        allocable to such receipts, and
                            ``(ii) other expenses, losses, or 
                        deductions (other than the deduction allowed 
                        under this section), which are properly 
                        allocable to such receipts.
            ``(2) Allocation method.--The Secretary shall prescribe 
        rules for the proper allocation of items described in paragraph 
        (1) for purposes of determining domestic manufacturing income. 
        Such rules shall provide for the proper allocation of items 
        whether or not such items are directly allocable to domestic 
        manufacturing gross receipts.
            ``(3) Special rules for determining costs.--
                    ``(A) In general.--For purposes of determining 
                costs under clause (i) of paragraph (1)(B), any item or 
                service brought into the United States shall be treated 
                as acquired by purchase, and its cost shall be treated 
                as not less than its value immediately after it entered 
                the United States. A similar rule shall apply in 
                determining the adjusted basis of leased or rented 
                property where the lease or rental gives rise to 
                domestic manufacturing gross receipts.
                    ``(B) Exports for further manufacture.--In the case 
                of any property described in subparagraph (A) that had 
                been exported by the taxpayer for further manufacture, 
                the increase in cost or adjusted basis under 
                subparagraph (A) shall not exceed the difference 
                between the value of the property when exported and the 
                value of the property when brought back into the United 
                States after the further manufacture.
            ``(4) Treatment of certain accelerated depreciation 
        deductions.--In the case of property placed in service after 
        December 31, 2007, and before the first taxable year of the 
        taxpayer beginning after December 31, 2016, the deduction under 
        section 168 with respect to such property which is treated as 
        properly allocable to domestic manufacturing gross receipts of 
        the taxpayer for any taxable year shall be determined without 
        regard to section 168(k)(1).
            ``(5) Treatment of deferred compensation under nonqualified 
        plans.--In the case of compensation paid or incurred by the 
        taxpayer which is deferred under a nonqualified deferred 
        compensation plan (as defined in section 409A(d)(1)), the 
        amount under paragraph (1)(B)(ii) shall be determined as though 
        the deduction for such compensation is allowed for the taxable 
        year in which the services for which such compensation was paid 
        or incurred are performed. This paragraph shall not apply with 
        respect to compensation paid or incurred for services performed 
        in taxable years beginning before the first taxable year of the 
        taxpayer beginning after December 31, 2016.
    ``(d) Domestic Manufacturing Gross Receipts.--For purposes of this 
section--
            ``(1) In general.--The term `domestic manufacturing gross 
        receipts' means the gross receipts of the taxpayer which are 
        derived from any lease, rental, license, sale, exchange, or 
        other disposition of qualified property which was manufactured, 
        produced, or grown by the taxpayer in whole or in significant 
        part within the United States. Such term shall not include 
        gross receipts of the taxpayer which are derived from the sale 
        of food and beverages prepared by the taxpayer at a retail 
        establishment.
            ``(2) Special rule for certain government contracts.--Gross 
        receipts derived from the manufacture or production of any 
        property shall not fail to be treated as meeting the 
        requirements of paragraph (1) solely because title or risk of 
        loss with respect to such property is held by the Federal 
        Government if--
                    ``(A) such property is manufactured or produced by 
                the taxpayer pursuant to a contract with the Federal 
                Government, and
                    ``(B) the Federal Acquisition Regulation requires 
                that title or risk of loss with respect to such 
                property be transferred to the Federal Government 
                before the manufacture or production of such property 
                is complete.
            ``(3) Qualified property.--The term `qualified property' 
        means--
                    ``(A) any tangible personal property other than--
                            ``(i) oil, gas, and primary products 
                        thereof (within the meaning of section 
                        199(d)(9)(C)),
                            ``(ii) property with respect to which 
                        section 613 applies,
                            ``(iii) property described in paragraph (3) 
                        or (4) of section 168(f), and
                            ``(iv) electricity and potable water, and
                    ``(B) any computer software other than video games 
                rated M, AO, RP, or any similar rating as determined by 
                the Secretary, by the Entertainment Software Rating 
                Board.
            ``(4) Partnerships owned by expanded affiliated groups.--
        For purposes of this subsection, if all of the interests in the 
        capital and profits of a partnership are owned by members of a 
        single expanded affiliated group at all times during the 
        taxable year of such partnership, the partnership and all 
        members of such group shall be treated as a single taxpayer 
        during such period.
            ``(5) Related persons.--
                    ``(A) In general.--The term `domestic manufacturing 
                gross receipts' shall not include any gross receipts of 
                the taxpayer derived from property leased, licensed, or 
                rented by the taxpayer for use by any related person.
                    ``(B) Related person.--For purposes of subparagraph 
                (A), a person shall be treated as related to another 
                person if such persons are treated as a single employer 
                under subsection (a) or (b) of section 52 or subsection 
                (m) or (o) of section 414, except that determinations 
                under subsections (a) and (b) of section 52 shall be 
                made without regard to section 1563(b).
    ``(e) Special Rules.--
            ``(1) Elective application of deduction.--Except as 
        otherwise provided by the Secretary, the taxpayer may elect not 
        to take any item of income into account as domestic 
        manufacturing gross receipts for purposes of this section.
            ``(2) Coordination with section 199.--If a deduction is 
        allowed under this section with respect to any taxpayer for any 
        taxable year, any gross receipts of the taxpayer which are 
        taken into account under this section for such taxable year 
        (and any items properly allocable thereto under subsection (b) 
        or (c)) shall not be taken into account under section 199 for 
        such taxable year.
            ``(3) Application of section to pass-thru entities.--
                    ``(A) Partnerships and s corporations.--In the case 
                of a partnership or S corporation--
                            ``(i) this section shall be applied at the 
                        partner or shareholder level,
                            ``(ii) each partner or shareholder shall 
                        take into account such person's allocable share 
                        of each item described in subparagraph (A) or 
                        (B) of subsection (c)(1) (determined without 
                        regard to whether the items described in such 
                        subparagraph (A) exceed the items described in 
                        such subparagraph (B)), and
                            ``(iii) each partner or shareholder shall 
                        be treated for purposes of subsection (b) as 
                        having an amount of each item taken into 
                        account in determining qualifying domestic 
                        investment of the partnership or S corporation 
                        for the taxable year equal to such person's 
                        allocable share of such item (as determined 
                        under regulations prescribed by the Secretary).
                    ``(B) Trust and estates.--In the case of a trust or 
                estate--
                            ``(i) the items referred to in subparagraph 
                        (A)(ii) (as determined therein) and the 
                        qualifying domestic investment of the trust or 
                        estate for the taxable year, shall be 
                        apportioned between the beneficiaries and the 
                        fiduciary (and among the beneficiaries) under 
                        regulations prescribed by the Secretary, and
                            ``(ii) for purposes of paragraph (4), 
                        adjusted gross income of the trust or estate 
                        shall be determined as provided in section 
                        67(e) with the adjustments described in such 
                        paragraph.
                    ``(C) Regulations.--The Secretary may prescribe 
                rules requiring or restricting the allocation of items 
                and qualifying domestic investment under this paragraph 
                and may prescribe such reporting requirements as the 
                Secretary determines appropriate.
            ``(4) Application to individuals.--In the case of an 
        individual, subsection (a)(2) shall be applied by substituting 
        `adjusted gross income' for `taxable income'. For purposes of 
        the preceding sentence, adjusted gross income shall be 
        determined--
                    ``(A) after application of sections 86, 135, 137, 
                219, 221, 222, and 469, and
                    ``(B) without regard to this section and section 
                199.
            ``(5) Application of other rules.--Rules similar to the 
        rules of paragraphs (3), (4), (5), (6), (7), and (10) of 
        section 199(d) shall apply for purposes of this section.''.
    (b) Conforming Amendments.--
            (1) Section 56(d)(1)(A) of such Code is amended by striking 
        ``deduction under section 199'' both places it appears and 
        inserting ``deductions under sections 199 and 200''.
            (2) Section 56(g)(4)(C) of such Code is amended by adding 
        at the end the following new clause:
                            ``(vii) Deduction for domestic business 
                        income.--Clause (i) shall not apply to any 
                        amount allowable as a deduction under section 
                        200.''.
            (3) The following provisions of such Code are each amended 
        by inserting ``200,'' after ``199,''.
                    (A) Section 86(b)(2)(A).
                    (B) Section 135(c)(4)(A).
                    (C) Section 137(b)(3)(A).
                    (D) Section 219(g)(3)(A)(ii).
                    (E) Section 221(b)(2)(C)(i).
                    (F) Section 222 (b)(2)(C)(i).
                    (G) Section 246(b)(1).
                    (H) Section 469(i)(3)(F)(iii).
            (4) Section 163(j)(6)(A)(i) of such Code is amended by 
        striking ``and'' at the end of subclause (III) and by inserting 
        after subclause (IV) the following new subclause:
                                    ``(V) any deduction allowable under 
                                section 200, and''.
            (5) Section 170(b)(2)(C) of such Code is amended by 
        striking ``and'' at the end of clause (iv), by striking the 
        period at the end of clause (v) and inserting ``, and'', and by 
        inserting after clause (v) the following new clause:
                            ``(vi) section 200.''.
            (6) Section 172(d) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(8) Domestic business income.--The deduction under 
        section 200 shall not be allowed.''.
            (7) Section 199(d)(2)(A) of such Code is amended by 
        inserting ``200,'' after ``137,''.
            (8) Section 613(a) of such Code is amended by striking 
        ``deduction under section 199'' and inserting ``deductions 
        under sections 199 and 200''.
            (9) Section 613A(d)(1) of such Code is amended by 
        redesignating subparagraphs (C), (D), and (E) as subparagraphs 
        (D), (E), and (F), respectively, and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) any deduction allowable under section 200,''.
            (10) Section 1402(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (16), by redesignating 
        paragraph (17) as paragraph (18), and by inserting after 
        paragraph (16) the following new paragraph:
            ``(17) the deduction provided by section 200 shall not be 
        allowed; and''.
            (11) The table of sections for part VI of subchapter B of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

``Sec. 200. Domestic manufacturing income.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.
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