[Congressional Record Volume 149, Number 39 (Tuesday, March 11, 2003)]
[Senate]
[Pages S3519-S3520]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENSIGN (for himself, Mrs. Boxer, Mr. Smith, Mr. Allen, Mr. 
        Enzi, and Mr. Bayh):
  S. 596. A bill to amend the Internal Revenue Code of 1986 to 
encourage the investment of foreign earnings within the United States 
for productive business investments and job creation; to the Committee 
on Finance.
  Mr. ENSIGN. Mr. President. I rise today with my colleagues Senator 
Boxer, Senator Smith, Senator Allen, Senator Enzi and Senator Bayh to 
introduce The Invest in the U.S.A. Act of 2003 to stimulate job growth 
and investment in the American economy.
  Under current tax law, American companies doing business overseas are 
discouraged from bringing their earnings back home because those 
earnings are subject to up to a 35-percent rate of taxation. 
Specifically, our government imposes taxes on American companies when 
its foreign subsidiary earnings are brought back to the United States, 
to the extent of any shortfall in the tax paid abroad and the 35-
percent U.S. tax rate. Therefore, many businesses do the math and 
conclude that it would be more beneficial to invest 100 percent of 
those earnings abroad than it would be to bring the funds home to be 
reinvested in the American economy.
  Our proposal is a sensible, fiscally responsible way to provide 
immediate investment in the American economy. Specifically, the Invest 
in the U.S.A. Act bill will allow domestic corporations doing business 
abroad to bring their foreign earnings home by imposing a 5.25-percent 
toll tax on dividends in excess of normal distributions for only one 
year. Companies must reinvest these funds in the United States in an 
approved investment plan to take advantage of the lowered rate. 
Finally, domestic shareholders would permanently surrender the right to 
claim foreign tax credits for 85 percent of foreign income taxes 
associated with dividends subject to the 5.25-percent tax, as well as 
exclude 85 percent of income subject to the 5.25-percent tax from the 
calculation of the foreign tax credit limitation ensuring that no 
American company will be taxed less than 5.25 percent.
  Lowering the tax burden on foreign subsidiary income for a limited 
time will open the floodgates for privately held foreign funds to be 
brought back into the American economy to provide immediate economic 
stimulus. According to the Joint Committee on Taxation, the Invest in 
the U.S.A. Act will not only increase receipts to the U.S. Treasury in 
the first year by $4.1 billion but also inject an additional $135 
billion of privately held funds into the U.S. economy that will be an 
immediate stimulus to our economy at a cost of only $3.9 billion over 
10 years--less than 3 percent of the overall gain this legislation will 
have to the American economy.
  These funds can be used to create more jobs for American workers, 
solidify corporate pension and retirement funds, invest in 
manufacturing equipment and research and development, and reduce 
domestic debt loads thereby increasing employee and shareholder 
dividends. American jobs depend on American companies, and this 
proposal will accomplish that objective. I ask unanimous consent that 
the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 596

       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 ``Invest in the U.S.A. Act of 
     2003''.

     SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION 
                   AMOUNT.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new section:

     ``SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN 
                   DISTRIBUTION AMOUNT.

       ``(a) Toll Tax Imposed on Excess Qualified Foreign 
     Distribution Amount.--If a corporation elects the application 
     of this section for any taxable year, a tax shall be imposed 
     for such taxable year in an amount equal to 5.25 percent of--
       ``(1) the taxpayer's excess qualified foreign distribution 
     amount for such taxable year, plus
       ``(2) the amount determined under section 78 which is 
     attributable to such excess qualified foreign distribution 
     amount.
     Such tax shall be imposed in lieu of the tax imposed under 
     section 11 or 55 on the amounts described in paragraphs (1) 
     and (2) for such taxable year.
       ``(b) Excess Qualified Foreign Distribution Amount.--For 
     purposes of this section--
       ``(1) In general.--The term `excess qualified foreign 
     distribution amount' means the excess (if any) of--
       ``(A) dividends received by the taxpayer during the taxable 
     year which are--
       ``(i) from 1 or more corporations which are controlled 
     foreign corporations in which the taxpayer is a United States 
     shareholder on the date such dividends are paid, and
       ``(ii) described in a domestic reinvestment plan approved 
     by the taxpayer's president, chief executive officer, or 
     comparable official before the payment of such dividends and 
     subsequently approved by the taxpayer's board of directors, 
     management committee, executive committee, or similar body, 
     which plan shall provide for the reinvestment of such 
     dividends in the United States, such as for the funding of 
     worker hiring and training; infrastructure; research and 
     development; capital investments; or the financial 
     stabilization of the corporation for the purposes of job 
     retention or creation, over
       ``(B) the base dividend amount.
       ``(2) Base dividend amount.--The term `base dividend 
     amount' means an amount designated under subsection (c)(7), 
     but not less than the average amount of dividends received 
     during the fixed base period from 1 or more corporations 
     which are controlled foreign corporations in which the 
     taxpayer is a United States shareholder on the date such 
     dividends are paid.
       ``(3) Fixed base period.--
       ``(A) In general.--The term `fixed base period' means each 
     of 3 taxable years which are among the 5 most recent taxable 
     years of the taxpayer ending on or before December 31, 2002, 
     determined by disregarding--
       ``(i) the 1 taxable year for which the taxpayer had the 
     highest amount of dividends from 1 or more corporations which 
     are controlled foreign corporations relative to the other 4 
     taxable years, and
       ``(ii) the 1 taxable year for which the taxpayer had the 
     lowest amount of dividends from such corporations relative to 
     the other 4 taxable years.
       ``(B) Shorter period.--If the taxpayer has fewer than 5 
     taxable years ending on or before December 31, 2002, then in 
     lieu of applying subparagraph (A), the fixed base period 
     shall mean such shorter period representing all of the 
     taxable years of the taxpayer ending on or before December 
     31, 2002.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Dividends.--The term `dividend' means a dividend as 
     defined in section 316, except that the term shall also 
     include amounts described in section 951(a)(1)(B), and shall 
     exclude amounts described in sections 78 and 959.
       ``(2) Controlled foreign corporations and united states 
     shareholders.--The term `controlled foreign corporation' 
     shall have the same meaning as under section 957(a) and the 
     term `United States shareholder' shall have the same meaning 
     as under section 951(b).
       ``(3) Foreign tax credits.--The amount of any income, war, 
     profits, or excess profit taxes paid (or deemed paid under 
     sections 902 and 960) or accrued by the taxpayer with respect 
     to the excess qualified foreign distribution amount for which 
     a credit would be allowable under section 901 in the absence 
     of this section, shall be reduced by 85 percent.
       ``(4) Foreign tax credit limitation.--For all purposes of 
     section 904, there shall be disregarded 85 percent of--
       ``(A) the excess qualified foreign distribution amount,
       ``(B) the amount determined under section 78 which is 
     attributable to such excess qualified foreign distribution 
     amount, and

[[Page S3520]]

       ``(C) the amounts (including assets, gross income, and 
     other relevant bases of apportionment) which are attributable 
     to the excess qualified foreign distribution amount which 
     would, determined without regard to this section, be used to 
     apportion the expenses, losses, and deductions of the 
     taxpayer under section 861 and 864 in determining its taxable 
     income from sources without the United States.

     For purposes of applying subparagraph (C), the principles of 
     section 864(e)(3)(A) shall apply.
       ``(5) Treatment of acquisitions and dispositions.--Rules 
     similar to the rules of section 41(f)(3) shall apply in the 
     case of acquisitions or dispositions of controlled foreign 
     corporations occurring on or after the first day of the 
     earliest taxable year taken into account in determining the 
     fixed base period.
       ``(6) Treatment of consolidated groups.--Members of an 
     affiliated group of corporations filing a consolidated return 
     under section 1501 shall be treated as a single taxpayer in 
     applying the rules of this section.
       ``(7) Designation of dividends.--Subject to subsection 
     (b)(2), the taxpayer shall designate the particular dividends 
     received during the taxable year from 1 or more corporations 
     which are controlled foreign corporations in which it is a 
     United States shareholder which are dividends excluded from 
     the excess qualified foreign distribution amount. The total 
     amount of such designated dividends shall equal the base 
     dividend amount.
       ``(8) Treatment of expenses, losses, and deductions.--Any 
     expenses, losses, or deductions of the taxpayer allowable 
     under subchapter B--
       ``(A) shall not be applied to reduce the amounts described 
     in subsection (a)(1), and
       ``(B) shall be applied to reduce other income of the 
     taxpayer (determined without regard to the amounts described 
     in subsection (a)(1)).
       ``(d) Election.--
       ``(1) In general.--An election under this section shall be 
     made on the timely filed income tax return for the taxpayer's 
     first taxable year (determined by taking extensions into 
     account) ending 120 days or more after the date of the 
     enactment of this section, and, once made, may be revoked 
     only with the consent of the Secretary.
       ``(2) All controlled foreign corporations.--The election 
     shall apply to all corporations which are controlled foreign 
     corporations in which the taxpayer is a United States 
     shareholder during the taxable year.
       ``(3) Consolidated groups.--If a taxpayer is a member of an 
     affiliated group of corporations filing a consolidated return 
     under section 1501 for the taxable year, an election under 
     this section shall be made by the common parent of the 
     affiliated group which includes the taxpayer, and shall apply 
     to all members of the affiliated group.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary and appropriate to carry out 
     the purposes of this section, including regulations under 
     section 55 and regulations addressing corporations which, 
     during the fixed base period or thereafter, join or leave an 
     affiliated group of corporations filing a consolidated 
     return.''.
       (b) Conforming Amendment.--The table of sections for 
     subpart F of part III of subchapter N of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new item:

``Sec. 965. Toll tax imposed on excess qualified foreign distribution 
              amount.''.

       (c) Effective Date.--The amendment made by this section 
     shall apply only to the first taxable year of the electing 
     taxpayer ending 120 days or more after the date of the 
     enactment of this Act.

  Mrs. BOXER. Today, Senator Ensign and I are introducing the Invest in 
the U.S.A. Act of 2003 along with Senators Smith, Allen, Enzi, and 
Bayh. This economic stimulus legislation would create a one-year 
incentive for corporations to bring the profits they have made overseas 
back to the United States and invest them in creating jobs.
  The act lowers the effective corporate tax rate on the foreign 
earnings of American companies from 35 percent to 5.25 percent for one 
year. By lowering that rate for one year, we will encourage companies 
to bring an estimated $135 billion from abroad back home to invest in 
the United States. Getting this capital into the domestic economy is 
particularly necessary in light of the difficulties firms are having 
raising money in this tough economy. By making this capital available 
for domestic investment, we will minimize the spending cuts that 
companies have been announcing for the coming year.
  The Invest in the U.S.A. Act would constitute a true economic 
stimulus by encouraging investment and job creation right away in such 
activities as worker hiring and training, research and development, and 
new plants.
  Our proposal is also fiscally responsible, unlike other proposals 
that fail to give the economy the shot in the arm it needs. It will 
result in job creation rather than deficit creation by enabling a 
tremendous amount of investment in our economy in the short term with 
only a small cost in the long term. For Government, the funds brought 
back to the United States will generate $4.1 billion in revenues in the 
first year and is expected to cost $3.9 billion over 10 years.
  I want to thank Senator Ensign for his active, engaged leadership on 
this legislation. I particularly appreciate Senator Ensign's focus on 
ensuring that these funds will be targeted at creating jobs and 
stimulating our economy right away.
  Mr. President, we will work hard to ensure that the provisions in 
this act are included in any economic growth package that the Senate 
considers because our workers need the opportunities it would create 
and our economy needs the capital it would generate.
                                 ______