[Congressional Record Volume 162, Number 56 (Wednesday, April 13, 2016)]
[Senate]
[Pages S2057-S2061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 3787. Mr. PAUL submitted an amendment intended to be proposed by
him to the bill S. 2012, to provide for the modernization of the energy
policy of the United States, and for other purposes; which was ordered
to lie on the table; as follows:
At the appropriate place, insert the following:
DIVISION A--ECONOMIC FREEDOM ZONES
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This division may be cited as the
``Economic Freedom Zones Act of 2016''.
(b) Table of Contents.--The table of contents for this
division is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--PROHIBITION OF FEDERAL GOVERNMENT BAILOUTS
Sec. 101. Prohibition of Federal Government bailouts.
TITLE II--DESIGNATION OF ECONOMIC FREEDOM ZONES (EFZ)
Sec. 201. Eligibility requirements for Economic Freedom Zone Status.
Sec. 202. Application and duration of designation.
TITLE III--FEDERAL TAX INCENTIVES
Sec. 301. Tax incentives related to Economic Freedom Zones.
TITLE IV--FEDERAL REGULATORY REDUCTIONS
Sec. 401. Suspension of certain laws and regulations.
TITLE V--EDUCATIONAL ENHANCEMENTS
Sec. 501. Educational opportunity tax credit.
Sec. 502. School choice through portability.
Sec. 503. Special Economic Freedom Zone visas.
Sec. 504. Economic Freedom Zone educational savings accounts.
TITLE VI--COMMUNITY ASSISTANCE AND REBUILDING
Sec. 601. Nonapplication of Davis-Bacon.
Sec. 602. Economic Freedom Zone charitable tax credit.
TITLE VII--STATE AND COMMUNITY POLICY RECOMMENDATIONS
Sec. 701. Sense of the Senate concerning policy recommendations.
SEC. 2. DEFINITIONS.
In this division:
(1) City.--The term ``city'' means any unit of general
local government that is classified as a municipality by the
United States Census Bureau, or is a town or township as
determined jointly by the Director of the Office of
Management and Budget and the Secretary.
(2) County.--The term ``county'' means any unit of local
general government that is classified as a county by the
United States Census Bureau.
(3) Eligible entity.--The term ``eligible entity'' means a
municipality or a zip code.
(4) Municipality.--The term ``municipality'' has the
meaning given that term in section 101(40) of title 11,
United States Code.
(5) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(6) Zip code.--The term ``zip code'' means any area or
region associated with or covered by a United States Postal
zip code of not less than 5 digits.
TITLE I--PROHIBITION OF FEDERAL GOVERNMENT BAILOUTS
SEC. 101. PROHIBITION OF FEDERAL GOVERNMENT BAILOUTS.
(a) Definitions.--In this section--
(1) the term ``credit rating'' has the meaning given that
term in section 3(a)(60) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(60));
(2) the term ``credit rating agency'' has the meaning given
that term in section 3(a)(61) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)(61));
(3) the term ``Federal assistance'' means the use of any
advances from the Federal Reserve credit facility or discount
window that is not part of a program or facility with broad-
based eligibility under section 13(3)(A) of the Federal
Reserve Act (12 U.S.C. 343(3)(A)), Federal Deposit Insurance
Corporation insurance, or guarantees for the purpose of--
(A) making a loan to, or purchasing any interest or debt
obligation of, a municipality;
(B) purchasing the assets of a municipality;
(C) guaranteeing a loan or debt issuance of a municipality;
or
(D) entering into an assistance arrangement, including a
grant program, with an eligible entity;
(4) the term ``insolvent'' means, with respect to an
eligible entity, a financial condition such that the eligible
entity--
(A) has any debt that has been given a credit rating lower
than a ``B'' by a nationally recognized statistical rating
organization or a credit rating agency;
(B) is not paying its debts as they become due, unless such
debts are the subject of a bona fide dispute; or
(C) is unable to pay its debts as they become due; and
(5) the term ``nationally recognized statistical rating
organization'' has the meaning given that term in section
3(a)(62) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(62)).
(b) Prohibition of Federal Government Bailouts.--
(1) Prohibition of federal assistance.--Notwithstanding any
other provision of law, no Federal assistance may be provided
to an eligible entity (other than the assistance provided for
in this division for an area that is designated as an
Economic Free Zone).
(2) Prohibition of financial assistance to bankrupt or
insolvent eligible entities.--Except as provided in paragraph
(1), the Federal Government may not provide financial
assistance--
(A) to a municipality that is a debtor under chapter 9 of
title 11, United States Code; or
(B) to a municipality that is insolvent.
TITLE II--DESIGNATION OF ECONOMIC FREEDOM ZONES (EFZ)
SEC. 201. ELIGIBILITY REQUIREMENTS FOR ECONOMIC FREEDOM ZONE
STATUS.
(a) Designation of Municipalities as Economic Freedom
Zones.--
(1) In general.--An eligible entity that is a municipality
may be designated by the Secretary as an Economic Freedom
Zone if the municipality--
(A) meets the requirements under section 109(c) of title
11, United States Code;
(B) is at risk of insolvency, as determined under paragraph
(2);
(C) has been subject to receivership by the State within
the last 3 years;
(D) has been a debtor under chapter 9 of title 11, United
States Code within the last 3 years; or
(E) has been subject to a financial advisory board,
emergency manager, or similar entity that--
(i) has arisen from the legislative or executive authority
of the State; and
(ii) exercises significant financial control over the
finances of the entity within the last 3 years.
(2) At risk of insolvency.--A municipality is at risk of
insolvency if--
(A) an independent actuarial firm that has been engaged by
the municipality and that does not have a conflict of
interest with the municipality, including any previous
relationship with the municipality, as determined by the
Secretary--
(i) determines that the municipality is insolvent (as
defined in section 101(a)(4) of title 11, United States
Code); and
(ii) submits its analysis regarding the insolvency of the
municipality to the Secretary; and
(B) the Secretary has reviewed and approved the
determination of insolvency by the actuarial firm.
(b) Designation of Counties, Cities, and Zip Codes as
Economic Freedom Zones.--
(1) In general.--An eligible entity may be designated by
the Secretary as an Economic Freedom Zone if the eligible
entity--
(A) is a county or city that--
(i) is located in a non-metropolitan statistical area (as
defined by the Director of the Office of Management and
Budget); and
(ii) meets the requirements under paragraph (2); or
(B) is a zip code that meets the requirements under
paragraph (2).
(2) Low economic and high poverty area.--
(A) In general.--An eligible entity shall be eligible for
designation as an Economic Freedom Zone under paragraph (1)
if the eligible entity is designated by the Secretary as a
low economic or high poverty area under subparagraph (B).
(B) Designation as low economic and high poverty area.--The
Secretary, after reviewing supporting data as determined
appropriate, shall designate an eligible entity as a low
economic or high poverty area if--
(i) the State or local government with jurisdiction over
the eligible entity certifies that--
(I) the eligible entity is one of pervasive poverty,
unemployment, and general distress;
(II) the average rate of unemployment within such eligible
entity during the most recent 3-month period for which data
is available is at least 1.5 times the national unemployment
rate for the period involved;
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(III) during the most recent 3-month period, at least 30
percent of the residents of the eligible entity have incomes
below the national poverty level; or
(IV) at least 70 percent of the residents of the eligible
entity have incomes below 80 percent of the median income of
households within the jurisdiction of the local government
(as determined in the same manner as under section 119(b)(2)
of the Housing and Community Development Act of 1974); and
(ii) the Secretary determines that such a designation is
appropriate.
(c) Refusal To Grant Status.--The Secretary may refuse to
designate an eligible entity as an Economic Freedom Zone if
the Secretary determines that any requirement under this
division, including any requirement under subsection (a)(2),
has not been satisfied.
SEC. 202. APPLICATION AND DURATION OF DESIGNATION.
(a) Application.--The Secretary shall develop procedures to
enable an eligible entity to submit to the Secretary an
application for designation as an Economic Freedom Zone under
this title.
(b) Duration.--The designation by the Secretary of an
eligible entity as a Economic Freedom Zone shall be for a
period of 10 years.
TITLE III--FEDERAL TAX INCENTIVES
SEC. 301. TAX INCENTIVES RELATED TO ECONOMIC FREEDOM ZONES.
(a) In General.--Chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subchapter:
``Subchapter Z--Economic Freedom Zones
``PART I--Tax Incentives
``PART II--Definitions
``PART I--TAX INCENTIVES
``Sec. 1400V-1. Economic Freedom Zone individual flat tax.
``Sec. 1400V-2. Economic Freedom Zone corporate flat tax.
``Sec. 1400V-3. Zero percent capital gains rate.
``Sec. 1400V-4. Reduced payroll taxes.
``Sec. 1400V-5. Increase in expensing under section 179.
``SEC. 1400V-1. ECONOMIC FREEDOM ZONE INDIVIDUAL FLAT TAX.
``(a) In General.--In the case of any individual whose
principal residence (within the meaning of section 121) is
located in an Economic Freedom Zone for the taxable year, in
lieu of the tax imposed by section 1, there shall be imposed
a tax equal to 5 percent of the taxable income of such
taxpayer. For purposes of this title, the tax imposed by the
preceding sentence shall be treated as a tax imposed by
section 1.
``(b) Joint Returns.--In the case of a joint return under
section 6013, subsection (a) shall apply so long as either
spouse has a principal residence (within the meaning of
section 121) in an Economic Freedom Zone for the taxable
year.
``(c) Alternative Minimum Tax Not To Apply.--The tax
imposed by section 55 shall not apply to any taxpayer to whom
subsection (a) applies.
``SEC. 1400V-2. ECONOMIC FREEDOM ZONE CORPORATE FLAT TAX.
``(a) In General.--In the case of any corporation located
in an Economic Freedom Zone for the taxable year, in lieu of
the tax imposed by section 11, there shall be imposed a tax
equal to 5 percent of the taxable income of such corporation.
For purposes of this title, the tax imposed by the preceding
sentence shall be treated as a tax imposed by section 11.
``(b) Limitation.--Subsection (a) shall not apply to any
corporation for any taxable year if the adjusted gross income
of such corporation for such taxable year exceeds
$500,000,000.
``(c) Located.--For purposes of this section, a corporation
shall be considered to be located in an Economic Freedom Zone
if--
``(1) not less than 10 percent of the total gross income of
such corporation is derived from the active conduct of a
trade or business within an Economic Freedom Zone, or
``(2) at least 25 percent of the employees of such
corporation are residents of an Economic Freedom Zone.
``(d) Alternative Minimum Tax Not To Apply.--The tax
imposed by section 55 shall not apply to any taxpayer to whom
subsection (a) applies.
``SEC. 1400V-3. ZERO PERCENT CAPITAL GAINS RATE.
``(a) Exclusion.--Gross income shall not include qualified
capital gain from the sale or exchange of--
``(1) any Economic Freedom Zone asset held for more than 5
years, or
``(2) any real property located in an Economic Freedom
Zone.
``(b) Economic Freedom Zone Asset.--For purposes of this
section--
``(1) In general.--The term `Economic Freedom Zone asset'
means--
``(A) any Economic Freedom Zone business stock,
``(B) any Economic Freedom Zone partnership interest, and
``(C) any Economic Freedom Zone business property.
``(2) Economic freedom zone business stock.--
``(A) In general.--The term `Economic Freedom Zone business
stock' means any stock in a domestic corporation if--
``(i) such stock is acquired by the taxpayer, before the
date on which such corporation no longer qualifies as an
Economic Freedom Zone business due to the lapse of 1 or more
Economic Freedom Zones, at its original issue (directly or
through an underwriter) solely in exchange for cash,
``(ii) as of the time such stock was issued, such
corporation was an Economic Freedom Zone business (or, in the
case of a new corporation, such corporation was being
organized for purposes of being an Economic Freedom Zone
business), and
``(iii) during substantially all of the taxpayer's holding
period for such stock, such corporation qualified as an
Economic Freedom Zone business.
``(B) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this paragraph.
``(3) Economic freedom zone partnership interest.--The term
`Economic Freedom Zone partnership interest' means any
capital or profits interest in a domestic partnership if--
``(A) such interest is acquired by the taxpayer, before the
date on which such partnership no longer qualifies as an
Economic Freedom Zone business due to the lapse of 1 or more
Economic Freedom Zones, from the partnership solely in
exchange for cash,
``(B) as of the time such interest was acquired, such
partnership was an Economic Freedom Zone business (or, in the
case of a new partnership, such partnership was being
organized for purposes of being an Economic Freedom Zone
business), and
``(C) during substantially all of the taxpayer's holding
period for such interest, such partnership qualified as an
Economic Freedom Zone business.
A rule similar to the rule of paragraph (2)(B) shall apply
for purposes of this paragraph.
``(4) Economic freedom zone business property.--
``(A) In general.--The term `Economic Freedom Zone business
property' means tangible property if--
``(i) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after the date on
such taxpayer qualifies as an Economic Freedom Zone business
and before the date on which such taxpayer no longer
qualifies as an Economic Freedom Zone business due to the
lapse of 1 or more Economic Freedom Zones,
``(ii) the original use of such property in the Economic
Freedom Zone 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 an Economic Freedom Zone business of the
taxpayer.
``(B) Special rule for buildings which are substantially
improved.--
``(i) In general.--The requirements of clauses (i) and (ii)
of subparagraph (A) shall be treated as met with respect to--
``(I) property which is substantially improved by the
taxpayer before the date on which such taxpayer no longer
qualifies as an Economic Freedom Zone business due to the
lapse of 1 or more Economic Freedom Zones, and
``(II) any land on which such property is located.
``(ii) Substantial improvement.--For purposes of clause
(i), property shall be treated as substantially improved by
the taxpayer only if, during any 24-month period beginning
after the date on which the taxpayer qualifies as an Economic
Freedom Zone business additions to basis with respect to such
property in the hands of the taxpayer exceed the greater of--
``(I) an amount equal to the adjusted basis of such
property at the beginning of such 24-month period in the
hands of the taxpayer, or
``(II) $5,000.
``(5) Treatment of economic freedom zone termination.--
Except as otherwise provided in this subsection, the
termination of the designation of the Economic Freedom Zone
shall be disregarded for purposes of determining whether any
property is an Economic Freedom Zone asset.
``(6) Treatment of subsequent purchasers, etc.--The term
`Economic Freedom Zone asset' includes any property which
would be an Economic Freedom Zone asset but for paragraph
(2)(A)(i), (3)(A), or (4)(A)(i) or (ii) in the hands of the
taxpayer if such property was an Economic Freedom Zone asset
in the hands of a prior holder.
``(7) 5-year safe harbor.--If any property ceases to be an
Economic Freedom Zone asset by reason of paragraph
(2)(A)(iii), (3)(C), or (4)(A)(iii) after the 5-year period
beginning on the date the taxpayer acquired such property,
such property shall continue to be treated as meeting the
requirements of such paragraph; except that the amount of
gain to which subsection (a) applies on any sale or exchange
of such property shall not exceed the amount which would be
qualified capital gain had such property been sold on the
date of such cessation.
``(c) Economic Freedom Zone Business.--For purposes of this
section, the term `Economic Freedom Zone business' means any
enterprise zone business (as defined in section 1397C),
determined--
``(1) after the application of section 1400(e),
``(2) by substituting `80 percent' for `50 percent' in
subsections (b)(2) and (c)(1) of section 1397C, and
``(3) by treating only areas that are Economic Freedom
Zones as an empowerment zone or enterprise community.
``(d) Other Definitions and Special Rules.--For purposes of
this section--
``(1) Qualified capital gain.--Except as otherwise provided
in this subsection, the
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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) Certain gain not qualified.--The term `qualified
capital gain' shall not include any gain attributable to
periods before the date on which the a business qualifies as
an Economic Freedom Zone business or after the date that is 4
years after the date on which such business no longer
qualifies as an Economic Freedom Zone business due to the
lapse of 1 or more Economic Freedom Zones.
``(3) Certain gain not qualified.--The term `qualified
capital gain' shall not include any gain which would be
treated as ordinary income under section 1245 or under
section 1250 if section 1250 applied to all depreciation
rather than the additional depreciation.
``(4) Intangibles not integral part of economic freedom
zone business.--In the case of gain described in subsection
(a)(1), the term `qualified capital gain' shall not include
any gain which is attributable to an intangible asset which
is not an integral part of an Economic Freedom Zone business.
``(5) Related party transactions.--The term `qualified
capital gain' shall not include any gain attributable,
directly or indirectly, in whole or in part, to a transaction
with a related person. For purposes of this paragraph,
persons are related to each other if such persons are
described in section 267(b) or 707(b)(1).
``(e) Sales and Exchanges of Interests in Partnerships and
S Corporations Which Are Economic Freedom Zone Businesses.--
In the case of the sale or exchange of an interest in a
partnership, or of stock in an S corporation, which was an
Economic Freedom Zone business during substantially all of
the period the taxpayer held such interest or stock, the
amount of qualified capital gain shall be determined without
regard to--
``(1) any gain which is attributable to an intangible asset
which is not an integral part of an Economic Freedom Zone
business, and
``(2) any gain attributable to periods before the date on
which the a business qualifies as an Economic Freedom Zone
business or after the date that is 4 years after the date on
which such business no longer qualifies as an Economic
Freedom Zone business due to the lapse of 1 or more Economic
Freedom Zones.
``SEC. 1400V-4. REDUCED PAYROLL TAXES.
``(a) In General.--
``(1) Employees.--The rate of tax under 3101(a) (including
for purposes of determining the applicable percentage under
sections 3201(a) and 3211(a)(1)) shall be 4.2 percent for any
remuneration received during any period in which the
individual's principal residence (within the meaning of
section 121) is located in an Economic Freedom Zone.
``(2) Employers.--
``(A) In general.--The rate of tax under section 3111(a)
(including for purposes of determining the applicable
percentage under sections 3221(a)) shall be 4.2 percent with
respect to remuneration paid for qualified services during
any period in which the employer is located in an Economic
Freedom Zone.
``(B) Qualified services.--For purposes of this section,
the term `qualified services' means services performed--
``(i) in a trade or business of a qualified employer, or
``(ii) in the case of a qualified employer exempt from tax
under section 501(a) of the Internal Revenue Code of 1986, in
furtherance of the activities related to the purpose or
function constituting the basis of the employer's exemption
under section 501 of such Code.
``(C) Location of employer.--For purposes of this
paragraph, the location of an employer shall be determined in
the same manner as under section 1400V-2(c).
``(3) Self-employed individuals.--The rate of tax under
section 1401(a) shall be 8.40 percent any taxable year in
which such individual was located (determined under section
1400V-2(c) as if such individual were a corporation) in an
Economic Freedom Zone.
``(b) Transfers of Funds.---
``(1) Transfers to federal old-age and survivors insurance
trust fund.--There are hereby appropriated to the Federal
Old-Age and Survivors Trust Fund and the Federal Disability
Insurance Trust Fund established under section 201 of the
Social Security Act (42 U.S.C. 401) amounts equal to the
reduction in revenues to the Treasury by reason of the
application of subsection (a). Amounts appropriated by the
preceding sentence shall be transferred from the general fund
at such times and in such manner as to replicate to the
extent possible the transfers which would have occurred to
such Trust Fund had such amendments not been enacted.
``(2) Transfers to social security equivalent benefit
account.--There are hereby appropriated to the Social
Security Equivalent Benefit Account established under section
15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C.
231n-1(a)) amounts equal to the reduction in revenues to the
Treasury by reason of the application of paragraphs (1) and
(2) of subsection (a). Amounts appropriated by the preceding
sentence shall be transferred from the general fund at such
times and in such manner as to replicate to the extent
possible the transfers which would have occurred to such
Account had such amendments not been enacted.
``(3) Coordination with other federal laws.--For purposes
of applying any provision of Federal law other than the
provisions of the Internal Revenue Code of 1986, the rate of
tax in effect under section 3101(a) shall be determined
without regard to the reduction in such rate under this
section.
``SEC. 1400V-5. INCREASE IN EXPENSING UNDER SECTION 179.
``(a) In General.--In the case of an Economic Freedom Zone
business, for purposes of section 179--
``(1) the limitation under section 179(b)(1) shall be
increased by the lesser of--
``(A) 200 percent of the amount in effect under such
section (determined without regard to this section), or
``(B) the cost of section 179 property which is Economic
Freedom Zone business property placed in service during the
taxable year, and
``(2) the amount taken into account under section 179(b)(2)
with respect to any section 179 property which is Economic
Freedom Zone business property shall be 50 percent of the
cost thereof.
``(b) Economic Freedom Zone Business Property.--For
purposes of this section, the term `Economic Freedom Zone
business property' has the meaning given such term under
section 1400V-3(b)(4), except that for purposes of
subparagraph (A)(ii) thereof, if property is sold and leased
back by the taxpayer within 3 months after the date such
property was originally placed in service, such property
shall be treated as originally placed in service not earlier
than the date on which such property is used under the
leaseback.
``(c) Recapture.--Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified zone
property which ceases to be used in an empowerment zone by an
enterprise zone business.
``PART II--DEFINITIONS
``Sec. 1400V-6. Economic Freedom Zone.
``SEC. 1400V-6. ECONOMIC FREEDOM ZONE.
``For purposes of this subchapter, the term `Economic
Freedom Zone' means any area which is an Economic Freedom
Zone under title II of the Economic Freedom Zone Act.''.
(b) Clerical Amendment.--The table of subchapters for
chapter 1 of such Code is amended by inserting after the item
relating to subchapter Y the following new item:
``subchapter z--economic freedom zones''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
TITLE IV--FEDERAL REGULATORY REDUCTIONS
SEC. 401. SUSPENSION OF CERTAIN LAWS AND REGULATIONS.
(a) Environmental Protection Agency.--For each area
designated as an Economic Freedom Zone under this division,
the Administrator of the Environmental Protection Agency
shall not enforce, with respect to that Economic Freedom
Zone, and the Economic Freedom Zone shall be exempt from
compliance with--
(1) part D of the Clean Air Act (42 U.S.C. 7501 et seq.)
(including any regulations promulgated under that part);
(2) section 402 of the Federal Water Pollution Control Act
(33 U.S.C. 1342);
(3) sections 139, 168, 169, 326, and 327 of title 23,
United States Code;
(4) section 304 of title 49, United States Code; and
(5) sections 1315 through 1320 of Public Law 112-141 (126
Stat. 549).
(b) Department of the Interior.--
(1) Wild and scenic rivers.--For each area designated as an
Economic Freedom Zone under this division, the Secretary of
the Interior shall not enforce, with respect to that Economic
Freedom Zone, and the Economic Freedom Zone shall be exempt
from compliance with the Wild and Scenic Rivers Act (16
U.S.C. 1271 et seq.).
(2) National heritage areas.--For the period beginning on
the date of enactment of this Act and ending on the date on
which an area is removed from designation as an Economic
Freedom Zone, any National Heritage Area located within that
Economic Freedom Zone shall not be considered to be a
National Heritage Area and any applicable Federal law
(including regulations) relating to that National Heritage
Area shall not apply.
TITLE V--EDUCATIONAL ENHANCEMENTS
SEC. 501. EDUCATIONAL OPPORTUNITY TAX CREDIT.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 25D the following new section:
``SEC. 25E. CREDIT FOR QUALIFIED ELEMENTARY AND SECONDARY
EDUCATION EXPENSES.
``(a) In General.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the qualified
elementary and secondary education expenses of an eligible
student.
``(b) Limitation.--The amount taken into account under
subsection (a) with respect to any student for any taxable
year shall not exceed $5,000.
``(c) Definitions.--For purposes of this section--
``(1) Qualified elementary and secondary education
expenses.--The term `qualified elementary and secondary
education expenses' has the meaning given such term under
section 530(b)(3).
``(2) Eligible student.--The term `eligible student' means
any student who--
``(A) is enrolled in, or attends, any public, private, or
religious school (as defined in section 530(b)(3)(B)), and
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``(B) whose principal residence (within the meaning of
section 123) is located in an Economic Freedom Zone.
``(3) Economic freedom zone.--The term `Economic Freedom
Zone' means any area which is an Economic Freedom Zone under
title II of the Economic Freedom Zone Act.''.
(b) Clerical Amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 25D
the following new item:
``Sec. 25E. Credit for qualified elementary and secondary education
expenses.''.
(c) Effective Date.--The amendments made by this section
shall apply to expenditures made in taxable years beginning
after the date of the enactment of this Act.
SEC. 502. SCHOOL CHOICE THROUGH PORTABILITY.
(a) In General.--Subpart 2 of part A of title I of the
Elementary and Secondary Education Act of 1965 (20 U.S.C.
6331 et seq.) is amended by adding at the end the following:
``SEC. 1128. SCHOOL CHOICE THROUGH PORTABILITY.
``(a) Authorization.--
``(1) In general.--Notwithstanding sections 1124, 1124A,
and 1125 and any other provision of law, and to the extent
permitted under State law, a State educational agency may
allocate grant funds under this subpart among the local
educational agencies in the State based on the formula
described in paragraph (2).
``(2) Formula.--A State educational agency may allocate
grant funds under this subpart for a fiscal year among the
local educational agencies in the State in proportion to the
number of eligible children enrolled in public schools served
by the local educational agency and enrolled in State-
accredited private schools within the local educational
agency's geographic jurisdiction, for the most recent fiscal
year for which satisfactory data are available, compared to
the number of such children in all such local educational
agencies for that fiscal year.
``(b) Eligible Child.--
``(1) In general.--In this section, the term `eligible
child' means a child--
``(A) from a family with an income below the poverty level,
on the basis of the most recent satisfactory data published
by the Department of Commerce; and
``(B) who resides in an Economic Freedom Zone as designated
under title II of the Economic Freedom Zones Act of 2016 .
``(2) Criteria of poverty.--In determining the families
with incomes below the poverty level for the purposes of
paragraph (2), a State educational agency shall use the
criteria of poverty used by the Census Bureau in compiling
the most recent decennial census.
``(3) Identification of eligible children.--On an annual
basis, on a date to be determined by the State educational
agency, each local educational agency that receives grant
funding in accordance with subsection (a) shall inform the
State educational agency of the number of eligible children
enrolled in public schools served by the local educational
agency and enrolled in State-accredited private schools
within the local educational agency's geographic
jurisdiction.
``(c) Distribution to Schools.--Each local educational
agency that receives grant funding under subsection (a) shall
distribute such funds to the public schools served by the
local educational agency and State-accredited private schools
with the local educational agency's geographic jurisdiction--
``(1) based on the number of eligible children enrolled in
such schools; and
``(2) in the manner that would, in the absence of such
Federal funds, supplement the funds made available from the
non-Federal resources for the education of pupils
participating in programs under this part, and not to
supplant such funds.''.
(b) Table of Contents.--The table of contents in section 2
of the Elementary and Secondary Education Act of 1965 is
amended by inserting after the item relating to section 1127
the following:
``Sec. 1128. School choice through portability.''.
SEC. 503. SPECIAL ECONOMIC FREEDOM ZONE VISAS.
(a) Definitions.--In this section:
(1) Abandoned; dilapidated.--The terms ``abandoned'' and
``dilapidated'' shall be defined by the States in accordance
with the provisions of this division.
(2) Full-time employment.--The term ``full-time
employment'' means employment in a position that requires at
least 35 hours of service per week at any time, regardless of
who fills the position.
(b) Purpose.--The purpose of this section is to facilitate
increased investment and enhanced human capital in Economic
Freedom Zones through the issuance of special regional visas.
(c) Authorization.--The Secretary of Homeland Security, in
collaboration with the Secretary of Labor, may issue Special
Economic Freedom Zone Visas, in a number determined by the
Governor of each State, in consultation with local officials
in regions designated by the Secretary of Treasury as
Economic Freedom Zones, to authorize qualified aliens to
enter the United States for the purpose of--
(1) engaging in a new commercial enterprise (including a
limited partnership)--
(A) in which such alien has invested, or is actively in the
process of investing, capital in an amount not less than the
amount specified in subsection (d); and
(B) which will benefit the region designated as an Economic
Freedom Zone by creating full-time employment of not fewer
than 5 United States citizens, aliens lawfully admitted for
permanent residence, or other immigrants lawfully authorized
to be employed in the United States (excluding the alien and
the alien's immediate family);
(2) engaging in the purchase and renovation of dilapidated
or abandoned properties or residences (as determined by State
and local officials) in which such alien has invested, or is
actively in the process of investing, in the ownership of
such properties or residences; or
(3) residing and working in an Economic Freedom Zone.
(d) Effective Period.--A visa issued to an alien under this
section shall expire on the later of--
(1) the date on which the relevant Economic Freedom Zone
loses such designation; or
(2) the date that is 5 years after the date on which such
visa was issued to such alien.
(e) Capital and Educational Requirements.--
(1) New commercial enterprises.--Except as otherwise
provided under this section, the minimum amount of capital
required to comply with subsection (c)(1)(A) shall be
$50,000.
(2) Renovation of dilapidated or abandoned properties.--An
alien is not in compliance with subsection (c)(2) unless the
alien--
(A) purchases a dilapidated or abandoned property in an
Economic Freedom Zone; and
(B) not later than 18 months after such purchase, invests
not less than $25,000 to rebuild, rehabilitate, or repurpose
the property.
(3) Verification.--A visa issued under subsection (c) shall
not remain in effect for more than 2 years unless the
Secretary of Homeland Security has verified that the alien
has complied with the requirements described in subsection
(c).
(4) Education and skill requirements.--An alien is not in
compliance with subsection (c)(3) unless the alien
possesses--
(A) a bachelor's degree (or its equivalent) or an advanced
degree;
(B) a degree or specialty certification that--
(i) is required for the job the alien will be performing;
and
(ii) is specific to an industry or job that is so complex
or unique that it can be performed only by an individual with
the specialty certification;
(C)(i) the knowledge required to perform the duties of the
job the alien will be performing; and
(ii) the nature of the specific duties is so specialized
and complex that such knowledge is usually associated with
attainment of a bachelor's or higher degree; or
(D) a skill or talent that would benefit the Economic
Freedom Zone.
(f) Additional Provisions.--
(1) Geographic limitation.--An alien who has been issued a
visa under this section is not permitted to live or work
outside of an Economic Freedom Zone.
(2) Rescission.--A visa issued under this section shall be
rescinded if the visa holder resides or works outside of an
Economic Freedom Zone or otherwise fails to comply with the
provisions of this section.
(3) Other visas.--An alien who has been issued a visa under
this section may apply for any other visa for which the alien
is eligible in order to pursue employment outside of an
Economic Freedom Zone.
(g) Adjustment of Status.--The Secretary of Homeland
Security may adjust the status of an alien who has been
issued a visa under this section to that of an alien lawfully
admitted for permanent residence, without numerical
limitation, if the alien--
(1) has fully complied with the requirements set forth in
this section for at least 5 years;
(2) submits a completed application to the Secretary; and
(3) is not inadmissible to the United States based on any
of the factors set forth in section 212(a) of the Immigration
and Nationality Act (8 U.S.C. 1182(a)).
SEC. 504. ECONOMIC FREEDOM ZONE EDUCATIONAL SAVINGS ACCOUNTS.
(a) In General.--Part VIII of subchapter F of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 530A. ECONOMIC FREEDOM ZONE EDUCATIONAL SAVINGS
ACCOUNTS.
``(a) In General.--Except as provided in this section, an
Economic Freedom Zone educational savings account shall be
treated for purposes of this title in the same manner as a
Coverdell education savings account.
``(b) Definitions.--For purposes of this section--
``(1) Economic freedom zone educational savings account.--
The term `Economic Freedom Zone educational savings account'
means a trust created or organized in the United States
exclusively for the purpose of paying the qualified education
expenses (as defined in section 530(b)(2)) of an individual
who is the designated beneficiary of the trust (and
designated as an Economic Freedom Zone educational saving
account at the time created or organized) and who is a
qualified individual at the time such trust is established,
but only if the written governing instrument creating the
trust meets the following requirements:
``(A) No contribution will be accepted--
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``(i) unless it is in cash,
``(ii) after the date on which such beneficiary attains age
25, or
``(iii) except in the case of rollover contributions, if
such contribution would result in aggregate contributions for
the taxable year exceeding $10,000.
``(B) No contribution shall be accepted at any time in
which the designated beneficiary is not a qualified
individual.
``(C) The trust meets the requirements of subparagraphs
(B), (C), (D), and (E) of section 530(b)(1).
The age limitations in subparagraphs (A)(ii), subparagraph
(E) of section 530(b)(1), and paragraphs (5) and (6) of
section 530(d), shall not apply to any designated beneficiary
with special needs (as determined under regulations
prescribed by the Secretary).
``(2) Qualified individual.--The term `qualified
individual' means any individual whose principal residence
(within the meaning of section 121) is located in an Economic
Freedom Zone (as defined in section 1400V-6).
``(c) Deduction for Contributions.--
``(1) In general.--There shall be allowed as a deduction
under part VII of subchapter B of this chapter an amount
equal to the aggregate amount of contributions made by the
taxpayer to any Economic Freedom Zone educational savings
account during the taxable year.
``(2) Limitation.--The amount of the deduction allowed
under paragraph (1) for any taxpayer for any taxable year
shall not exceed $40,000.
``(3) No deduction for rollover contributions.--No
deduction shall be allowed under paragraph (1) for any
rollover contribution described in section 530(d)(5).
``(d) Other Rules.--
``(1) No income limit.--In the case of an Economic Freedom
Zone educational savings account, subsection (c) of section
530 shall not apply.
``(2) Change in beneficiaries.--Notwithstanding paragraph
(6) of section 530(b), a change in the beneficiary of an
Economic Freedom Zone education savings account shall be
treated as a distribution unless the new beneficiary is a
qualified individual.''.
(b) Clerical Amendment.--The table of sections for part
VIII of subchapter F of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 530A. Economic Freedom Zone educational savings accounts.''.
TITLE VI--COMMUNITY ASSISTANCE AND REBUILDING
SEC. 601. NONAPPLICATION OF DAVIS-BACON.
The wage rate requirements of subchapter IV of chapter 31
of title 40, United States Code (commonly referred to as the
``Davis-Bacon Act''), shall not apply with respect to any
area designated as an Economic Freedom Zone under this
division.
SEC. 602. ECONOMIC FREEDOM ZONE CHARITABLE TAX CREDIT.
(a) In General.--Section 170 is amended by redesignating
subsection (p) as subsection (q) and by inserting after
subsection (o) the following new subsection:
``(o) Election To Treat Contributions for Economic Freedom
Zone Charities as a Credit.--
``(1) In general.--In the case of an individual, at the
election of the taxpayer, so much of the deduction allowed
under subsection (a) (determined without regard to this
subsection) which is attributable to Economic Freedom Zone
charitable contributions--
``(A) shall be allowed as a credit against the tax imposed
by this chapter for the taxable year, and
``(B) shall not be allowed as a deduction for such taxable
year under subsection (a).
Any amount allowable as a credit under this subsection shall
be treated as a credit allowed under subpart A of part IV of
subchapter A for purposes of this title.
``(2) Amount attributable to economic freedom zone
charitable contributions.--For purposes of paragraph (1)--
``(A) In general.--In any case in which the total
charitable contributions of a taxpayer for a taxable year
exceed the contribution base, the amount of Economic Freedom
Zone charitable contributions taken into account under
paragraph (1) shall be the amount which bears the same ratio
to the total charitable contributions made by the taxpayer
during such taxable year as the amount of the deduction
allowed under subsection (a) (determined without regard to
this subsection and after application of subsection (b))
bears to the total charitable contributions made by the
taxpayer for such taxable year.
``(B) Carryovers.--In the case of any contribution carried
from a preceding taxable year under subsection (d), such
amount shall be treated as attributable to an Economic
Freedom Zone charitable contribution in the amount that bears
the same ratio to the total amount carried from preceding
taxable years under subsection (d) as the amount of Economic
Freedom Zone charitable contributions not allowed as a
deduction under subsection (a) (other than by reason of this
subsection) for the preceding 5 taxable year bears to total
amount carried from preceding taxable years under subsection
(d).
``(3) Economic freedom zone charitable contribution.--The
term `Economic Freedom Zone charitable contribution' means
any contribution to a corporation, trust, or community chest
fund, or foundation described in subsection (c)(2), but only
if--
``(A) such entity is created or organized exclusively for--
``(i) religious purposes,
``(ii) educational purposes, or
``(iii) any of the following charitable purposes: providing
educational scholarships, providing shelters for homeless
individuals, or setting up or maintaining food banks,
``(B) the primary mission of such entity is serving
individuals in an Economic Freedom Zone,
``(C) the entity maintains accountability to residents of
such Economic Freedom Zone through their representation on
any governing board of the entity or any advisory board to
the entity, and
``(D) the entity is certified by the Secretary for purposes
of this subsection.
Such term shall not include any contribution made to an
entity described in the preceding sentence after the date in
which the designation of the Economic Freedom Zone serviced
by such entity lapses.
``(4) Economic freedom zone.--The term `Economic Freedom
Zone' means any area which is an Economic Freedom Zone under
title II of the Economic Freedom Zone Act.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
TITLE VII--STATE AND COMMUNITY POLICY RECOMMENDATIONS
SEC. 701. SENSE OF THE SENATE CONCERNING POLICY
RECOMMENDATIONS.
It is the sense of the Senate that State and local
governments should review and adopt the following policy
recommendations:
(1) Pension reform.--State and local governments should--
(A) implement reforms to address any fiscal shortfall in
public pension funding, including utilizing accrual
accounting methods, such as those reforms undertaken by the
private sector pension funds; and
(B) restructure and renegotiate any public pension fund
that is deemed to be insolvent or underfunded, including
adopting defined contribution retirement systems.
(2) Taxes.--State and local governments should reduce
jurisdictional tax rates below the national average in order
to help facilitate capital investment and economic growth,
particularly in combination with the provisions of this
division.
(3) Education.--State and local governments should adopt
school choice options to provide children and parents more
educational choices, particularly in impoverished areas.
(4) Communities.--State and local governments should adopt
right-to-work laws to allow more competitiveness and more
flexibility for businesses to expand.
(5) Regulations.--State and local governments should
streamline the regulatory burden on families and businesses,
including streamlining the opportunities for occupational
licensing.
(6) Abandoned structures.--State and local governments
should consider the following options to reduce or fix areas
with abandoned properties or residences:
(A) In the case of foreclosures, tax notifications should
be sent to both the lien holder (if different than the
homeowner) and the homeowner.
(B) Where State constitutions permit, property tax
abatement or credits should be provided for individuals who
purchase or invest in abandoned or dilapidated properties.
(C) Non-profit or charity demolition entities should be
permitted or encouraged to help remove abandoned properties.
(D) Government or municipality fees and penalties should be
limited, and be proportional to the outstanding tax amount
and the ability to pay.
(E) The sale of tax liens to third parties should be
reviewed, and where available, should prohibit the selling of
tax liens below a certain threshold (for example the
prohibition of the sale of tax liens to third parties under
$1,000).
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