[Congressional Record Volume 163, Number 187 (Wednesday, November 15, 2017)]
[House]
[Pages H9302-H9361]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         TAX CUTS AND JOBS ACT

  Mr. BRADY of Texas. Mr. Speaker, pursuant to House Resolution 619, I 
call up the bill (H.R. 1) to provide for reconciliation pursuant to 
title II of the concurrent resolution on the budget for fiscal year 
2018, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 619, in lieu of 
the amendment in the nature of a substitute recommended by the 
Committee on Ways and Means printed in the bill, an amendment in the 
nature of a substitute consisting of the text of Rules Committee Print 
115-39 is adopted, and the bill, as amended, is considered read.
  The text of the bill, as amended, is as follows

                                 H.R. 1

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

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Tax Cuts 
     and Jobs Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; etc.

                  TITLE I--TAX REFORM FOR INDIVIDUALS

Subtitle A--Simplification and Reform of Rates, Standard Deduction, and 
                               Exemptions

Sec. 1001. Reduction and simplification of individual income tax rates.

[[Page H9303]]

Sec. 1002. Enhancement of standard deduction.
Sec. 1003. Repeal of deduction for personal exemptions.
Sec. 1004. Maximum rate on business income of individuals.
Sec. 1005. Conforming amendments related to simplification of 
              individual income tax rates.

  Subtitle B--Simplification and Reform of Family and Individual Tax 
                                Credits

Sec. 1101. Enhancement of child tax credit and new family tax credit.
Sec. 1102. Repeal of nonrefundable credits.
Sec. 1103. Refundable credit program integrity.
Sec. 1104. Procedures to reduce improper claims of earned income 
              credit.
Sec. 1105. Certain income disallowed for purposes of the earned income 
              tax credit.

     Subtitle C--Simplification and Reform of Education Incentives

Sec. 1201. American opportunity tax credit.
Sec. 1202. Consolidation of education savings rules.
Sec. 1203. Reforms to discharge of certain student loan indebtedness.
Sec. 1204. Repeal of other provisions relating to education.
Sec. 1205. Rollovers between qualified tuition programs and qualified 
              ABLE programs.

          Subtitle D--Simplification and Reform of Deductions

Sec. 1301. Repeal of overall limitation on itemized deductions.
Sec. 1302. Mortgage interest.
Sec. 1303. Repeal of deduction for certain taxes not paid or accrued in 
              a trade or business.
Sec. 1304. Repeal of deduction for personal casualty losses.
Sec. 1305. Limitation on wagering losses.
Sec. 1306. Charitable contributions.
Sec. 1307. Repeal of deduction for tax preparation expenses.
Sec. 1308. Repeal of medical expense deduction.
Sec. 1309. Repeal of deduction for alimony payments.
Sec. 1310. Repeal of deduction for moving expenses.
Sec. 1311. Termination of deduction and exclusions for contributions to 
              medical savings accounts.
Sec. 1312. Denial of deduction for expenses attributable to the trade 
              or business of being an employee.

    Subtitle E--Simplification and Reform of Exclusions and Taxable 
                              Compensation

Sec. 1401. Limitation on exclusion for employer-provided housing.
Sec. 1402. Exclusion of gain from sale of a principal residence.
Sec. 1403. Repeal of exclusion, etc., for employee achievement awards.
Sec. 1404. Sunset of exclusion for dependent care assistance programs.
Sec. 1405. Repeal of exclusion for qualified moving expense 
              reimbursement.
Sec. 1406. Repeal of exclusion for adoption assistance programs.

 Subtitle F--Simplification and Reform of Savings, Pensions, Retirement

Sec. 1501. Repeal of special rule permitting recharacterization of Roth 
              IRA contributions as traditional IRA contributions.
Sec. 1502. Reduction in minimum age for allowable in-service 
              distributions.
Sec. 1503. Modification of rules governing hardship distributions.
Sec. 1504. Modification of rules relating to hardship withdrawals from 
              cash or deferred arrangements.
Sec. 1505. Extended rollover period for the rollover of plan loan 
              offset amounts in certain cases.
Sec. 1506. Modification of nondiscrimination rules to protect older, 
              longer service participants.

    Subtitle G--Estate, Gift, and Generation-skipping Transfer Taxes

Sec. 1601. Increase in credit against estate, gift, and generation-
              skipping transfer tax.
Sec. 1602. Repeal of estate and generation-skipping transfer taxes.

                TITLE II--ALTERNATIVE MINIMUM TAX REPEAL

Sec. 2001. Repeal of alternative minimum tax.

                     TITLE III--BUSINESS TAX REFORM

                         Subtitle A--Tax Rates

Sec. 3001. Reduction in corporate tax rate.

                       Subtitle B--Cost Recovery

Sec. 3101. Increased expensing.

                   Subtitle C--Small Business Reforms

Sec. 3201. Expansion of section 179 expensing.
Sec. 3202. Small business accounting method reform and simplification.
Sec. 3203. Small business exception from limitation on deduction of 
              business interest.
Sec. 3204. Modification of treatment of S corporation conversions to C 
              corporations.

  Subtitle D--Reform of Business-related Exclusions, Deductions, etc.

Sec. 3301. Interest.
Sec. 3302. Modification of net operating loss deduction.
Sec. 3303. Like-kind exchanges of real property.
Sec. 3304. Revision of treatment of contributions to capital.
Sec. 3305. Repeal of deduction for local lobbying expenses.
Sec. 3306. Repeal of deduction for income attributable to domestic 
              production activities.
Sec. 3307. Entertainment, etc. expenses.
Sec. 3308. Unrelated business taxable income increased by amount of 
              certain fringe benefit expenses for which deduction is 
              disallowed.
Sec. 3309. Limitation on deduction for FDIC premiums.
Sec. 3310. Repeal of rollover of publicly traded securities gain into 
              specialized small business investment companies.
Sec. 3311. Certain self-created property not treated as a capital 
              asset.
Sec. 3312. Repeal of special rule for sale or exchange of patents.
Sec. 3313. Repeal of technical termination of partnerships.
Sec. 3314. Recharacterization of certain gains in the case of 
              partnership profits interests held in connection with 
              performance of investment services.
Sec. 3315. Amortization of research and experimental expenditures.
Sec. 3316. Uniform treatment of expenses in contingency fee cases.

                 Subtitle E--Reform of Business Credits

Sec. 3401. Repeal of credit for clinical testing expenses for certain 
              drugs for rare diseases or conditions.
Sec. 3402. Repeal of employer-provided child care credit.
Sec. 3403. Repeal of rehabilitation credit.
Sec. 3404. Repeal of work opportunity tax credit.
Sec. 3405. Repeal of deduction for certain unused business credits.
Sec. 3406. Termination of new markets tax credit.
Sec. 3407. Repeal of credit for expenditures to provide access to 
              disabled individuals.
Sec. 3408. Modification of credit for portion of employer social 
              security taxes paid with respect to employee tips.

                       Subtitle F--Energy Credits

Sec. 3501. Modifications to credit for electricity produced from 
              certain renewable resources.
Sec. 3502. Modification of the energy investment tax credit.
Sec. 3503. Extension and phaseout of residential energy efficient 
              property.
Sec. 3504. Repeal of enhanced oil recovery credit.
Sec. 3505. Repeal of credit for producing oil and gas from marginal 
              wells.
Sec. 3506. Modifications of credit for production from advanced nuclear 
              power facilities.

                        Subtitle G--Bond Reforms

Sec. 3601. Termination of private activity bonds.
Sec. 3602. Repeal of advance refunding bonds.
Sec. 3603. Repeal of tax credit bonds.
Sec. 3604. No tax exempt bonds for professional stadiums.

                         Subtitle H--Insurance

Sec. 3701. Net operating losses of life insurance companies.
Sec. 3702. Repeal of small life insurance company deduction.
Sec. 3703. Surtax on life insurance company taxable income.
Sec. 3704. Adjustment for change in computing reserves.
Sec. 3705. Repeal of special rule for distributions to shareholders 
              from pre-1984 policyholders surplus account.
Sec. 3706. Modification of proration rules for property and casualty 
              insurance companies.
Sec. 3707. Modification of discounting rules for property and casualty 
              insurance companies.
Sec. 3708. Repeal of special estimated tax payments.

                        Subtitle I--Compensation

Sec. 3801. Modification of limitation on excessive employee 
              remuneration.
Sec. 3802. Excise tax on excess tax-exempt organization executive 
              compensation.
Sec. 3803. Treatment of qualified equity grants.

        TITLE IV--TAXATION OF FOREIGN INCOME AND FOREIGN PERSONS

    Subtitle A--Establishment of Participation Exemption System for 
                       Taxation of Foreign Income

Sec. 4001. Deduction for foreign-source portion of dividends received 
              by domestic corporations from specified 10-percent owned 
              foreign corporations.
Sec. 4002. Application of participation exemption to investments in 
              United States property.
Sec. 4003. Limitation on losses with respect to specified 10-percent 
              owned foreign corporations.
Sec. 4004. Treatment of deferred foreign income upon transition to 
              participation exemption system of taxation.

     Subtitle B--Modifications Related to Foreign Tax Credit System

Sec. 4101. Repeal of section 902 indirect foreign tax credits; 
              determination of section 960 credit on current year 
              basis.
Sec. 4102. Source of income from sales of inventory determined solely 
              on basis of production activities.

            Subtitle C--Modification of Subpart F Provisions

Sec. 4201. Repeal of inclusion based on withdrawal of previously 
              excluded subpart F income from qualified investment.
Sec. 4202. Repeal of treatment of foreign base company oil related 
              income as subpart F income.

[[Page H9304]]

Sec. 4203. Inflation adjustment of de minimis exception for foreign 
              base company income.
Sec. 4204. Look-thru rule for related controlled foreign corporations 
              made permanent.
Sec. 4205. Modification of stock attribution rules for determining 
              status as a controlled foreign corporation.
Sec. 4206. Elimination of requirement that corporation must be 
              controlled for 30 days before subpart F inclusions apply.

                 Subtitle D--Prevention of Base Erosion

Sec. 4301. Current year inclusion by United States shareholders with 
              foreign high returns.
Sec. 4302. Limitation on deduction of interest by domestic corporations 
              which are members of an international financial reporting 
              group.
Sec. 4303. Excise tax on certain payments from domestic corporations to 
              related foreign corporations; election to treat such 
              payments as effectively connected income.

   Subtitle E--Provisions Related to Possessions of the United States

Sec. 4401. Extension of deduction allowable with respect to income 
              attributable to domestic production activities in Puerto 
              Rico.
Sec. 4402. Extension of temporary increase in limit on cover over of 
              rum excise taxes to Puerto Rico and the Virgin Islands.
Sec. 4403. Extension of American Samoa economic development credit.

                Subtitle F--Other International Reforms

Sec. 4501. Restriction on insurance business exception to passive 
              foreign investment company rules.

                     TITLE V--EXEMPT ORGANIZATIONS

               Subtitle A--Unrelated Business Income Tax

Sec. 5001. Clarification of unrelated business income tax treatment of 
              entities treated as exempt from taxation under section 
              501(a).
Sec. 5002. Exclusion of research income limited to publicly available 
              research.

                        Subtitle B--Excise Taxes

Sec. 5101. Simplification of excise tax on private foundation 
              investment income.
Sec. 5102. Private operating foundation requirements relating to 
              operation of art museum.
Sec. 5103. Excise tax based on investment income of private colleges 
              and universities.
Sec. 5104. Exception from private foundation excess business holding 
              tax for independently-operated philanthropic business 
              holdings.

       Subtitle C--Requirements for Organizations Exempt From Tax

Sec. 5201. 501(c)(3) organizations permitted to make statements 
              relating to political campaign in ordinary course of 
              activities.
Sec. 5202. Additional reporting requirements for donor advised fund 
              sponsoring organizations.

                  TITLE I--TAX REFORM FOR INDIVIDUALS

Subtitle A--Simplification and Reform of Rates, Standard Deduction, and 
                               Exemptions

     SEC. 1001. REDUCTION AND SIMPLIFICATION OF INDIVIDUAL INCOME 
                   TAX RATES.

       (a) In General.--Section 1 is amended by striking 
     subsection (i) and by striking all that precedes subsection 
     (h) and inserting the following:

     ``SEC. 1. TAX IMPOSED.

       ``(a) In General.--There is hereby imposed on the income of 
     every individual a tax equal to the sum of--
       ``(1) 12 percent bracket.--12 percent of so much of the 
     taxable income as does not exceed the 25-percent bracket 
     threshold amount,
       ``(2) 25 percent bracket.--25 percent of so much of the 
     taxable income as exceeds the 25-percent bracket threshold 
     amount but does not exceed the 35-percent bracket threshold 
     amount, plus
       ``(3) 35 percent bracket.--35 percent of so much of taxable 
     income as exceeds the 35-percent bracket threshold amount but 
     does not exceed the 39.6 percent bracket threshold amount.
       ``(4) 39.6 percent bracket.--39.6 percent of so much of 
     taxable income as exceeds the 39.6-percent bracket threshold 
     amount.
       ``(b) Bracket Threshold Amounts.--For purposes of this 
     section--
       ``(1) 25-percent bracket threshold amount.--The term `25-
     percent bracket threshold amount' means--
       ``(A) in the case of a joint return or surviving spouse, 
     $90,000,
       ``(B) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), $67,500,
       ``(C) in the case of any other individual (other than an 
     estate or trust), an amount equal to \1/2\ of the amount in 
     effect for the taxable year under subparagraph (A), and
       ``(D) in the case of an estate or trust, $2,550.
       ``(2) 35-percent bracket threshold amount.--The term `35-
     percent bracket threshold amount' means--
       ``(A) in the case of a joint return or surviving spouse, 
     $260,000,
       ``(B) in the case of a married individual filing a separate 
     return, an amount equal to \1/2\ of the amount in effect for 
     the taxable year under subparagraph (A), and
       ``(C) in the case of any other individual (other than an 
     estate or trust), $200,000, and
       ``(D) in the case of an estate or trust, $9,150.
       ``(3) 39.6-percent bracket threshold amount.--The term 
     `39.6-percent bracket threshold amount' means--
       ``(A) in the case of a joint return or surviving spouse, 
     $1,000,000,
       ``(B) in the case of any other individual (other than an 
     estate or trust), an amount equal to \1/2\ of the amount in 
     effect for the taxable year under subparagraph (A), and
       ``(C) in the case of an estate or trust, $12,500.
       ``(c) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2018, each dollar amount in subsections (b) 
     and (e)(3) (other than any amount determined by reference to 
     such a dollar amount) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under this 
     subsection for the calendar year in which the taxable year 
     begins by substituting `2017' for `2016' in paragraph 
     (2)(A)(ii).
     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.
       ``(2) Cost-of-living adjustment.--For purposes of this 
     subsection--
       ``(A) In general.--The cost-of-living adjustment for any 
     calendar year is the percentage (if any) by which--
       ``(i) the C-CPI-U for the preceding calendar year, exceeds
       ``(ii) the normalized CPI for calendar year 2016.
       ``(B) Special rule for adjustments with a base year after 
     2016.--For purposes of any provision which provides for the 
     substitution of a year after 2016 for `2016' in subparagraph 
     (A)(ii), subparagraph (A) shall be applied by substituting 
     `C-CPI-U' for `normalized CPI' in clause (ii).
       ``(3) Normalized cpi.--For purposes of this subsection, the 
     normalized CPI for any calendar year is the product of--
       ``(A) the CPI for such calendar year, multiplied by
       ``(B) the C-CPI-U transition multiple.
       ``(4) C-CPI-U transition multiple.--For purposes of this 
     subsection, the term `C-CPI-U transition multiple' means the 
     amount obtained by dividing--
       ``(A) the C-CPI-U for calendar year 2016, by
       ``(B) the CPI for calendar year 2016.
       ``(5) C-CPI-U.--For purposes of this subsection--
       ``(A) In general.--The term `C-CPI-U' means the Chained 
     Consumer Price Index for All Urban Consumers (as published by 
     the Bureau of Labor Statistics of the Department of Labor). 
     The values of the Chained Consumer Price Index for All Urban 
     Consumers taken into account for purposes of determining the 
     cost-of-living adjustment for any calendar year under this 
     subsection shall be the latest values so published as of the 
     date on which such Bureau publishes the initial value of the 
     Chained Consumer Price Index for All Urban Consumers for the 
     month of August for the preceding calendar year.
       ``(B) Determination for calendar year.--The C-CPI-U for any 
     calendar year is the average of the C-CPI-U as of the close 
     of the 12-month period ending on August 31 of such calendar 
     year.
       ``(6) CPI.--For purposes of this subsection--
       ``(A) In general.--The term `Consumer Price Index' means 
     the last Consumer Price Index for All Urban Consumers 
     published by the Department of Labor. For purposes of the 
     preceding sentence, the revision of the Consumer Price Index 
     which is most consistent with the Consumer Price Index for 
     calendar year 1986 shall be used.
       ``(B) Determination for calendar year.--The CPI for any 
     calendar year is the average of the Consumer Price Index as 
     of the close of the 12-month period ending on August 31 of 
     such calendar year.
       ``(d) Special Rules for Certain Children With Unearned 
     Income.--
       ``(1) In general.--In the case of any child to whom this 
     subsection applies for any taxable year--
       ``(A) the 25-percent bracket threshold amount shall not be 
     more than the taxable income of such child for the taxable 
     year reduced by the net unearned income of such child, and
       ``(B) the 35-percent bracket threshold amount shall not be 
     more than the sum of--
       ``(i) the taxable income of such child for the taxable year 
     reduced by the net unearned income of such child, plus
       ``(ii) the dollar amount in effect under subsection 
     (b)(2)(D) for the taxable year.
       ``(C) the 39.6-percent bracket threshold amount shall not 
     be more than the sum of--
       ``(i) the taxable income of such child for the taxable year 
     reduced by the net unearned income of such child, plus
       ``(ii) the dollar amount in effect under subsection 
     (b)(3)(C).
       ``(2) Child to whom subsection applies.--This subsection 
     shall apply to any child for any taxable year if--
       ``(A) such child--
       ``(i) has not attained age 18 before the close of the 
     taxable year, or
       ``(ii) has attained age 18 before the close of the taxable 
     year and is described in paragraph (3),
       ``(B) either parent of such child is alive at the close of 
     the taxable year, and
       ``(C) such child does not file a joint return for the 
     taxable year.
       ``(3) Certain children whose earned income does not exceed 
     one-half of individual's support.--A child is described in 
     this paragraph if--
       ``(A) such child--
       ``(i) has not attained age 19 before the close of the 
     taxable year, or
       ``(ii) is a student (within the meaning of section 
     7706(f)(2)) who has not attained age 24 before the close of 
     the taxable year, and

[[Page H9305]]

       ``(B) such child's earned income (as defined in section 
     911(d)(2)) for such taxable year does not exceed one-half of 
     the amount of the individual's support (within the meaning of 
     section 7706(c)(1)(D) after the application of section 
     7706(f)(5) (without regard to subparagraph (A) thereof)) for 
     such taxable year.
       ``(4) Net unearned income.--For purposes of this 
     subsection--
       ``(A) In general.--The term `net unearned income' means the 
     excess of--
       ``(i) the portion of the adjusted gross income for the 
     taxable year which is not attributable to earned income (as 
     defined in section 911(d)(2)), over
       ``(ii) the sum of--

       ``(I) the amount in effect for the taxable year under 
     section 63(c)(2)(A) (relating to limitation on standard 
     deduction in the case of certain dependents), plus
       ``(II) The greater of the amount described in subclause (I) 
     or, if the child itemizes his deductions for the taxable 
     year, the amount of the itemized deductions allowed by this 
     chapter for the taxable year which are directly connected 
     with the production of the portion of adjusted gross income 
     referred to in clause (i).

       ``(B) Limitation based on taxable income.--The amount of 
     the net unearned income for any taxable year shall not exceed 
     the individual's taxable income for such taxable year.
       ``(e) Phaseout of 12-percent Rate.--
       ``(1) In general.--The amount of tax imposed by this 
     section (determined without regard to this subsection) shall 
     be increased by 6 percent of the excess (if any) of--
       ``(A) adjusted gross income, over
       ``(B) the applicable dollar amount.
       ``(2) Limitation.--The increase determined under paragraph 
     (1) with respect to any taxpayer for any taxable year shall 
     not exceed 27.6 percent of the lesser of--
       ``(A) the taxpayer's taxable income for such taxable year, 
     or
       ``(B) the 25-percent bracket threshold amount in effect 
     with respect to the taxpayer for such taxable year.
       ``(3) Applicable dollar amount.--For purposes of this 
     subsection, the term `applicable dollar amount' means--
       ``(A) in the case of a joint return or a surviving spouse, 
     $1,200,000,
       ``(B) in the case of a married individual filing a separate 
     return, an amount equal to \1/2\ of the amount in effect for 
     the taxable year under subparagraph (A), and
       ``(C) in the case of any other individual, $1,000,000.
       ``(4) Estates and trusts.--Paragraph (1) shall not apply in 
     the case of an estate or trust.''.
       (b) Application of Current Income Tax Brackets to Capital 
     Gains Brackets.--
       (1) In general.--
       (A) 0-percent capital gains bracket.--Section 1(h)(1) is 
     amended by striking ``which would (without regard to this 
     paragraph) be taxed at a rate below 25 percent'' in 
     subparagraph (B)(i) and inserting ``below the 15-percent rate 
     threshold''.
       (B) 15-percent capital gains bracket.--Section 
     1(h)(1)(C)(ii)(I) is amended by striking ``which would 
     (without regard to this paragraph) be taxed at a rate below 
     39.6 percent'' and inserting ``below the 20-percent rate 
     threshold''.
       (2) Rate thresholds defined.--Section 1(h) is amended by 
     adding at the end the following new paragraph:
       ``(12) Rate thresholds defined.--For purposes of this 
     subsection--
       ``(A) 15-percent rate threshold.--The 15-percent rate 
     threshold shall be--
       ``(i) in the case of a joint return or surviving spouse, 
     $77,200 (\1/2\ such amount in the case of a married 
     individual filing a separate return),
       ``(ii) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), $51,700,
       ``(iii) in the case of any other individual (other than an 
     estate or trust), an amount equal to \1/2\ of the amount in 
     effect for the taxable year under clause (i), and
       ``(iv) in the case of an estate or trust, $2,600.
       ``(B) 20-percent rate threshold.--The 20-percent rate 
     threshold shall be--
       ``(i) in the case of a joint return or surviving spouse, 
     $479,000 (\1/2\ such amount in the case of a married 
     individual filing a separate return),
       ``(ii) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), $452,400,
       ``(iii) in the case of any other individual (other than an 
     estate or trust), $425,800, and
       ``(iv) in the case of an estate or trust, $12,700.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2018, each of the dollar amounts in 
     subparagraphs (A) and (B) shall be increased by an amount 
     equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     subsection (c)(2)(A) for the calendar year in which the 
     taxable year begins, determined by substituting `calendar 
     year 2017' for `calendar year 2016' in clause (ii) 
     thereof.''.
       (c) Application of Section 15.--
       (1) In general.--Subsection (a) of section 15 is amended by 
     striking ``by this chapter'' and inserting ``by section 11 
     (or by reference to any such rates)''.
       (2) Conforming amendments.--
       (A) Section 15 is amended by striking subsections (d) and 
     (f) and by redesignating subsection (e) as subsection (d).
       (B) Section 15(d), as redesignated by subparagraph (A), is 
     amended by striking ``section 1 or 11(b)'' and inserting 
     ``section 11(b)''.
       (C) Section 6013(c) is amended by striking ``sections 15, 
     443, and 7851(a)(1)(A)'' and inserting ``sections 443 and 
     7851(a)(1)(A)''.
       (3) Application to this act.--Section 15 of the Internal 
     Revenue Code of 1986 shall not apply to any change in a rate 
     of tax imposed by chapter 1 of such Code which occurs by 
     reason of any amendment made by this Act (other than the 
     amendments made by section 3001).
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2017.
       (2) Subsection (c).--The amendments made by subsection (c) 
     shall take effect on the date of the enactment of this Act.

     SEC. 1002. ENHANCEMENT OF STANDARD DEDUCTION.

       (a) Increase in Standard Deduction.--Section 63(c) is 
     amended to read as follows:
       ``(c) Standard Deduction.--For purposes of this subtitle--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `standard deduction' means--
       ``(A) $24,400, in the case of a joint return (or a 
     surviving spouse (as defined in section 2(a)),
       ``(B) three-quarters of the amount in effect under 
     subparagraph (A) for the taxable year, in the case of the 
     head of a household (as defined in section 2(b)), and
       ``(C) one-half of the amount in effect under subparagraph 
     (A) for the taxable year, in any other case.
       ``(2) Limitation on standard deduction in the case of 
     certain dependents.--In the case of an individual who is a 
     dependent of another taxpayer for a taxable year beginning in 
     the calendar year in which the individual's taxable year 
     begins, the standard deduction applicable to such individual 
     for such individual's taxable year shall not exceed the 
     greater of--
       ``(A) $500, or
       ``(B) the sum of $250 and such individual's earned income 
     (within the means of section 32).
       ``(3) Certain individuals, etc., not eligible for standard 
     deduction.--In the case of--
       ``(A) a married individual filing a separate return where 
     either spouse itemizes deductions,
       ``(B) a nonresident alien individual,
       ``(C) an individual making a return under section 443(a)(1) 
     for a period of less than 12 months on account of a change in 
     his annual accounting period, or
       ``(D) an estate or trust, common trust fund, or 
     partnership,
     the standard deduction shall be zero.
       ``(4) Unmarried individual.--For purposes of this section, 
     the term `unmarried individual' means any individual who--
       ``(A) is not married as of the close of the taxable year 
     (as determined by applying section 7703),
       ``(B) is not a surviving spouse (as defined in section 
     2(a)) for the taxable year, and
       ``(C) is not a dependent of another taxpayer for a taxable 
     year beginning in the calendar year in which the individual's 
     taxable year begins.
       ``(5) Inflation adjustments.--
       ``(A) Standard deduction amount.--In the case of any 
     taxable year beginning after 2019, the dollar amount in 
     paragraph (1)(A) shall be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2018' 
     for `calendar year 2016' in clause (ii) thereof.
       ``(B) Limitation amount in case of certain dependents.--In 
     the case of any taxable year beginning after 2017, each of 
     the dollar amounts in paragraph (2) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii)(I) in the case of the dollar amount in paragraph 
     (2)(A), under section 1(c)(2)(A) for the calendar year in 
     which the taxable year begins determined by substituting 
     `calendar year 1987' for `calendar year 2016' in clause (ii) 
     thereof, and
       ``(II) in the case of the dollar amount in paragraph 
     (2)(B), under section 1(c)(2)(A) for the calendar year in 
     which the taxable year begins determined by substituting 
     `calendar year 1997' for `calendar year 2016' in clause (ii) 
     thereof.
     If any increase determined under this paragraph is not a 
     multiple of $100, such increase shall be rounded to the next 
     lowest multiple of $100.''.
       (b) Conforming Amendments.--
       (1) Section 63(b) is amended by striking ``, minus--'' and 
     all that follows and inserting ``minus the standard 
     deduction''.
       (2) Section 63 is amended by striking subsections (f) and 
     (g).
       (3) Section 1398(c) is amended--
       (A) by striking ``Basic'' in the heading thereof,
       (B) by striking ``Basic standard'' in the heading of 
     paragraph (3) and inserting ``Standard'', and
       (C) by striking ``basic'' in paragraph (3).
       (4) Section 3402(m)(3) is amended by striking ``(including 
     the additional standard deduction under section 63(c)(3) for 
     the aged and blind)''.
       (5) Section 6014(b)(4) is amended by striking ``section 
     63(c)(5)'' and inserting ``section 63(c)(2)''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1003. REPEAL OF DEDUCTION FOR PERSONAL EXEMPTIONS.

       (a) In General.--Part V of subchapter B of chapter 1 is 
     hereby repealed.
       (b) Definition of Dependent Retained.--Section 152, prior 
     to repeal by subsection (a), is hereby redesignated as 
     section 7706 and moved to the end of chapter 79.
       (c) Application to Estates and Trusts.--Subsection (b) of 
     section 642 is amended--
       (1) by striking paragraph (2)(C),
       (2) by striking paragraph (3), and
       (3) by striking ``Deduction for Personal Exemption'' in the 
     heading thereof and inserting ``Basic Deduction''.

[[Page H9306]]

       (d) Application to Nonresident Aliens.--Section 873(b) is 
     amended by striking paragraph (3).
       (e) Modification of Wage Withholding Rules.--
       (1) In general.--Section 3402(a) is amended by striking 
     paragraph (2).
       (2) Conforming amendment.--Section 3402(a) is amended--
       (A) by redesignating subparagraphs (A) and (B) of paragraph 
     (1) as paragraphs (1) and (2) and moving such redesignated 
     paragraphs 2 ems to the left, and
       (B) by striking all that precedes ``otherwise provided in 
     this section'' and inserting the following:
       ``(a) Requirement of Withholding.--Except as''.
       (3) Number of exemptions.--Section 3402(f)(1) is amended--
       (A) in subparagraph (A), by striking ``an individual 
     described in section 151(d)(2)'' and inserting ``a dependent 
     of any other taxpayer'', and
       (B) in subparagraph (C), by striking ``with respect to 
     whom, on the basis of facts existing at the beginning of such 
     day, there may reasonably be expected to be allowable an 
     exemption under section 151(c)'' and inserting ``who, on the 
     basis of facts existing at the beginning of such day, is 
     reasonably expected to be a dependent of the employee''.
       (f) Modification of Return Requirement.--
       (1) In general.--Paragraph (1) of section 6012(a) is 
     amended to read as follows:
       ``(1) Every individual who has gross income for the taxable 
     year, except that a return shall not be required of--
       ``(A) an individual who is not married (determined by 
     applying section 7703) and who has gross income for the 
     taxable year which does not exceed the standard deduction 
     applicable to such individual for such taxable year under 
     section 63, or
       ``(B) an individual entitled to make a joint return if--
       ``(i) the gross income of such individual, when combined 
     with the gross income of such individual's spouse, for the 
     taxable year does not exceed the standard deduction which 
     would be applicable to the taxpayer for such taxable year 
     under section 63 if such individual and such individual's 
     spouse made a joint return,
       ``(ii) such individual and such individual's spouse have 
     the same household as their home at the close of the taxable 
     year,
       ``(iii) such individual's spouse does not make a separate 
     return, and
       ``(iv) neither such individual nor such individual's spouse 
     is an individual described in section 63(c)(2) who has income 
     (other than earned income) in excess of the amount in effect 
     under section 63(c)(2)(A).''.
       (2) Bankruptcy estates.--Paragraph (8) of section 6012(a) 
     is amended by striking ``the sum of the exemption amount plus 
     the basic standard deduction under section 63(c)(2)(D)'' and 
     inserting ``the standard deduction in effect under section 
     63(c)(1)(B)''.
       (g) Conforming Amendments.--
       (1) Section 2(a)(1)(B) is amended by striking ``a 
     dependent'' and all that follows through ``section 151'' and 
     inserting ``a dependent who (within the meaning of section 
     7706, determined without regard to subsections (b)(1), (b)(2) 
     and (d)(1)(B) thereof) is a son, stepson, daughter, or 
     stepdaughter of the taxpayer''.
       (2) Section 36B(b)(2)(A) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (3) Section 36B(b)(3)(B) is amended by striking ``unless a 
     deduction is allowed under section 151 for the taxable year 
     with respect to a dependent'' in the flush matter at the end 
     and inserting ``unless the taxpayer has a dependent for the 
     taxable year''.
       (4) Section 36B(c)(1)(D) is amended by striking ``with 
     respect to whom a deduction under section 151 is allowable to 
     another taxpayer'' and inserting ``who is a dependent of 
     another taxpayer''.
       (5) Section 36B(d)(1) is amended by striking ``equal to the 
     number of individuals for whom the taxpayer is allowed a 
     deduction under section 151 (relating to allowance of 
     deduction for personal exemptions) for the taxable year'' and 
     inserting ``the sum of 1 (2 in the case of a joint return) 
     plus the number of the taxpayer's dependents for the taxable 
     year''.
       (6) Section 36B(e)(1) is amended by striking ``1 or more 
     individuals for whom a taxpayer is allowed a deduction under 
     section 151 (relating to allowance of deduction for personal 
     exemptions) for the taxable year (including the taxpayer or 
     his spouse)'' and inserting ``1 or more of the taxpayer, the 
     taxpayer's spouse, or any dependent of the taxpayer''.
       (7) Section 42(i)(3)(D)(ii)(I) is amended--
       (A) by striking ``section 152'' and inserting ``section 
     7706'', and
       (B) by striking the period at the end and inserting a 
     comma.
       (8) Section 72(t)(2)(D)(i)(III) is amended by striking 
     ``section 152'' and inserting ``section 7706''.
       (9) Section 72(t)(7)(A)(iii) is amended by striking 
     ``section 152(f)(1)'' and inserting ``section 7706(f)(1)''.
       (10) Section 105(b) is amended--
       (A) by striking ``as defined in section 152'' and inserting 
     ``as defined in section 7706'',
       (B) by striking ``section 152(f)(1)'' and inserting 
     ``section 7706(f)(1)'' and
       (C) by striking ``section 152(e)'' and inserting ``section 
     7706(e)''.
       (11) Section 105(c)(1) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (12) Section 125(e)(1)(D) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (13) Section 132(h)(2)(B) is amended--
       (A) by striking ``section 152(f)(1)'' and inserting 
     ``section 7706(f)(1)'', and
       (B) by striking ``section 152(e)'' and inserting ``section 
     7706(e)''.
       (14) Section 139D(c)(5) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (15) Section 162(l)(1)(D) is amended by striking ``section 
     152(f)(1)'' and inserting ``section 7706(f)(1)''.
       (16) Section 170(g)(1) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (17) Section 170(g)(3) is amended by striking ``section 
     152(d)(2)'' and inserting ``section 7706(d)(2)''.
       (18) Section 172(d) is amended by striking paragraph (3).
       (19) Section 220(b)(6) is amended by striking ``with 
     respect to whom a deduction under section 151 is allowable 
     to'' and inserting ``who is a dependent of''.
       (20) Section 220(d)(2)(A) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (21) Section 223(b)(6) is amended by striking ``with 
     respect to whom a deduction under section 151 is allowable 
     to'' and inserting ``who is a dependent of''.
       (22) Section 223(d)(2)(A) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (23) Section 401(h) is amended by striking ``section 
     152(f)(1)'' in the last sentence and inserting ``section 
     7706(f)(1)''.
       (24) Section 402(l)(4)(D) is amended by striking ``section 
     152'' and inserting ``section 7706''.
       (25) Section 409A(a)(2)(B)(ii)(I) is amended by striking 
     ``section 152(a)'' and inserting ``section 7706(a)''.
       (26) Section 501(c)(9) is amended by striking ``section 
     152(f)(1)'' and inserting ``section 7706(f)(1)''.
       (27) Section 529(e)(2)(B) is amended by striking ``section 
     152(d)(2)'' and inserting ``section 7706(d)(2)''.
       (28) Section 703(a)(2) is amended by striking subparagraph 
     (A) and by redesignating subparagraphs (B) through (F) as 
     subparagraphs (A) through (E), respectively.
       (29) Section 874 is amended by striking subsection (b) and 
     by redesignating subsection (c) as subsection (b).
       (30) Section 891 is amended by striking ``under section 151 
     and''.
       (31) Section 904(b) is amended by striking paragraph (1).
       (32) Section 931(b)(1) is amended by striking ``(other than 
     the deduction under section 151, relating to personal 
     exemptions)''.
       (33) Section 933 is amended--
       (A) by striking ``(other than the deduction under section 
     151, relating to personal exemptions)'' in paragraph (1), and
       (B) by striking ``(other than the deduction for personal 
     exemptions under section 151)'' in paragraph (2).
       (34) Section 1212(b)(2)(B)(ii) is amended to read as 
     follows:
       ``(ii) in the case of an estate or trust, the deduction 
     allowed for such year under section 642(b).''.
       (35) Section 1361(c)(1)(C) is amended by striking ``section 
     152(f)(1)(C)'' and inserting ``section 7706(f)(1)(C)''.
       (36) Section 1402(a) is amended by striking paragraph (7).
       (37) Section 2032A(c)(7)(D) is amended by striking 
     ``section 152(f)(2)'' and inserting ``section 7706(f)(2)''.
       (38) Section 3402(m)(1) is amended by striking ``other than 
     the deductions referred to in section 151 and''.
       (39) Section 3402(r)(2) is amended by striking ``the sum 
     of--'' and all that follows and inserting ``the standard 
     deduction in effect under section 63(c)(1)(B).''.
       (40) Section 5000A(b)(3)(A) is amended by striking 
     ``section 152'' and inserting ``section 7706''.
       (41) Section 5000A(c)(4)(A) is amended by striking ``the 
     number of individuals for whom the taxpayer is allowed a 
     deduction under section 151 (relating to allowance of 
     deduction for personal exemptions) for the taxable year'' and 
     inserting ``the sum of 1 (2 in the case of a joint return) 
     plus the number of the taxpayer's dependents for the taxable 
     year''.
       (42) Section 6013(b)(3)(A) is amended--
       (A) by striking ``had less than the exemption amount of 
     gross income'' in clause (ii) and inserting ``had no gross 
     income'',
       (B) by striking ``had gross income of the exemption amount 
     or more'' in clause (iii) and inserting ``had any gross 
     income'', and
       (C) by striking the flush language following clause (iii).
       (43) Section 6103(l)(21)(A)(iii) is amended to read as 
     follows:
       ``(iii) the number of the taxpayer's dependents,''.
       (44) Section 6213(g)(2) is amended by striking subparagraph 
     (H).
       (45) Section 6334(d)(2) is amended to read as follows:
       ``(2) Exempt amount.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `exempt amount' means an amount equal to--
       ``(i) the standard deduction, divided by
       ``(ii) 52.
       ``(B) Verified statement.--Unless the taxpayer submits to 
     the Secretary a written and properly verified statement 
     specifying the facts necessary to determine the proper amount 
     under subparagraph (A), subparagraph (A) shall be applied as 
     if the taxpayer were a married individual filing a separate 
     return with no dependents.''.
       (46) Section 7702B(f)(2)(C)(iii) is amended by striking 
     ``section 152(d)(2)'' and inserting ``section 7706(d)(2)''.
       (47) Section 7703(a) is amended by striking ``part V of 
     subchapter B of chapter 1 and''.
       (48) Section 7703(b)(1) is amended by striking ``section 
     152(f)(1)'' and all that follows and inserting ``section 
     7706(f)(1),''.
       (49) Section 7706(a), as redesignated by this section, is 
     amended by striking ``this subtitle'' and inserting 
     ``subtitle A''.
       (50)(A) Section 7706(d)(1)(B), as redesignated by this 
     section, is amended by striking ``the exemption amount (as 
     defined in section 151(d))'' and inserting ``$4,150''.

[[Page H9307]]

       (B) Section 7706(d), as redesignated by this section, is 
     amended by adding at the end the following new paragraph:
       ``(6) Inflation adjustment.--In the case of any calendar 
     year beginning after 2018, the $4,150 amount in paragraph 
     (1)(B) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for such calendar year, determined by 
     substituting `calendar year 2017' for `calendar year 2016' in 
     clause (ii) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.''.
       (51) The table of sections for chapter 79 is amended by 
     adding at the end the following new item:

``Sec. 7706. Dependent defined.''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1004. MAXIMUM RATE ON BUSINESS INCOME OF INDIVIDUALS.

       (a) In General.--Part I of subchapter A of chapter 1 is 
     amended by inserting after section 3 the following new 
     section:

     ``SEC. 4. 25 PERCENT MAXIMUM RATE ON BUSINESS INCOME OF 
                   INDIVIDUALS.

       ``(a) Reduction in Tax to Achieve 25 Percent Maximum 
     Rate.--The tax imposed by section 1 shall be reduced by the 
     sum of--
       ``(1) 10 percent of the lesser of--
       ``(A) qualified business income, or
       ``(B) the excess (if any) of--
       ``(i) taxable income reduced by net capital gain (as 
     defined in section 1(h)(11)(A)), over
       ``(ii) the maximum dollar amount for the 25-percent rate 
     bracket which applies to the taxpayer under section 1 for the 
     taxable year, and
       ``(2) 4.6 percent of the excess (if any) of--
       ``(A) the lesser of--
       ``(i) qualified business income, or
       ``(ii) the excess (if any) determined under paragraph 
     (1)(B), over
       ``(B) the excess of--
       ``(i) the maximum dollar amount for the 35-percent rate 
     bracket which applies to the taxpayer under section 1 for the 
     taxable year, over
       ``(ii) the maximum dollar amount for the 25-percent rate 
     bracket which applies to the taxpayer under section 1 for the 
     taxable year.
       ``(b) Qualified Business Income.--For purposes of this 
     section, the term `qualified business income' means the 
     excess (if any) of--
       ``(1) the sum of--
       ``(A) 100 percent of any net business income derived from 
     any passive business activity, plus
       ``(B) the capital percentage of any net business income 
     derived from any active business activity, over
       ``(2) the sum of--
       ``(A) 100 percent of any net business loss derived from any 
     passive business activity,
       ``(B) except as provided in subsection (e)(3)(A), 30 
     percent of any net business loss derived from any active 
     business activity, plus
       ``(C) any carryover business loss determined for the 
     preceding taxable year.
       ``(c) Determination of Net Business Income or Loss.--For 
     purposes of this section--
       ``(1) In general.--Net business income or loss shall be 
     determined with respect to any business activity by 
     appropriately netting items of income, gain, deduction, and 
     loss with respect to such business activity.
       ``(2) Wages, etc.--Any wages (as defined in section 3401), 
     payments described in subsection (a) or (c) of section 707, 
     or directors' fees received by the taxpayer which are 
     properly attributable to any business activity shall be taken 
     into account under paragraph (1) as an item of income with 
     respect to such business activity.
       ``(3) Exception for certain investment-related items.--
     There shall not be taken into account under paragraph (1)--
       ``(A) any item of short-term capital gain, short-term 
     capital loss, long-term capital gain, or long-term capital 
     loss,
       ``(B) any dividend, income equivalent to a dividend, or 
     payment in lieu of dividends described in section 
     954(c)(1)(G),
       ``(C) any interest income other than interest income which 
     is properly allocable to a trade or business,
       ``(D) any item of gain or loss described in subparagraph 
     (C) or (D) of section 954(c)(1) (applied by substituting 
     `business activity' for `controlled foreign corporation'),
       ``(E) any item of income, gain, deduction, or loss taken 
     into account under section 954(c)(1)(F) (determined without 
     regard to clause (ii) thereof and other than items 
     attributable to notional principal contracts entered into in 
     transactions qualifying under section 1221(a)(7)),
       ``(F) any amount received from an annuity which is not 
     received in connection with the trade or business of the 
     business activity, and
       ``(G) any item of deduction or loss properly allocable to 
     an amount described in any of the preceding subparagraphs.
       ``(4) Application of restrictions applicable to determining 
     taxable income.--Net business income or loss shall be 
     appropriately adjusted so as only to take into account any 
     amount of income, gain, deduction, or loss to the extent such 
     amount affects the determination of taxable income for the 
     taxable year.
       ``(5) Carryover business loss.--For purposes of subsection 
     (b)(2)(C), the carryover business loss determined for any 
     taxable year is the excess (if any) of the sum described in 
     subsection (b)(2) over the sum described in subsection (b)(1) 
     for such taxable year.
       ``(d) Passive and Active Business Activity.--For purposes 
     of this section--
       ``(1) Passive business activity.--The term `passive 
     business activity' means any passive activity as defined in 
     section 469(c) determined without regard to paragraphs (3) 
     and (6)(B) thereof.
       ``(2) Active business activity.--The term `active business 
     activity' means any business activity which is not a passive 
     business activity.
       ``(3) Business activity.--The term `business activity' 
     means any activity (within the meaning of section 469) which 
     involves the conduct of any trade or business.
       ``(e) Capital Percentage.--For purposes of this section--
       ``(1) In general.--Except as otherwise provided in this 
     section, the term `capital percentage' means 30 percent.
       ``(2) Increased percentage for capital-intensive business 
     activities.--In the case of a taxpayer who elects the 
     application of this paragraph with respect to any active 
     business activity (other than a specified service activity), 
     the capital percentage shall be equal to the applicable 
     percentage (as defined in subsection (f)) for each taxable 
     year with respect to which such election applies. Any 
     election made under this paragraph shall apply to the taxable 
     year for which such election is made and each of the 4 
     subsequent taxable years. Such election shall be made not 
     later than the due date (including extensions) for the return 
     of tax for the taxable year for which such election is made, 
     and, once made, may not be revoked.
       ``(3) Treatment of specified service activities.--
       ``(A) In general.--In the case of any active business 
     activity which is a specified service activity--
       ``(i) the capital percentage shall be 0 percent, and
       ``(ii) subsection (b)(2)(B) shall be applied by 
     substituting `0 percent' for `30 percent'.
       ``(B) Exception for capital-intensive specified service 
     activities.--If--
       ``(i) the taxpayer elects the application of this 
     subparagraph with respect to such activity for any taxable 
     year, and
       ``(ii) the applicable percentage (as defined in subsection 
     (f)) with respect to such activity for such taxable year is 
     at least 10 percent,
     then subparagraph (A) shall not apply and the capital 
     percentage with respect to such activity shall be equal to 
     such applicable percentage.
       ``(C) Specified service activity.--The term `specified 
     service activity' means any activity involving the 
     performance of services described in section 1202(e)(3)(A), 
     including investing, trading, or dealing in securities (as 
     defined in section 475(c)(2)), partnership interests, or 
     commodities (as defined in section 475(e)(2)).
       ``(4) Reduction in capital percentage in certain cases.--
     The capital percentage (determined after the application of 
     paragraphs (2) and (3)) with respect to any active business 
     activity shall not exceed 1 minus the quotient (not greater 
     than 1) of--
       ``(A) any amounts described in subsection (c)(2) which are 
     taken into account in determining the net business income 
     derived from such activity, divided by
       ``(B) such net business income.
       ``(f) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable percentage' means, 
     with respect to any active business activity for any taxable 
     year, the quotient (not greater than 1) of--
       ``(A) the specified return on capital with respect to such 
     activity for such taxable year, divided by
       ``(B) the taxpayer's net business income derived from such 
     activity for such taxable year.
       ``(2) Specified return on capital.--The term `specified 
     return on capital' means, with respect to any active business 
     activity referred to in paragraph (1), the excess of--
       ``(A) the product of--
       ``(i) the deemed rate of return for the taxable year, 
     multiplied by
       ``(ii) the asset balance with respect to such activity for 
     such taxable year, over
       ``(B) an amount equal to the interest which is paid or 
     accrued, and for which a deduction is allowed under this 
     chapter, with respect to such activity for such taxable year.
       ``(3) Deemed rate of return.--The term `deemed rate of 
     return' means, with respect to any taxable year, the Federal 
     short-term rate (determined under section 1274(d) for the 
     month in which or with which such taxable year ends) plus 7 
     percentage points.
       ``(4) Asset balance.--
       ``(A) In general.--The asset balance with respect to any 
     active business activity referred to in paragraph (1) for any 
     taxable year equals the taxpayer's adjusted basis of any 
     property described in section 1221(a)(2) which is used in 
     connection with such activity as of the end of the taxable 
     year (determined without regard to sections 168(k) and 179).
       ``(B) Application to activities carried on through 
     partnerships and s corporations.--In the case of any active 
     business activity carried on through a partnership or S 
     corporation, the taxpayer shall take into account such 
     taxpayer's distributive or pro rata share (as the case may 
     be) of the asset balance with respect to such activity as 
     determined with respect to such partnership or S corporation 
     under subparagraph (A) (applied by substituting `the 
     partnership's or S corporation's adjusted basis' for `the 
     taxpayer's adjusted basis').
       ``(g) Reduced Rate for Small Businesses With Net Active 
     Business Income.--
       ``(1) In general.--The tax imposed by section 1 shall be 
     reduced by 3 percent of the excess (if any) of--
       ``(A) the least of--
       ``(i) qualified active business income,
       ``(ii) taxable income reduced by net capital gain (as 
     defined in section 1(h)(11)(A)), or
       ``(iii) the 9-percent bracket threshold amount, over
       ``(B) the excess (if any) of taxable income over the 
     applicable threshold amount.

[[Page H9308]]

       ``(2) Phase-in of rate reduction.--In the case of any 
     taxable year beginning before January 1, 2022, paragraph (1) 
     shall be applied by substituting for `3 percent'--
       ``(A) in the case of any taxable year beginning after 
     December 31, 2017, and before January 1, 2020, `1 percent', 
     and
       ``(B) in the case of any taxable year beginning after 
     December 31, 2019, and before January 1, 2022, `2 percent'.
       ``(3) Qualified active business income.--For purposes of 
     this subsection, the term `qualified active business income' 
     means the excess (if any) of--
       ``(A) any net business income derived from any active 
     business activity, over
       ``(B) any net business loss derived from any active 
     business activity.
       ``(4) 9-percent bracket threshold amount.--For purposes of 
     this subsection, the term `9-percent bracket threshold 
     amount' means--
       ``(A) in the case of a joint return or surviving spouse, 
     $75,000,
       ``(B) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), \3/4\ of the amount 
     in effect for the taxable year under subparagraph (A), and
       ``(C) in the case of any other individual, \1/2\ of the 
     amount in effect for the taxable year under subparagraph (A).
       ``(5) Applicable threshold amount.--For purposes of this 
     subsection, the term `applicable threshold amount' means--
       ``(A) in the case of a joint return or surviving spouse, 
     $150,000,
       ``(B) in the case of an individual who is the head of a 
     household (as defined in section 2(b)), \3/4\ of the amount 
     in effect for the taxable year under subparagraph (A), and
       ``(C) in the case of any other individual, \1/2\ of the 
     amount in effect for the taxable year under subparagraph (A).
       ``(6) Estates and trusts.--Paragraph (1) shall not apply to 
     any estate or trust.
       ``(7) Inflation adjustment.--In the case of any taxable 
     year beginning after 2018, the dollar amounts in paragraphs 
     (4)(A) and (5)(A) shall each be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     subsection (c)(2)(A) for the calendar year in which the 
     taxable year begins, determined by substituting `calendar 
     year 2017' for `calendar year 2016' in clause (ii) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $100, such increase shall be rounded to the 
     next lowest multiple of $100.
       ``(h) Regulations.--The Secretary may issue such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this section, 
     including regulations or other guidance--
       ``(1) which ensures that no amount is taken into account 
     under subsection (f)(4) with respect to more than one 
     activity, and
       ``(2) which treats all specified service activities of the 
     taxpayer as a single business activity for purposes of this 
     section to the extent that such activities would be treated 
     as a single employer under subsection (a) or (b) of section 
     52 or subsection (m) or (o) of section 414.
       ``(i) References.--Any reference in this title to section 1 
     shall be treated as including a reference to this section 
     unless the context of such reference clearly indicates 
     otherwise.''.
       (b) 25 Percent Rate for Certain Dividends of Real Estate 
     Investment Trusts and Cooperatives.--Section 1(h), as amended 
     by the preceding provisions of this Act, is amended by adding 
     at the end the following new paragraph:
       ``(13) 25 percent rate for certain dividends of real estate 
     investment trusts and cooperatives.--
       ``(A) In general.--For purposes of this subsection, net 
     capital gain (as defined in paragraph (11)) and unrecaptured 
     section 1250 gain (as defined in paragraph (6)) shall each be 
     increased by specified dividend income.
       ``(B) Specified dividend income.--For purposes of this 
     paragraph, the term `specified dividend income' means--
       ``(i) in the case of any dividend received from a real 
     estate investment trust, the portion of such dividend which 
     is neither--

       ``(I) a capital gain dividend (as defined in section 
     852(b)(3)), nor
       ``(II) taken into account in determining qualified dividend 
     income (as defined in paragraph (11)), and

       ``(ii) any dividend which is includible in gross income and 
     which is received from an organization or corporation 
     described in section 501(c)(12) or 1381(a).''.
       (c) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 1 is amended by inserting after 
     the item relating to section 3 the following new item:

``Sec. 4. 25 percent maximum rate on business income of individuals.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
       (e) Transition Rule.--In the case of any taxable year which 
     includes December 31, 2017, the amendment made by subsection 
     (a) shall apply with respect to such taxable year adjusted--
       (1) so as to apply with respect to the rates of tax in 
     effect under section 1 of the Internal Revenue Code of 1986 
     with respect to such taxable year (and so as to achieve a 25 
     percent effective rate of tax on the business income 
     (determined without regard to paragraph (2)) in the same 
     manner as such amendment applies to taxable years beginning 
     after such date with respect to the rates of tax in effect 
     for such years), and
       (2) by reducing the amount of the reduction in tax (as 
     otherwise determined under paragraph (1)) by the amount which 
     bears the same proportion to the amount of such reduction as 
     the number of days in the taxable year which are before 
     January 1, 2018, bears to the number of days in the entire 
     taxable year.

     SEC. 1005. CONFORMING AMENDMENTS RELATED TO SIMPLIFICATION OF 
                   INDIVIDUAL INCOME TAX RATES.

       (a) Amendments Related to Modification of Inflation 
     Adjustment.--
       (1) Section 32(b)(2)(B)(ii)(II) is amended by striking 
     ``section 1(f)(3) for the calendar year in which the taxable 
     year begins determined by substituting `calendar year 2008' 
     for `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) for the calendar year in which 
     the taxable year begins determined by substituting `calendar 
     year 2008' for `calendar year 2016' in clause (ii) thereof''.
       (2) Section 32(j)(1)(B) is amended--
       (A) in the matter preceding clause (i), by striking 
     ``section 1(f)(3)'' and inserting ``section 1(c)(2)(A)'',
       (B) in clause (i), by striking ``for `calendar year 1992' 
     in subparagraph (B) thereof'' and inserting ``for `calendar 
     year 2016' in clause (ii) thereof'', and
       (C) in clause (ii), by striking ``for `calendar year 1992' 
     in subparagraph (B) of such section 1'' and inserting ``for 
     `calendar year 2016' in clause (ii) thereof''.
       (3) Section 36B(b)(3)(A)(ii)(II) is amended by striking 
     ``consumer price index'' and inserting ``C-CPI-U (as defined 
     in section 1(c))''.
       (4) Section 41(e)(5)(C) is amended to read as follows:
       ``(C) Cost-of-living adjustment defined.--
       ``(i) In general.--The cost-of-living adjustment for any 
     calendar year is the cost-of-living adjustment for such 
     calendar year determined under section 1(c)(2)(A), by 
     substituting `calendar year 1987' for `calendar year 2016' in 
     clause (ii) thereof.
       ``(ii) Special rule where base period ends in a calendar 
     year other than 1983 or 1984.--If the base period of any 
     taxpayer does not end in 1983 or 1984, clause (i) shall be 
     applied by substituting the calendar year in which such base 
     period ends for 1987.''.
       (5) Section 42(e)(3)(D)(ii) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting 
     `calendar year 2008' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year by substituting `calendar year 2008' for 
     `calendar year 2016' in clause (ii) thereof''.
       (6) Section 42(h)(3)(H)(i)(II) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting 
     `calendar year 2001' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year by substituting `calendar year 2001' for 
     `calendar year 2016' in clause (ii) thereof''.
       (7) Section 45R(d)(3)(B)(ii) is amended by striking 
     ``section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 2012' for `calendar year 1992' in 
     subparagraph (B) thereof'' and inserting `` `section 
     1(c)(2)(A) for such calendar year, determined by substituting 
     ``calendar year 2012'' for ``calendar year 2016'' in clause 
     (ii) thereof' ''.
       (8) Section 125(i)(2) is amended--
       (A) by striking ``section 1(f)(3) for the calendar year in 
     which the taxable year begins by substituting `calendar year 
     2012' for `calendar year 1992' in subparagraph (B) thereof'' 
     in subparagraph (B) and inserting ``section 1(c)(2)(A) for 
     the calendar year in which the taxable year begins'', and
       (B) by striking ``$50'' both places it appears in the last 
     sentence and inserting ``$100''.
       (9) Section 162(o)(3) is amended by inserting ``as in 
     effect before enactment of the Tax Cuts and Jobs Act'' after 
     ``section 1(f)(5)''.
       (10) Section 220(g)(2) is amended by striking ``section 
     1(f)(3) for the calendar year in which the taxable year 
     begins by substituting `calendar year 1997' for `calendar 
     year 1992' in subparagraph (B) thereof'' and inserting 
     ``section 1(c)(2)(A) for the calendar year in which the 
     taxable year begins, determined by substituting `calendar 
     year 1997' for `calendar year 2016' in clause (ii) thereof''.
       (11) Section 223(g)(1) is amended by striking all that 
     follows subparagraph (A) and inserting the following:
       ``(B) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for the calendar year in which the taxable 
     year begins, determined--
       ``(i) by substituting for `calendar year 2016' in clause 
     (ii) thereof--

       ``(I) except as provided in clause (ii), `calendar year 
     1997', and
       ``(II) in the case of each dollar amount in subsection 
     (c)(2)(A), `calendar year 2003', and

       ``(ii) by substituting `March 31' for `August 31' in 
     paragraphs (5)(B) and (6)(B) of section 1(c).
     The Secretary shall publish the dollar amounts as adjusted 
     under this subsection for taxable years beginning in any 
     calendar year no later than June 1 of the preceding calendar 
     year.''.
       (12) Section 430(c)(7)(D)(vii)(II) is amended by striking 
     ``section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 2009' for `calendar year 1992' in 
     subparagraph (B) thereof'' and inserting ``section 1(c)(2)(A) 
     for the calendar year, determined by substituting `calendar 
     year 2009' for `calendar year 2016' in clause (ii) thereof''.
       (13) Section 512(d)(2)(B) is amended by striking ``section 
     1(f)(3) for the calendar year in which the taxable year 
     begins, by substituting `calendar year 1994' for `calendar 
     year 1992' in subparagraph (B) thereof''and inserting 
     ``section 1(c)(2)(A) for the calendar year in which the 
     taxable year begins, determined by substituting `calendar 
     year 1994' for `calendar year 2016' in clause (ii) thereof''.
       (14) Section 513(h)(2)(C)(ii) is amended by striking 
     ``section 1(f)(3) for the calendar year in which the taxable 
     year begins by substituting `calendar year 1987' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) for the calendar year in which

[[Page H9309]]

     the taxable year begins, determined by substituting `calendar 
     year 1987' for `calendar year 2016' in clause (ii) thereof''.
       (15) Section 831(b)(2)(D)(ii) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting 
     `calendar year 2013' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year by substituting `calendar year 2013' for 
     `calendar year 2016' in clause (ii) thereof''.
       (16) Section 877A(a)(3)(B)(i)(II) is amended by striking 
     ``section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) for the calendar year in which 
     the taxable year begins, determined by substituting `calendar 
     year 2007' for `calendar year 2016' in clause (ii) thereof''.
       (17) Section 911(b)(2)(D)(ii)(II) is amended by striking 
     ``section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `2004' for `1992' in 
     subparagraph (B) thereof'' and inserting ``section 1(c)(2)(A) 
     for the calendar year in which the taxable year begins, 
     determined by substituting `calendar year 2004' for `calendar 
     year 2016' in clause (ii) thereof''.
       (18) Section 1274A(d)(2) is amended to read as follows:
       ``(2) Inflation adjustment.--
       ``(A) In general.--In the case of any debt instrument 
     arising out of a sale or exchange during any calendar year 
     after 2018, each adjusted dollar amount shall be increased by 
     an amount equal to--
       ``(i) such adjusted dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for such calendar year, determined by 
     substituting `calendar year 2017' for `calendar year 2016' in 
     clause (ii) thereof.
       ``(B) Adjusted dollar amounts.--For purposes of this 
     paragraph, the term `adjusted dollar amount' means the dollar 
     amounts in subsections (b) and (c), in each case as in effect 
     for calendar year 2018.
       ``(C) Rounding.--Any increase under subparagraph (A) shall 
     be rounded to the nearest multiple of $100.''.
       (19) Section 2010(c)(3)(B)(ii) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting 
     `calendar year 2010' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year, determined by substituting `calendar year 
     2010' for `calendar year 2016' in clause (ii) thereof''.
       (20) Section 2032A(a)(3)(B) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting 
     `calendar year 1997' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year, determined by substituting `calendar year 
     1997' for `calendar year 2016' in clause (ii) thereof''.
       (21) Section 2503(b)(2)(B) is amended by striking ``section 
     1(f)(3) for such calendar year by substituting `calendar year 
     1997' for `calendar year 1992' in subparagraph (B) thereof'' 
     and inserting ``section 1(c)(2)(A) for the calendar year, 
     determined by substituting `calendar year 1997' for `calendar 
     year 2016' in clause (ii) thereof''.
       (22) Section 4161(b)(2)(C)(i)(II) is amended by striking 
     ``section 1(f)(3) for such calendar year, determined by 
     substituting `2004' for `1992' in subparagraph (B) thereof'' 
     and inserting ``section 1(c)(2)(A) for such calendar year, 
     determined by substituting `calendar year 2004' for `calendar 
     year 2016' in clause (ii) thereof''.
       (23) Section 4261(e)(4)(A)(ii) is amended by striking 
     ``section 1(f)(3) for such calendar year by substituting the 
     year before the last nonindexed year for `calendar year 1992' 
     in subparagraph (B) thereof'' and inserting ``section 
     1(c)(2)(A) for such calendar year, determined by substituting 
     the year before the last nonindexed year for `calendar year 
     2016' in clause (ii) thereof''.
       (24) Section 4980I(b)(3)(C)(v)(II) is amended--
       (A) by striking ``section 1(f)(3)'' and inserting ``section 
     1(c)(2)(A)'',
       (B) by striking ``subparagraph (B)'' and inserting ``clause 
     (ii)'', and
       (C) by striking ``1992'' and inserting ``2016''.
       (25) Section 5000A(c)(3)(D)(ii) is amended--
       (A) by striking ``section 1(f)(3)'' and inserting ``section 
     1(c)(2)(A)'',
       (B) by striking ``subparagraph (B)'' and inserting ``clause 
     (ii)'', and
       (C) by striking ``1992'' and inserting ``2016''.
       (26) Section 6039F(d) is amended by striking ``section 
     1(f)(3), except that subparagraph (B) thereof'' and inserting 
     ``section 1(c)(2)(A), except that clause (ii) thereof''.
       (27) Section 6323(i)(4)(B) is amended by striking ``section 
     1(f)(3) for the calendar year, determined by substituting 
     `calendar year 1996' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for the 
     calendar year, determined by substituting `calendar year 
     1996' for `calendar year 2016' in clause (ii) thereof''.
       (28) Section 6334(g)(1)(B) is amended by striking ``section 
     1(f)(3) for such calendar year, by substituting `calendar 
     year 1998' for `calendar year 1992' in subparagraph (B) 
     thereof'' and inserting ``section 1(c)(2)(A) for such 
     calendar year, determined by substituting `calendar year 
     1999' for `calendar year 2016' in clause (ii) thereof''.
       (29) Section 6601(j)(3)(B) is amended by striking ``section 
     1(f)(3) for such calendar year by substituting `calendar year 
     1997' for `calendar year 1992' in subparagraph (B) thereof'' 
     and inserting ``section 1(c)(2)(A) for such calendar year by 
     substituting `calendar year 1997' for `calendar year 2016' in 
     clause (ii) thereof''.
       (30) Section 6651(i)(1) is amended by striking ``section 
     1(f)(3) determined by substituting `calendar year 2013' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) determined by substituting 
     `calendar year 2013' for `calendar year 2016' in clause (ii) 
     thereof''.
       (31) Section 6721(f)(1) is amended--
       (A) by striking ``section 1(f)(3)'' and inserting ``section 
     1(c)(2)(A)'',
       (B) by striking ``subparagraph (B)'' and inserting ``clause 
     (ii)'', and
       (C) by striking ``1992'' and inserting ``2016''.
       (32) Section 6722(f)(1) is amended--
       (A) by striking ``section 1(f)(3)'' and inserting ``section 
     1(c)(2)(A)'',
       (B) by striking ``subparagraph (B)'' and inserting ``clause 
     (ii)'', and
       (C) by striking ``1992'' and inserting ``2016''.
       (33) Section 6652(c)(7)(A) is amended by striking ``section 
     1(f)(3) determined by substituting `calendar year 2013' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) determined by substituting 
     `calendar year 2013' for `calendar year 2016' in clause (ii) 
     thereof''.
       (34) Section 6695(h)(1) is amended by striking ``section 
     1(f)(3) determined by substituting `calendar year 2013' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) determined by substituting 
     `calendar year 2013' for `calendar year 2016' in clause (ii) 
     thereof''.
       (35) Section 6698(e)(1) is amended by striking ``section 
     1(f)(3) determined by substituting `calendar year 2013' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) determined by substituting 
     `calendar year 2013' for `calendar year 2016' in clause (ii) 
     thereof''.
       (36) Section 6699(e)(1) is amended by striking ``section 
     1(f)(3) determined by substituting `calendar year 2013' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) determined by substituting 
     `calendar year 2013' for `calendar year 2016' in clause (ii) 
     thereof''.
       (37) Section 7345(f)(2) is amended by striking ``section 
     1(f)(3) for the calendar year, determined by substituting 
     `calendar year 2015' for `calendar year 1992' in subparagraph 
     (B) thereof'' and inserting ``section 1(c)(2)(A) for the 
     calendar year, determined by substituting `calendar year 
     2015' for `calendar year 2016' in clause (ii) thereof''.
       (38) Section 7430(c)(1) is amended by striking ``section 
     1(f)(3) for such calendar year, by substituting `calendar 
     year 1995' for `calendar year 1992' in subparagraph (B) 
     thereof'' in the flush text at the end and inserting 
     ``section 1(c)(2)(A) for such calendar year, determined by 
     substituting `calendar year 1995' for `calendar year 2016' in 
     clause (ii) thereof''.
       (39) Section 7872(g)(5) is amended to read as follows:
       ``(5) Inflation adjustment.--
       ``(A) In general.--In the case of any loan made during any 
     calendar year after 2018 to which paragraph (1) applies, the 
     adjusted dollar amount shall be increased by an amount equal 
     to--
       ``(i) such adjusted dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for such calendar year, determined by 
     substituting `calendar year 2017' for `calendar year 2016' in 
     clause (ii) thereof.
       ``(B) Adjusted dollar amount.--For purposes of this 
     paragraph, the term `adjusted dollar amount' means the dollar 
     amount in paragraph (2) as in effect for calendar year 2018.
       ``(C) Rounding.--Any increase under subparagraph (A) shall 
     be rounded to the nearest multiple of $100.''.
       (40) Section 219(b)(5)(C)(i)(II) is amended by striking 
     ``section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2007' 
     for `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) for the calendar year in which 
     the taxable year begins, determined by substituting `calendar 
     year 2007' for `calendar year 2016' in clause (ii) thereof''.
       (41) Section 219(g)(8)(B) is amended by striking ``section 
     1(f)(3) for the calendar year in which the taxable year 
     begins, determined by substituting `calendar year 2005' for 
     `calendar year 1992' in subparagraph (B) thereof'' and 
     inserting ``section 1(c)(2)(A) for the calendar year in which 
     the taxable year begins, determined by substituting `calendar 
     year 2005' for `calendar year 2016' in clause (ii) thereof''.
       (b) Other Conforming Amendments.--
       (1) Section 36B(b)(3)(B)(ii)(I)(aa) is amended to read as 
     follows:
       ``(aa) who is described in section 1(b)(1)(B) and who does 
     not have any dependents for the taxable year,''.
       (2) Section 486B(b)(1) is amended--
       (A) by striking ``maximum rate in effect'' and inserting 
     ``highest rate specified'', and
       (B) by striking ``section 1(e)'' and inserting ``section 
     1''.
       (3) Section 511(b)(1) is amended by striking ``section 
     1(e)'' and inserting ``section 1''.
       (4) Section 641(a) is amended by striking ``section 1(e) 
     shall apply to the taxable income'' and inserting ``section 1 
     shall apply to the taxable income''.
       (5) Section 641(c)(2)(A) is amended to read as follows:
       ``(A) Except to the extent provided in section 1(h), the 
     rate of tax shall be treated as being the highest rate of tax 
     set forth in section 1(a).''.
       (6) Section 646(b) is amended to read as follows:
       ``(b) Taxation of Income of Trust.--Except as provided in 
     subsection (f)(1)(B)(ii), there is hereby imposed on the 
     taxable income of an electing Settlement Trust a tax at the 
     rate specified in section 1(a)(1). Such tax shall be in lieu 
     of the income tax otherwise imposed by this chapter on such 
     income.''.
       (7) Section 685(c) is amended by striking ``Section 1(e)'' 
     and inserting ``Section 1''.
       (8) Section 904(b)(3)(E)(ii)(I) is amended by striking 
     ``set forth in subsection (a), (b), (c), (d),

[[Page H9310]]

     or (e) of section 1 (whichever applies)'' and inserting ``the 
     highest rate of tax specified in section 1''.
       (9) Section 1398(c)(2) is amended by striking ``subsection 
     (d) of''.
       (10) Section 3402(p)(1)(B) is amended by striking ``any 
     percentage applicable to any of the 3 lowest income brackets 
     in the table under section 1(c),'' and inserting ``12 
     percent, 25 percent,''.
       (11) Section 3402(q)(1) is amended by striking ``the 
     product of third lowest rate of tax applicable under section 
     1(c) and'' and inserting ``25 percent of''.
       (12) Section 3402(r)(3) is amended by striking ``the amount 
     of tax which would be imposed by section 1(c) (determined 
     without regard to any rate of tax in excess of the fourth 
     lowest rate of tax applicable under section 1(c)) on an 
     amount of taxable income equal to'' and inserting ``an amount 
     equal to the product of 25 percent multiplied by''.
       (13) Section 3406(a)(1) is amended by striking ``the 
     product of the fourth lowest rate of tax applicable under 
     section 1(c) and'' and inserting ``25 percent of''.
       (14) Section 6103(e)(1)(A)(iii) is amended by inserting 
     ``(as in effect on the day before the date of the enactment 
     of the Tax Cuts and Jobs Act)'' after ``section 1(g)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

  Subtitle B--Simplification and Reform of Family and Individual Tax 
                                Credits

     SEC. 1101. ENHANCEMENT OF CHILD TAX CREDIT AND NEW FAMILY TAX 
                   CREDIT.

       (a) Increase in Credit Amount and Addition of Other 
     Dependents.--
       (1) In General.--Section 24(a) is amended to read as 
     follows:
       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the sum of--
       ``(1) with respect to each qualifying child of the 
     taxpayer, $1,600, and
       ``(2) for taxable years beginning before January 1, 2023, 
     with respect to the taxpayer (each spouse in the case of a 
     joint return) and each dependent of the taxpayer to whom 
     paragraph (1) does not apply, $300.''.
       (2) Conforming Amendments.--
       (A) Section 24(c) is amended--
       (i) by redesignating paragraphs (1) and (2) as paragraphs 
     (2) and (3), respectively,
       (ii) by striking ``152(c)'' in paragraph (2) (as so 
     redesignated) and inserting ``7706(c)'',
       (iii) by inserting before paragraph (2) (as so 
     redesignated) the following new paragraph:
       ``(1) Dependent.--
       ``(A) In general.--The term `dependent' shall have the 
     meaning given such term by section 7706.
       ``(B) Certain individuals not treated as dependents.--In 
     the case of an individual with respect to whom a credit under 
     this section is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which the individual's 
     taxable year begins, the amount applicable to such individual 
     under subsection (a) for such individual's taxable year shall 
     be zero.'',
       (iv) in paragraph (3) (as so redesignated)--
       (I) by striking ``term `qualifying child' '' and inserting 
     ``terms `qualifying child' and `dependent' '', and
       (II) by striking ``152(b)(3)'' and inserting 
     ``7706(b)(3)'', and
       (v) in the heading by striking ``Qualifying'' and inserting 
     ``Dependent; Qualifying''.
       (B) The heading for section 24 is amended by inserting 
     ``and family'' after ``child''.
       (C) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 24 and inserting the following new item:

``Sec. 24. Child and family tax credit.''.
       (b) Elimination of Marriage Penalty.--Section 24(b)(2) is 
     amended--
       (1) by striking ``$110,000'' in subparagraph (A) and 
     inserting ``$230,000'',
       (2) by inserting ``and'' at the end of subparagraph (A),
       (3) by striking ``$75,000 in the case of an individual who 
     is not married'' and all that follows through the period at 
     the end and inserting ``one-half of the amount in effect 
     under subparagraph (A) for the taxable year in the case of 
     any other individual.''.
       (c) Credit Refundable up to $1,000 Per Child.--
       (1) In General.--Section 24(d)(1)(A) is amended by striking 
     all that follows ``under this section'' and inserting the 
     following: ``determined--
       ``(i) without regard to this subsection and the limitation 
     under section 26(a),
       ``(ii) without regard to subsection (a)(2), and
       ``(iii) by substituting `$1,000' for `$1,600' in subsection 
     (a)(1), or''.
       (2) Inflation Adjustment.--Section 24(d) is amended by 
     inserting after paragraph (2) the following new paragraph:
       ``(3) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2017, the $1,000 
     amount in paragraph (1)(A)(iii) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment under section 
     1(c)(2)(A) for such calendar year.
     Any increase determined under the preceding sentence shall be 
     rounded to the next highest multiple of $100 and shall not 
     exceed the amount in effect under subsection (a)(2).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1102. REPEAL OF NONREFUNDABLE CREDITS.

       (a) Repeal of Section 22.--
       (1) In general.--Subpart A of part IV of subchapter A of 
     chapter 1 is amended by striking section 22 (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (2) Conforming amendment.--
       (A) Section 86(f) is amended by striking paragraph (1) and 
     by redesignating paragraphs (2), (3), and (4) as paragraphs 
     (1), (2), and (3), respectively.
       (B)(i) Subsections (c)(3)(B) and (d)(4)(A) of section 7706, 
     as redesignated by this Act, are each amended by striking 
     ``(as defined in section 22(e)(3)''.
       (ii) Section 7706(f), as redesignated by this Act, is 
     amended by redesignating paragraph (7) as paragraph (8) and 
     by inserting after paragraph (6) the following new paragraph:
       ``(7) Permanent and total disability defined.--An 
     individual is permanently and totally disabled if he is 
     unable to engage in any substantial gainful activity by 
     reason of any medically determinable physical or mental 
     impairment which can be expected to result in death or which 
     has lasted or can be expected to last for a continuous period 
     of not less than 12 months. An individual shall not be 
     considered to be permanently and totally disabled unless he 
     furnishes proof of the existence thereof in such form and 
     manner, and at such times, as the Secretary may require.''.
       (iii) Section 415(c)(3)(C)(i) is amended by striking 
     ``22(e)(3)'' and inserting ``7706(f)(7)''.
       (iv) Section 422(c)(6) is amended by striking ``22(e)(3)'' 
     and inserting ``7706(f)(7)''.
       (b) Termination of Section 25.--Section 25, as amended by 
     section 3601, is amended by adding at the end the following 
     new subsection:
       ``(k) Termination.--No credit shall be allowed under this 
     section with respect to any mortgage credit certificate 
     issued after December 31, 2017.''.
       (c) Repeal of Section 30D.--
       (1) In general.--Subpart B of part IV of subchapter A of 
     chapter 1 is amended by striking section 30D (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (2) Conforming amendments.--
       (A) Section 38(b) is amended by striking paragraph (35).
       (B) Section 1016(a) is amended by striking paragraph (37).
       (C) Section 6501(m) is amended by striking ``30D(e)(4),''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to 
     taxable years beginning after December 31, 2017.
       (2) Subsection (b).--The amendment made by subsection (c) 
     shall apply to taxable years ending after December 31, 2017.
       (3) Subsection (c).--The amendments made by subsection (d) 
     shall apply to vehicles placed in service in taxable years 
     beginning after December 31, 2017.

     SEC. 1103. REFUNDABLE CREDIT PROGRAM INTEGRITY.

       (a) Identification Requirements for Child and Family Tax 
     Credit.--
       (1) In general.--Section 24(e) is amended to read as 
     follows:
       ``(e) Identification Requirements.--
       ``(1) Requirements for qualifying child.--No credit shall 
     be allowed under this section to a taxpayer with respect to 
     any qualifying child unless the taxpayer includes the name 
     and social security number of such qualifying child on the 
     return of tax for the taxable year. The preceding sentence 
     shall not prevent a qualifying child from being treated as a 
     dependent described in subsection (a)(2).
       ``(2) Other identification requirements.--No credit shall 
     be allowed under this section with respect to any individual 
     unless the taxpayer identification number of such individual 
     is included on the return of tax for the taxable year and 
     such identifying number was issued before the due date for 
     filing the return for the taxable year.
       ``(3) Social security number.--For purposes of this 
     subsection, the term `social security number' means a social 
     security number issued by the Social Security Administration 
     (but only if the social security number is issued to a 
     citizen of the United States or pursuant to subclause (I) (or 
     that portion of subclause (III) that relates to subclause 
     (I)) of section 205(c)(2)(B)(i) of the Social Security 
     Act)).''.
       (2) Omissions treated as mathematical or clerical error.--
       (A) In general.--Section 6213(g)(2)(I) is amended to read 
     as follows:
       ``(I) an omission of a correct social security number, or a 
     correct TIN, required under section 24(e) (relating to child 
     tax credit), to be included on a return,''.
       (b) Social Security Number Must Be Provided.--
       (1) In general.--Section 25A(f)(1)(A), as amended by 
     section 1201 of this Act, is amended by striking ``taxpayer 
     identification number'' each place it appears and inserting 
     ``social security number''.
       (2) Omission treated as mathematical or clerical error.--
     Section 6213(g)(2)(J) is amended by striking ``TIN'' and 
     inserting ``social security number and employer 
     identification number''.
       (c) Individuals Prohibited From Engaging in Employment in 
     United States Not Eligible for Earned Income Tax Credit.--
     Section 32(m) is amended--
       (1) by striking ``(other than:'' and all that follows 
     through ``of the Social Security Act)'', and
       (2) by inserting before the period at the end the 
     following: ``, but only if, in the case of subsection 
     (c)(1)(E), the social security number is issued to a citizen 
     of the United States or pursuant to subclause (I) (or that 
     portion of subclause (III) that relates to subclause (I)) of 
     section 205(c)(2)(B)(i) of the Social Security Act''.

[[Page H9311]]

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1104. PROCEDURES TO REDUCE IMPROPER CLAIMS OF EARNED 
                   INCOME CREDIT.

       (a) Clarification Regarding Determination of Self-
     employment Income Which Is Treated as Earned Income.--Section 
     32(c)(2)(B) is amended by striking ``and'' at the end of 
     clause (v), by striking the period at the end of clause (vi) 
     and inserting ``, and'', and by adding at the end the 
     following new clause:
       ``(vii) in determining the taxpayer's net earnings from 
     self-employment under subparagraph (A)(ii) there shall not 
     fail to be taken into account any deduction which is 
     allowable to the taxpayer under this subtitle.''.
       (b) Required Quarterly Reporting of Wages of Employees.--
     Section 6011 is amended by adding at the end the following 
     new subsection:
       ``(i) Employer Reporting of Wages.--Every person required 
     to deduct and withhold from an employee a tax under section 
     3101 or 3402 shall include on each return or statement 
     submitted with respect to such tax, the name and address of 
     such employee and the amount of wages for such employee on 
     which such tax was withheld.''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     ending after the date of the enactment of this Act.
       (2) Reporting.--The Secretary of the Treasury, or his 
     designee, may delay the application of the amendment made by 
     subsection (b) for such period as such Secretary (or 
     designee) determines to be reasonable to allow persons 
     adequate time to modify electronic (or other) systems to 
     permit such person to comply with the requirements of such 
     amendment.

     SEC. 1105. CERTAIN INCOME DISALLOWED FOR PURPOSES OF THE 
                   EARNED INCOME TAX CREDIT.

       (a) Substantiation Requirement.--Section 32 is amended by 
     adding at the end the following new subsection:
       ``(n) Inconsistent Income Reporting.--If the earned income 
     of a taxpayer claimed on a return for purposes of this 
     section is not substantiated by statements or returns under 
     sections 6051, 6052, 6041(a), or 6050W with respect to such 
     taxpayer, the Secretary may require such taxpayer to provide 
     books and records to substantiate such income, including for 
     the purpose of preventing fraud.''.
       (b) Exclusion of Unsubstantiated Amount From Earned 
     Income.--Section 32(c)(2) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Exclusion.--In the case of a taxpayer with respect to 
     which there is an inconsistency described in subsection (n) 
     who fails to substantiate such inconsistency to the 
     satisfaction of the Secretary, the term `earned income' shall 
     not include amounts to the extent of such inconsistency.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     Subtitle C--Simplification and Reform of Education Incentives

     SEC. 1201. AMERICAN OPPORTUNITY TAX CREDIT.

       (a) In General.--Section 25A is amended to read as follows:

     ``SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT.

       ``(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 sum of--
       ``(1) 100 percent of so much of the qualified tuition and 
     related expenses paid by the taxpayer during the taxable year 
     (for education furnished to any eligible student for whom an 
     election is in effect under this section for such taxable 
     year during any academic period beginning in such taxable 
     year) as does not exceed $2,000, plus
       ``(2) 25 percent of so much of such expenses so paid as 
     exceeds the dollar amount in effect under paragraph (1) but 
     does not exceed twice such dollar amount.
       ``(b) Portion of Credit Refundable.--40 percent of the 
     credit allowable under subsection (a)(1) (determined without 
     regard to this subsection and section 26(a) and after 
     application of all other provisions of this section) shall be 
     treated as a credit allowable under subpart C (and not under 
     this part). The preceding sentence shall not apply to any 
     taxpayer for any taxable year if such taxpayer is a child to 
     whom section 1(d) applies for such taxable year.
       ``(c) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount allowable as a credit under 
     subsection (a) for any taxable year shall be reduced (but not 
     below zero) by an amount which bears the same ratio to the 
     amount so allowable (determined without regard to this 
     subsection and subsection (b) but after application of all 
     other provisions of this section) as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $80,000 (twice such amount in the case of a joint 
     return), bears to
       ``(B) $10,000 (twice such amount in the case of a joint 
     return).
       ``(2) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year increased by any amount excluded from gross income under 
     section 911, 931, or 933.
       ``(d) Other Limitations.--
       ``(1) Credit allowed only for 5 taxable years.--An election 
     to have this section apply may not be made for any taxable 
     year if such an election (by the taxpayer or any other 
     individual) is in effect with respect to such student for any 
     5 prior taxable years.
       ``(2) Credit allowed only for first 5 years of 
     postsecondary education.--
       ``(A) In general.--No credit shall be allowed under 
     subsection (a) for a taxable year with respect to the 
     qualified tuition and related expenses of an eligible student 
     if the student has completed (before the beginning of such 
     taxable year) the first 5 years of postsecondary education at 
     an eligible educational institution.
       ``(B) Fifth year limitations.--In the case of an eligible 
     student with respect to whom an election has been in effect 
     for 4 preceding taxable years for purposes of the fifth 
     taxable year--
       ``(i) the amount of the credit allowed under this section 
     for the taxable year shall not exceed an amount equal to 50 
     percent of the credit otherwise determined with respect to 
     such student under this section (without regard to this 
     subparagraph), and
       ``(ii) the amount of the credit determined under subsection 
     (b) and allowable under subpart C shall not exceed an amount 
     equal to 40 percent of the amount determined with respect to 
     such student under clause (i).
       ``(e) Definitions.--For purposes of this section--
       ``(1) Eligible student.-- The term `eligible student' 
     means, with respect to any academic period, a student who--
       ``(A) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on August 5, 1997, and
       ``(B) is carrying at least \1/2\ the normal full-time work 
     load for the course of study the student is pursuing.
       ``(2) Qualified tuition and related expenses.--
       ``(A) In general.--The term `qualified tuition and related 
     expenses' means tuition, fees, and course materials, required 
     for enrollment or attendance of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse, or
       ``(iii) any dependent of the taxpayer,
     at an eligible educational institution for courses of 
     instruction of such individual at such institution.
       ``(B) Exception for education involving sports, etc.--Such 
     term does not include expenses with respect to any course or 
     other education involving sports, games, or hobbies, unless 
     such course or other education is part of the individual's 
     degree program.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to an individual's 
     academic course of instruction.
       ``(3) Eligible educational institution.--The term `eligible 
     educational institution' means an institution--
       ``(A) which is described in section 481 of the Higher 
     Education Act of 1965 (20 U.S.C. 1088), as in effect on 
     August 5, 1997, and
       ``(B) which is eligible to participate in a program under 
     title IV of such Act.
       ``(f) Special Rules.--
       ``(1) Identification requirements.--
       ``(A) Student.--No credit shall be allowed under subsection 
     (a) to a taxpayer with respect to the qualified tuition and 
     related expenses of an individual unless the taxpayer 
     includes the name and taxpayer identification number of such 
     individual on the return of tax for the taxable year, and 
     such taxpayer identification number was issued on or before 
     the due date for filing such return.
       ``(B) Taxpayer.--No credit shall be allowed under this 
     section if the identifying number of the taxpayer was issued 
     after the due date for filing the return for the taxable 
     year.
       ``(C) Institution.--No credit shall be allowed under this 
     section unless the taxpayer includes the employer 
     identification number of any institution to which qualified 
     tuition and related expenses were paid with respect to the 
     individual.
       ``(2) Adjustment for certain scholarships, etc.--The amount 
     of qualified tuition and related expenses otherwise taken 
     into account under subsection (a) with respect to an 
     individual for an academic period shall be reduced (before 
     the application of subsection (c)) by the sum of any amounts 
     paid for the benefit of such individual which are allocable 
     to such period as--
       ``(A) a qualified scholarship which is excludable from 
     gross income under section 117,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or under 
     chapter 1606 of title 10, United States Code, and
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for such 
     individual's educational expenses, or attributable to such 
     individual's enrollment at an eligible educational 
     institution, which is excludable from gross income under any 
     law of the United States.
       ``(3) Treatment of expenses paid by dependent.--If an 
     individual is a dependent of another taxpayer for a taxable 
     year beginning in the calendar year in which such individuals 
     taxable year begins--
       ``(A) no credit shall be allowed under subsection (a) to 
     such individual for such individual's taxable year, and
       ``(B) qualified tuition and related expenses paid by such 
     individual during such individual's taxable year shall be 
     treated for purposes of this section as paid by such other 
     taxpayer.
       ``(4) Treatment of certain prepayments.--If qualified 
     tuition and related expenses are paid by the taxpayer during 
     a taxable year for an academic period which begins during the 
     first 3 months following such taxable year, such academic 
     period shall be treated for purposes of this section as 
     beginning during such taxable year.
       ``(5) Denial of double benefit.--No credit shall be allowed 
     under this section for any

[[Page H9312]]

     amount for which a deduction is allowed under any other 
     provision of this chapter.
       ``(6) No credit for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(7) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(8) Restrictions on taxpayers who improperly claimed 
     credit in prior year.--
       ``(A) Taxpayers making prior fraudulent or reckless 
     claims.--
       ``(i) In general.--No credit shall be allowed under this 
     section for any taxable year in the disallowance period.
       ``(ii) Disallowance period.--For purposes of clause (i), 
     the disallowance period is--

       ``(I) the period of 10 taxable years after the most recent 
     taxable year for which there was a final determination that 
     the taxpayer's claim of credit under this section was due to 
     fraud, and
       ``(II) the period of 2 taxable years after the most recent 
     taxable year for which there was a final determination that 
     the taxpayer's claim of credit under this section was due to 
     reckless or intentional disregard of rules and regulations 
     (but not due to fraud).

       ``(B) Taxpayers making improper prior claims.--In the case 
     of a taxpayer who is denied credit under this section for any 
     taxable year as a result of the deficiency procedures under 
     subchapter B of chapter 63, no credit shall be allowed under 
     this section for any subsequent taxable year unless the 
     taxpayer provides such information as the Secretary may 
     require to demonstrate eligibility for such credit.
       ``(g) Inflation Adjustment.--
       ``(1) In general.--In the case of a taxable year beginning 
     after 2018, the $80,000 amount in subsection (c)(1)(A)(ii) 
     shall each be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2017' 
     for `calendar year 2016' in clause (ii) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $1,000, such amount shall be rounded 
     to the next lowest multiple of $1,000.
       ``(h) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out this section, including regulations 
     providing for a recapture of the credit allowed under this 
     section in cases where there is a refund in a subsequent 
     taxable year of any amount which was taken into account in 
     determining the amount of such credit.''.
       (b) Conforming Amendments.--
       (1) Section 72(t)(7)(B) is amended by striking ``section 
     25A(g)(2)'' and inserting ``section 25A(f)(2)''.
       (2) Section 529(c)(3)(B)(v)(I) is amended by striking 
     ``section 25A(g)(2)'' and inserting ``section 25A(f)(2)''.
       (3) Section 529(e)(3)(B)(i) is amended by striking 
     ``section 25A(b)(3)'' and inserting ``section 25A(d)''.
       (4) Section 530(d)(2)(C) is amended--
       (A) by striking ``section 25A(g)(2)'' in clause (i)(I) and 
     inserting ``section 25A(f)(2)'', and
       (B) by striking ``Hope and lifetime learning credits'' in 
     the heading and inserting ``American opportunity tax 
     credit''.
       (5) Section 530(d)(4)(B)(iii) is amended by striking 
     ``section 25A(g)(2)'' and inserting ``section 25A(d)(4)(B)''.
       (6) Section 6050S(e) is amended by striking ``subsection 
     (g)(2)'' and inserting ``subsection (f)(2)''.
       (7) Section 6211(b)(4)(A) is amended by striking 
     ``subsection (i)(6)'' and inserting ``subsection (b)''.
       (8) Section 6213(g)(2)(J) is amended by striking ``TIN 
     required under section 25A(g)(1)'' and inserting ``TIN, and 
     employer identification number, required under section 
     25A(f)(1)''.
       (9) Section 6213(g)(2)(Q) is amended to read as follows:
       ``(Q) an omission of information required by section 
     25A(f)(8)(B) or an entry on the return claiming the credit 
     determined under section 25A(a) for a taxable year for which 
     the credit is disallowed under section 25A(f)(8)(A).''.
       (10) Section 1004(c) of division B of the American Recovery 
     and Reinvestment Tax Act of 2009 is amended--
       (A) in paragraph (1)--
       (i) by striking ``section 25A(i)(6)'' each place it appears 
     and inserting ``section 25A(b)'', and
       (ii) by striking ``with respect to taxable years beginning 
     after 2008 and before 2018'' each place it appears and 
     inserting ``with respect to each taxable year'',
       (B) in paragraph (2), by striking ``Section 25A(i)(6)'' and 
     inserting ``Section 25A(b)'', and
       (C) in paragraph (3)(C), by striking ``subsection (i)(6)'' 
     and inserting ``subsection (b)''.
       (11) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 25A and inserting the following new item:

``Sec. 25A. American opportunity tax credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1202. CONSOLIDATION OF EDUCATION SAVINGS RULES.

       (a) No New Contributions to Coverdell Education Savings 
     Account.--Section 530(b)(1)(A) is amended to read as follows:
       ``(A) Except in the case of rollover contributions, no 
     contribution will be accepted after December 31, 2017.''.
       (b) Limited Distribution Allowed for Elementary and 
     Secondary Tuition.--
       (1) In general.--Section 529(c) is amended by adding at the 
     end the following new paragraph:
       ``(7) Treatment of elementary and secondary tuition.--Any 
     reference in this subsection to the term `qualified higher 
     education expense' shall include a reference to expenses for 
     tuition in connection with enrollment at an elementary or 
     secondary school.''.
       (2) Limitation.--Section 529(e)(3)(A) is amended by adding 
     at the end the following: ``The amount of cash distributions 
     from all qualified tuition programs described in subsection 
     (b)(1)(A)(ii) with respect to a beneficiary during any 
     taxable year, shall, in the aggregate, include not more than 
     $10,000 in expenses for tuition incurred during the taxable 
     year in connection with the enrollment or attendance of the 
     beneficiary as an elementary or secondary school student at a 
     public, private, or religious school.''.
       (c) Rollovers to Qualified Tuition Programs Permitted.--
     Section 530(d)(5) is amended by inserting ``, or into (by 
     purchase or contribution) a qualified tuition program (as 
     defined in section 529),'' after ``into another Coverdell 
     education savings account''.
       (d) Distributions From Qualified Tuition Programs for 
     Certain Expenses Associated With Registered Apprenticeship 
     Programs.--Section 529(e)(3) is amended by adding at the end 
     the following new subparagraph:
       ``(C) Certain expenses associated with registered 
     apprenticeship programs.--The term `qualified higher 
     education expenses' shall include books, supplies, and 
     equipment required for the enrollment or attendance of a 
     designated beneficiary in an apprenticeship program 
     registered and certified with the Secretary of Labor under 
     section 1 of the National Apprenticeship Act (29 U.S.C. 
     50).''.
       (e) Unborn Children Allowed as Account Beneficiaries.--
     Section 529(e) is amended by adding at the end the following 
     new paragraph:
       ``(6) Treatment of unborn children.--
       ``(A) In general.--Nothing shall prevent an unborn child 
     from being treated as a designated beneficiary or an 
     individual under this section.
       ``(B) Unborn child.--For purposes of this paragraph--
       ``(i) In general.--The term `unborn child' means a child in 
     utero.
       ``(ii) Child in utero.--The term `child in utero' means a 
     member of the species homo sapiens, at any stage of 
     development, who is carried in the womb.''.
       (f) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to contributions made after December 31, 2017.
       (2) Rollovers to qualified tuition programs.--The 
     amendments made by subsection (b) shall apply to 
     distributions after December 31, 2017.

     SEC. 1203. REFORMS TO DISCHARGE OF CERTAIN STUDENT LOAN 
                   INDEBTEDNESS.

       (a) Treatment of Student Loans Discharged on Account of 
     Death or Disability.--Section 108(f) is amended by adding at 
     the end the following new paragraph:
       ``(5) Discharges on account of death or disability.--
       ``(A) In general.--In the case of an individual, gross 
     income does not include any amount which (but for this 
     subsection) would be includible in gross income by reasons of 
     the discharge (in whole or in part) of any loan described in 
     subparagraph (B) if such discharge was--
       ``(i) pursuant to subsection (a) or (d) of section 437 of 
     the Higher Education Act of 1965 or the parallel benefit 
     under part D of title IV of such Act (relating to the 
     repayment of loan liability),
       ``(ii) pursuant to section 464(c)(1)(F) of such Act, or
       ``(iii) otherwise discharged on account of the death or 
     total and permanent disability of the student.
       ``(B) Loans described.--A loan is described in this 
     subparagraph if such loan is--
       ``(i) a student loan (as defined in paragraph (2)), or
       ``(ii) a private education loan (as defined in section 
     140(7) of the Consumer Credit Protection Act (15 U.S.C. 
     1650(7))).''.
       (b) Exclusion From Gross Income for Payments Made Under 
     Indian Health Service Loan Repayment Program.--
       (1) In general.--Section 108(f)(4) is amended by inserting 
     ``under section 108 of the Indian Health Care Improvement 
     Act,'' after ``338I of such Act,''.
       (2) Clerical amendment.--The heading for section 108(f)(4) 
     is amended by striking ``and certain'' and inserting ``, 
     indian health service loan repayment program, and certain''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection 
     (a)(1) shall apply to discharges of indebtedness after 
     December 31, 2017.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to amounts received in taxable years beginning 
     after December 31, 2017.

     SEC. 1204. REPEAL OF OTHER PROVISIONS RELATING TO EDUCATION.

       (a) In General.--Subchapter B of chapter 1 is amended--
       (1) in part VII by striking sections 221 and 222 (and by 
     striking the items relating to such sections in the table of 
     sections for such part),
       (2) in part VII by striking sections 135 and 127 (and by 
     striking the items relating to such sections in the table of 
     sections for such part), and
       (3) by striking subsection (d) of section 117.
       (b) Conforming Amendment Relating to Section 221.--
       (1) Section 62(a) is amended by striking paragraph (17).

[[Page H9313]]

       (2) Section 74(d) is amended by striking ``221,''.
       (3) Section 86(b)(2)(A) is amended by striking ``221,''.
       (4) Section 219(g)(3)(A)(ii) is amended by striking 
     ``221,''.
       (5) Section 163(h)(2) is amended by striking subparagraph 
     (F).
       (6) Section 6050S(a) is amended--
       (A) by inserting ``or'' at the end of paragraph (1),
       (B) by striking ``or'' at the end of paragraph (2), and
       (C) by striking paragraph (3).
       (7) Section 6050S(e) is amended by striking all that 
     follows ``thereof)'' and inserting a period.
       (c) Conforming Amendments Related to Section 222.--
       (1) Section 62(a) is amended by striking paragraph (18).
       (2) Section 74(d)(2)(B) is amended by striking ``222,''.
       (3) Section 86(b)(2)(A) is amended by striking ``222,''.
       (4) Section 219(g)(3)(A)(ii) is amended by striking 
     ``222,''.
       (d) Conforming Amendments Relating to Section 127.--
       (1) Section 125(f)(1) is amended by striking ``127,''.
       (2) Section 132(j)(8) is amended by striking ``which are 
     not excludable from gross income under section 127''.
       (3) Section 414(n)(3)(C) is amended by striking ``127,''.
       (4) Section 414(t)(2) is amended by striking ``127,''.
       (5) Section 3121(a)(18) is amended by striking ``127,''.
       (6) Section 3231(e) is amended by striking paragraph (6).
       (7) Section 3306(b)(13) is amended by ``127,''.
       (8) Section 3401(a)(18) is amended by striking ``127,''.
       (9) Section 6039D(d)(1) is amended by striking ``, 127''.
       (e) Conforming Amendments Relating to Section 117(d).--
       (1) Section 117(c)(1) is amended--
       (A) by striking ``subsections (a) and (d)'' and inserting 
     ``subsection (a)'', and
       (B) by striking ``or qualified tuition reduction''.
       (2) Section 414(n)(3)(C) is amended by striking 
     ``117(d),''.
       (3) Section 414(t)(2) is amended by striking ``117(d),''.
       (f) Conforming Amendments Related to Section 135.--
       (1) Section 74(d)(2)(B) is amended by striking ``135,''.
       (2) Section 86(b)(2)(A) is amended by striking ``135,''.
       (3) Section 219(g)(3)(A)(ii) is amended by striking 
     ``135,''.
       (g) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2017.
       (2) Amendments relating to section 117(d).--The amendments 
     made by subsections (a)(3) and (e) shall apply to amounts 
     paid or incurred after December 31, 2017.

     SEC. 1205. ROLLOVERS BETWEEN QUALIFIED TUITION PROGRAMS AND 
                   QUALIFIED ABLE PROGRAMS.

       (a) Rollovers From Qualified Tuition Programs to Qualified 
     ABLE Programs.--Section 529(c)(3)(C)(i) is amended by 
     striking ``or'' at the end of subclause (I), by striking the 
     period at the end of subclause (II) and inserting ``, or'', 
     and by adding at the end the following new subclause:

       ``(III) to an ABLE account (as defined in section 
     529A(e)(6)) of the designated beneficiary or a member of the 
     family of the designated beneficiary.

     Subclause (III) shall not apply to so much of a distribution 
     which, when added to all other contributions made to the ABLE 
     account for the taxable year, exceeds the limitation under 
     section 529A(b)(2)(B).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2017.

          Subtitle D--Simplification and Reform of Deductions

     SEC. 1301. REPEAL OF OVERALL LIMITATION ON ITEMIZED 
                   DEDUCTIONS.

       (a) In General.--Part 1 of subchapter B of chapter 1 is 
     amended by striking section 68 (and the item relating to such 
     section in the table of sections for such part).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1302. MORTGAGE INTEREST.

       (a) Modification of Limitations.--
       (1) In general.--Section 163(h)(3) is amended to read as 
     follows:
       ``(3) Qualified residence interest.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified residence interest' 
     means any interest which is paid or accrued during the 
     taxable year on indebtedness which--
       ``(i) is incurred in acquiring, constructing, or 
     substantially improving any qualified residence (determined 
     as of the time the interest is accrued) of the taxpayer, and
       ``(ii) is secured by such residence.
     Such term also includes interest on any indebtedness secured 
     by such residence resulting from the refinancing of 
     indebtedness meeting the requirements of the preceding 
     sentence (or this sentence); but only to the extent the 
     amount of the indebtedness resulting from such refinancing 
     does not exceed the amount of the refinanced indebtedness.
       ``(B) Limitation.--The aggregate amount of indebtedness 
     taken into account under subparagraph (A) for any period 
     shall not exceed $500,000 (half of such amount in the case of 
     a married individual filing a separate return).
       ``(C) Treatment of indebtedness incurred on or before 
     november 2, 2017.--
       ``(i) In general.--In the case of any pre-November 2, 2017, 
     indebtedness, this paragraph shall apply as in effect 
     immediately before the enactment of the Tax Cuts and Jobs 
     Act.
       ``(ii) Pre-november 2, 2017, indebtedness.--For purposes of 
     this subparagraph, the term `pre-November 2, 2017, 
     indebtedness' means--

       ``(I) any principal residence acquisition indebtedness 
     which was incurred on or before November 2, 2017, or
       ``(II) any principal residence acquisition indebtedness 
     which is incurred after November 2, 2017, to refinance 
     indebtedness described in clause (i) (or refinanced 
     indebtedness meeting the requirements of this clause) to the 
     extent (immediately after the refinancing) the principal 
     amount of the indebtedness resulting from the refinancing 
     does not exceed the principal amount of the refinanced 
     indebtedness (immediately before the refinancing).

       ``(iii) Limitation on period of refinancing.--clause 
     (ii)(II) shall not apply to any indebtedness after--

       ``(I) the expiration of the term of the original 
     indebtedness, or
       ``(II) if the principal of such original indebtedness is 
     not amortized over its term, the expiration of the term of 
     the 1st refinancing of such indebtedness (or if earlier, the 
     date which is 30 years after the date of such 1st 
     refinancing).

       ``(iv) Binding contract exception.--In the case of a 
     taxpayer who enters into a written binding contract before 
     November 2, 2017, to close on the purchase of a principal 
     residence before January 1, 2018, and who purchases such 
     residence before April 1, 2018, subparagraphs (A) and (B) 
     shall be applied by substituting `April 1, 2018' for 
     `November 2, 2017'.''.
       (2) Conforming amendments.--
       (A) Section 108(h)(2) is by striking ``for `$1,000,000 
     ($500,000' in clause (ii) thereof'' and inserting ``for 
     `$500,000 ($250,000' in paragraph (2)(A), and `$1,000,000' 
     for `$500,000' in paragraph (2)(B), thereof''.
       (B) Section 163(h) is amended by striking subparagraphs (E) 
     and (F) in paragraph (4).
       (b) Taxpayers Limited to 1 Qualified Residence.--Section 
     163(h)(4)(A)(i) is amended to read as follows:
       ``(i) In general.--The term `qualified residence' means the 
     principal residence (within the meaning of section 121) of 
     the taxpayer.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to interest paid or accrued in taxable years beginning 
     after December 31, 2017, with respect to indebtedness 
     incurred before, on, or after such date.
       (2) Treatment of grandfathered indebtedness.--For 
     application of the amendments made by this section to 
     grandfathered indebtedness, see paragraph (3)(C) of section 
     163(h) of the Internal Revenue Code of 1986, as amended by 
     this section.

     SEC. 1303. REPEAL OF DEDUCTION FOR CERTAIN TAXES NOT PAID OR 
                   ACCRUED IN A TRADE OR BUSINESS.

       (a) In General.--Section 164(b)(5) is amended to read as 
     follows:
       ``(5) Limitation in case of individuals.--In the case of a 
     taxpayer other than a corporation--
       ``(A) foreign real property taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) shall not be taken into 
     account under subsection (a)(1),
       ``(B) the aggregate amount of taxes (other than taxes which 
     are paid or accrued in carrying on a trade or business or an 
     activity described in section 212) taken into account under 
     subsection (a)(1) for any taxable year shall not exceed 
     $10,000 ($5,000 in the case of a married individual filing a 
     separate return),
       ``(C) subsection (a)(2) shall only apply to taxes which are 
     paid or accrued in carrying on a trade or business or an 
     activity described in section 212, and
       ``(D) subsection (a)(3) shall not apply to State and local 
     taxes.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1304. REPEAL OF DEDUCTION FOR PERSONAL CASUALTY LOSSES.

       (a) In General.--Section 165(c) is amended by inserting 
     ``and'' at the end of paragraph (1), by striking ``; and'' at 
     the end of paragraph (2) and inserting a period, and by 
     striking paragraph (3).
       (b) Conforming Amendments.--
       (1) Section 165(h) is amended to read as follows:
       ``(h) Special Rule Where Personal Casualty Gains Exceed 
     Personal Casualty Losses.--
       ``(1) In general.--If the personal casualty gains for any 
     taxable year exceed the personal casualty losses for such 
     taxable year--
       ``(A) all such gains shall be treated as gains from sales 
     or exchanges of capital assets, and
       ``(B) all such losses shall be treated as losses from sales 
     or exchanges of capital assets.
       ``(2) Definitions of personal casualty gain and personal 
     casualty loss.--For purposes of this subsection--
       ``(A) Personal casualty loss.--The term `personal casualty 
     loss' means any loss of property not connected with a trade 
     or business or a transaction entered into for profit, if such 
     loss arises from fire, storm, shipwreck, or other casualty, 
     or from theft.
       ``(B) Personal casualty gain.--The term `personal casualty 
     gain' means the recognized gain from any involuntary 
     conversion of property which is described in subparagraph (A)

[[Page H9314]]

     arising from fire, storm, shipwreck, or other casualty, or 
     from theft.''.
       (2) Section 165 is amended by striking subsection (k).
       (3)(A) Section 165(l)(1) is amended by striking ``a loss 
     described in subsection (c)(3)'' and inserting ``an ordinary 
     loss described in subsection (c)(2)''.
       (B) Section 165(l) is amended--
       (i) by striking paragraph (5),
       (ii) by redesignating paragraphs (2), (3), and (4) as 
     paragraphs (3), (4), and (5), respectively, and
       (iii) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Limitations.--
       ``(A) Deposit may not be federally insured.--No election 
     may be made under paragraph (1) with respect to any loss on a 
     deposit in a qualified financial institution if part or all 
     of such deposit is insured under Federal law.
       ``(B) Dollar limitation.--With respect to each financial 
     institution, the aggregate amount of losses attributable to 
     deposits in such financial institution to which an election 
     under paragraph (1) may be made by the taxpayer for any 
     taxable year shall not exceed $20,000 ($10,000 in the case of 
     a separate return by a married individual). The limitation of 
     the preceding sentence shall be reduced by the amount of any 
     insurance proceeds under any State law which can reasonably 
     be expected to be received with respect to losses on deposits 
     in such institution.''.
       (4) Section 172(b)(1)(E)(ii), prior to amendment under 
     title III, is amended by striking subclause (I) and by 
     redesignating subclauses (II) and (III) as subclauses (I) and 
     (II), respectively.
       (5) Section 172(d)(4)(C) is amended by striking ``paragraph 
     (2) or (3) of section 165(c)'' and inserting ``section 
     165(c)(2)''.
       (6) Section 274(f) is amended by striking ``Casualty 
     Losses,'' in the heading thereof.
       (7) Section 280A(b) is amended by striking ``Casualty 
     Losses,'' in the heading thereof.
       (8) Section 873(b), as amended by the preceding provisions 
     of this Act, is amended by striking paragraph (1) and by 
     redesignating paragraphs (2) and (3) as paragraphs (1) and 
     (2), respectively.
       (9) Section 504(b) of the Disaster Tax Relief and Airport 
     and Airway Extension Act of 2017 is amended by adding at the 
     end the following new paragraph:
       ``(4) Coordination with tax reform.--This subsection shall 
     be applied without regard to the amendments made by section 
     1304 of the Tax Cuts and Jobs Act.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1305. LIMITATION ON WAGERING LOSSES.

       (a) In General.--Section 165(d) is amended by adding at the 
     end the following: ``For purposes of the preceding sentence, 
     the term `losses from wagering transactions' includes any 
     deduction otherwise allowable under this chapter incurred in 
     carrying on any wagering transaction.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1306. CHARITABLE CONTRIBUTIONS.

       (a) Increased Limitation for Cash Contributions.--Section 
     170(b)(1) is amended by redesignating subparagraph (G) as 
     subparagraph (H) and by inserting after subparagraph (F) the 
     following new subparagraph:
       ``(G) Increased limitation for cash contributions.--
       ``(i) In general.--In the case of any contribution of cash 
     to an organization described in subparagraph (A), the total 
     amount of such contributions which may be taken into account 
     under subsection (a) for any taxable year shall not exceed 60 
     percent of the taxpayer's contribution base for such year.
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the applicable limitation 
     under clause (i), such excess shall be treated (in a manner 
     consistent with the rules of subsection (d)(1)) as a 
     charitable contribution to which clause (i) applies in each 
     of the 5 succeeding years in order of time.
       ``(iii) Coordination with subparagraphs (A) and (B).--

       ``(I) In general.--Contributions taken into account under 
     this subparagraph shall not be taken into account under 
     subparagraph (A).
       ``(II) Limitation reduction.--Subparagraphs (A) and (B) 
     shall be applied by reducing (but not below zero) the 
     aggregate contribution limitation allowed for the taxable 
     year under each such subparagraph by the aggregate 
     contributions allowed under this subparagraph for such 
     taxable year.''.

       (b) Denial of Deduction for College Athletic Event Seating 
     Rights.--Section 170(l)(1) is amended to read as follows:
       ``(1) In general.--No deduction shall be allowed under this 
     section for any amount described in paragraph (2).''.
       (c) Charitable Mileage Rate Adjusted for Inflation.--
     Section 170(i) is amended by striking ``shall be 14 cents per 
     mile'' and inserting ``shall be a rate which takes into 
     account the variable cost of operating an automobile''.
       (d) Repeal of Substantiation Exception in Case of 
     Contributions Reported by Donee.--Section 170(f)(8) is 
     amended by striking subparagraph (D) and by redesignating 
     subparagraph (E) as subparagraph (D).
       (e) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2017.

     SEC. 1307. REPEAL OF DEDUCTION FOR TAX PREPARATION EXPENSES.

       (a) In General.--Section 212 is amended by adding ``or'' at 
     the end of paragraph (1), by striking ``; or'' at the end of 
     paragraph (2) and inserting a period, and by striking 
     paragraph (3).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1308. REPEAL OF MEDICAL EXPENSE DEDUCTION.

       (a) In General.--Part VII of subchapter B is amended by 
     striking by striking section 213 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (b) Conforming Amendments.--
       (1)(A) Section 105(f) is amended to read as follows:
       ``(f) Medical Care.--For purposes of this section--
       ``(1) In general.--The term `medical care' means amounts 
     paid--
       ``(A) for the diagnosis, cure, mitigation, treatment, or 
     prevention of disease, or for the purpose of affecting any 
     structure or function of the body,
       ``(B) for transportation primarily for and essential to 
     medical care referred to in subparagraph (A),
       ``(C) for qualified long-term care services (as defined in 
     section 7702B(c)), or
       ``(D) for insurance (including amounts paid as premiums 
     under part B of title XVIII of the Social Security Act, 
     relating to supplementary medical insurance for the aged) 
     covering medical care referred to in subparagraphs (A) and 
     (B) or for any qualified long-term care insurance contract 
     (as defined in section 7702B(b)).
     In the case of a qualified long-term care insurance contract 
     (as defined in section 7702B(b)), only eligible long-term 
     care premiums (as defined in paragraph (7)) shall be taken 
     into account under subparagraph (D).
       ``(2) Amounts paid for certain lodging away from home 
     treated as paid for medical care.--Amounts paid for lodging 
     (not lavish or extravagant under the circumstances) while 
     away from home primarily for and essential to medical care 
     referred to in paragraph (1)(A) shall be treated as amounts 
     paid for medical care if--
       ``(A) the medical care referred to in paragraph (1)(A) is 
     provided by a physician in a licensed hospital (or in a 
     medical care facility which is related to, or the equivalent 
     of, a licensed hospital), and
       ``(B) there is no significant element of personal pleasure, 
     recreation, or vacation in the travel away from home.
     The amount taken into account under the preceding sentence 
     shall not exceed $50 for each night for each individual.
       ``(3) Physician.--The term `physician' has the meaning 
     given to such term by section 1861(r) of the Social Security 
     Act (42 U.S.C. 1395x(r)).
       ``(4) Contracts covering other than medical care.--In the 
     case of an insurance contract under which amounts are payable 
     for other than medical care referred to in subparagraphs (A), 
     (B) and (C) of paragraph (1)--
       ``(A) no amount shall be treated as paid for insurance to 
     which paragraph (1)(D) applies unless the charge for such 
     insurance is either separately stated in the contract, or 
     furnished to the policyholder by the insurance company in a 
     separate statement,
       ``(B) the amount taken into account as the amount paid for 
     such insurance shall not exceed such charge, and
       ``(C) no amount shall be treated as paid for such insurance 
     if the amount specified in the contract (or furnished to the 
     policyholder by the insurance company in a separate 
     statement) as the charge for such insurance is unreasonably 
     large in relation to the total charges under the contract.
       ``(5) Certain pre-paid contracts.--Subject to the 
     limitations of paragraph (4), premiums paid during the 
     taxable year by a taxpayer before he attains the age of 65 
     for insurance covering medical care (within the meaning of 
     subparagraphs (A), (B), and (C) of paragraph (1)) for the 
     taxpayer, his spouse, or a dependent after the taxpayer 
     attains the age of 65 shall be treated as expenses paid 
     during the taxable year for insurance which constitutes 
     medical care if premiums for such insurance are payable (on a 
     level payment basis) under the contract for a period of 10 
     years or more or until the year in which the taxpayer attains 
     the age of 65 (but in no case for a period of less than 5 
     years).
       ``(6) Cosmetic surgery.--
       ``(A) In general.--The term `medical care' does not include 
     cosmetic surgery or other similar procedures, unless the 
     surgery or procedure is necessary to ameliorate a deformity 
     arising from, or directly related to, a congenital 
     abnormality, a personal injury resulting from an accident or 
     trauma, or disfiguring disease.
       ``(B) Cosmetic surgery defined .--For purposes of this 
     paragraph, the term `cosmetic surgery' means any procedure 
     which is directed at improving the patient's appearance and 
     does not meaningfully promote the proper function of the body 
     or prevent or treat illness or disease.
       ``(7) Eligible long-term care premiums.--
       ``(A) In general.--For purposes of this section, the term 
     `eligible long-term care premiums' means the amount paid 
     during a taxable year for any qualified long-term care 
     insurance contract (as defined in section 7702B(b)) covering 
     an individual, to the extent such amount does not exceed the 
     limitation determined under the following table:

------------------------------------------------------------------------
``In the case of an individual with
an attained age before the close of           The limitation is:
        the taxable year of:
------------------------------------------------------------------------
40 or less                           $200
More than 40 but not more than 50    $375
More than 50 but not more than 60    $750
More than 60 but not more than 70    $2,000
More than 70                         $2,500
------------------------------------------------------------------------

       ``(B) Indexing.--

[[Page H9315]]

       ``(i) In general.--In the case of any taxable year 
     beginning after 1997, each dollar amount in subparagraph (A) 
     shall be increased by the medical care cost adjustment of 
     such amount for such calendar year. Any increase determined 
     under the preceding sentence shall be rounded to the nearest 
     multiple of $10.
       ``(ii) Medical care cost adjustment.--For purposes of 
     clause (i), the medical care cost adjustment for any calendar 
     year is the adjustment prescribed by the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     for purposes of such clause. To the extent that CPI (as 
     defined section 1(c)), or any component thereof, is taken 
     into account in determining such adjustment, such adjustment 
     shall be determined by taking into account C-CPI-U (as so 
     defined), or the corresponding component thereof, in lieu of 
     such CPI (or component thereof), but only with respect to the 
     portion of such adjustment which relates to periods after 
     December 31, 2017.
       ``(8) Certain payments to relatives treated as not paid for 
     medical care.--An amount paid for a qualified long-term care 
     service (as defined in section 7702B(c)) provided to an 
     individual shall be treated as not paid for medical care if 
     such service is provided--
       ``(A) by the spouse of the individual or by a relative 
     (directly or through a partnership, corporation, or other 
     entity) unless the service is provided by a licensed 
     professional with respect to such service, or
       ``(B) by a corporation or partnership which is related 
     (within the meaning of section 267(b) or 707(b)) to the 
     individual.
     For purposes of this paragraph, the term `relative' means an 
     individual bearing a relationship to the individual which is 
     described in any of subparagraphs (A) through (G) of section 
     7706(d)(2). This paragraph shall not apply for purposes of 
     subsection (b) with respect to reimbursements through 
     insurance.''.
       (B) Section 72(t)(2)(D)(i)(III) is amended by striking 
     ``section 213(d)(1)(D)'' and inserting ``section 
     105(f)(1)(D)''.
       (C) Section 104(a) is amended by striking ``section 
     213(d)(1)'' in the last sentence and inserting ``section 
     105(f)(1)''.
       (D) Section 105(b) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (E) Section 139D is amended by striking ``section 213'' and 
     inserting ``section 223''.
       (F) Section 162(l)(2) is amended by striking ``section 
     213(d)(10)'' and inserting ``section 105(f)(7)''.
       (G) Section 220(d)(2)(A) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (H) Section 223(d)(2)(A) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (I) Section 419A(f)(2) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (J) Section 501(c)(26)(A) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (K) Section 2503(e) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (L) Section 4980B(c)(4)(B)(i)(I) is amended by striking 
     ``section 213(d)'' and inserting ``section 105(f)''.
       (M) Section 6041(f) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (N) Section 7702B(a)(2) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (O) Section 7702B(a)(4) is amended by striking ``section 
     213(d)(1)(D)'' and inserting ``section 105(f)(1)(D)''.
       (P) Section 7702B(d)(5) is amended by striking ``section 
     213(d)(10)'' and inserting ``section 105(f)(7)''.
       (Q) Section 9832(d)(3) is amended by striking ``section 
     213(d)'' and inserting ``section 105(f)''.
       (2) Section 72(t)(2)(B) is amended to read as follows:
       ``(B) Medical expenses.--Distributions made to an 
     individual (other than distributions described in 
     subparagraph (A), (C), or (D) to the extent such 
     distributions do not exceed the excess of--
       ``(i) the expenses paid by the taxpayer during the taxable 
     year, not compensated for by insurance or otherwise, for 
     medical care (as defined in 105(f)) of the taxpayer, his 
     spouse, or a dependent (as defined in section 7706, 
     determined without regard to subsections (b)(1), (b)(2), and 
     (d)(1)(B) thereof), over
       ``(ii) 10 percent of the taxpayer's adjusted gross 
     income.''.
       (3) Section 162(l) is amended by striking paragraph (3).
       (4) Section 402(l) is amended by striking paragraph (7) and 
     redesignating paragraph (8) as paragraph (7).
       (5) Section 220(f) is amended by striking paragraph (6).
       (6) Section 223(f) is amended by striking paragraph (6).
       (7) Section 7702B(e) is amended by striking paragraph (2).
       (8) Section 7706(f)(7), as redesignated by this Act, is 
     amended by striking ``sections 105(b), 132(h)(2)(B), and 
     213(d)(5)'' and inserting ``sections 105(b) and 
     132(h)(2)(B)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1309. REPEAL OF DEDUCTION FOR ALIMONY PAYMENTS.

       (a) In General.--Part VII of subchapter B is amended by 
     striking by striking section 215 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (b) Conforming Amendments.--
       (1) Corresponding repeal of provisions providing for 
     inclusion of alimony in gross income.--
       (A) Subsection (a) of section 61 is amended by striking 
     paragraph (8) and by redesignating paragraphs (9) through 
     (15) as paragraphs (8) through (14), respectively.
       (B) Part II of subchapter B of chapter 1 is amended by 
     striking section 71 (and by striking the item relating to 
     such section in the table of sections for such part).
       (C) Subpart F of part I of subchapter J of chapter 1 is 
     amended by striking section 682 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (2) Related to repeal of section 215.--
       (A) Section 62(a) is amended by striking paragraph (10).
       (B) Section 3402(m)(1) is amended by striking ``(other than 
     paragraph (10) thereof)''.
       (3) Related to repeal of section 71.--
       (A) Section 121(d)(3) is amended--
       (i) by striking ``(as defined in section 71(b)(2))'' in 
     subparagraph (B), and
       (ii) by adding at the end the following new subparagraph:
       ``(C) Divorce or separation instrument.--For purposes of 
     this paragraph, the term `divorce or separation instrument' 
     means--
       ``(i) a decree of divorce or separate maintenance or a 
     written instrument incident to such a decree,
       ``(ii) a written separation agreement, or
       ``(iii) a decree (not described in clause (i)) requiring a 
     spouse to make payments for the support or maintenance of the 
     other spouse.''.
       (B) Section 220(f)(7) is amended by striking ``subparagraph 
     (A) of section 71(b)(2)'' and inserting ``clause (i) of 
     section 121(d)(3)(C)''.
       (C) Section 223(f)(7) is amended by striking ``subparagraph 
     (A) of section 71(b)(2)'' and inserting ``clause (i) of 
     section 121(d)(3)(C)''.
       (D) Section 382(l)(3)(B)(iii) is amended by striking 
     ``section 71(b)(2)'' and inserting ``section 121(d)(3)(C)''.
       (E) Section 408(d)(6) is amended by striking ``subparagraph 
     (A) of section 71(b)(2)'' and inserting ``clause (i) of 
     section 121(d)(3)(C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) any divorce or separation instrument (as defined in 
     section 71(b)(2) of the Internal Revenue Code of 1986 as in 
     effect before the date of the enactment of this Act) executed 
     after December 31, 2017, and
       (2) any divorce or separation instrument (as so defined) 
     executed on or before such date and modified after such date 
     if the modification expressly provides that the amendments 
     made by this section apply to such modification.

     SEC. 1310. REPEAL OF DEDUCTION FOR MOVING EXPENSES.

       (a) In General.--Part VII of subchapter B is amended by 
     striking by striking section 217 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (b) Retention of Moving Expenses for Members of Armed 
     Forces.--Section 134(b) is amended by adding at the end the 
     following new paragraph:
       ``(7) Moving expenses.--The term `qualified military 
     benefit' includes any benefit described in section 217(g) (as 
     in effect before the enactment of the Tax Cuts And Jobs 
     Act).''.
       (c) Conforming Amendments.--
       (1) Section 62(a) is amended by striking paragraph (15).
       (2) Section 274(m)(3) is amended by striking ``(other than 
     section 217)''.
       (3) Section 3121(a) is amended by striking paragraph (11).
       (4) Section 3306(b) is amended by striking paragraph (9).
       (5) Section 3401(a) is amended by striking paragraph (15).
       (6) Section 7872(f) is amended by striking paragraph (11).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1311. TERMINATION OF DEDUCTION AND EXCLUSIONS FOR 
                   CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.

       (a) Termination of Income Tax Deduction.--Section 220 is 
     amended by adding at the end the following new subsection:
       ``(k) Termination.--No deduction shall be allowed under 
     subsection (a) with respect to any taxable year beginning 
     after December 31, 2017.''.
       (b) Termination of Exclusion for Employer-Provided 
     Contributions.--Section 106 is amended by striking subsection 
     (b).
       (c) Conforming Amendments.--
       (1) Section 62(a) is amended by striking paragraph (16).
       (2) Section 106(d) is amended by striking paragraph (2), by 
     redesignating paragraph (3) as paragraph (6), and by 
     inserting after paragraph (1) the following new paragraphs:
       ``(2) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between the contributions referred to in 
     paragraph (1) and employer contributions to another health 
     plan of the employer.
       ``(3) Special rule for deduction of employer 
     contributions.--Any employer contribution to a health savings 
     account (as so defined), if otherwise allowable as a 
     deduction under this chapter, shall be allowed only for the 
     taxable year in which paid.
       ``(4) Employer health savings account contribution required 
     to be shown on return.--Every individual required to file a 
     return under section 6012 for the taxable year shall include 
     on such return the aggregate amount contributed by employers 
     to the health savings accounts (as so defined) of such 
     individual or such individual's spouse for such taxable year.
       ``(5) Health savings account contributions not part of 
     cobra coverage.--Paragraph (1) shall not apply for purposes 
     of section 4980B.''.
       (3) Section 223(b)(4) is amended by striking subparagraph 
     (A), by redesignating subparagraphs (B) and (C) as 
     subparagraphs (A) and (B), respectively, and by striking the 
     second sentence thereof.
       (4) Section 223(b)(5) is amended by striking ``under 
     paragraph (3))'' and all that follows

[[Page H9316]]

     through ``shall be divided equally between them'' and 
     inserting the following: ``under paragraph (3)) shall be 
     divided equally between the spouses''.
       (5) Section 223(c) is amended by striking paragraph (5).
       (6) Section 3231(e) is amended by striking paragraph (10).
       (7) Section 3306(b) is amended by striking paragraph (17).
       (8) Section 3401(a) is amended by striking paragraph (21).
       (9) Chapter 43 is amended by striking section 4980E (and by 
     striking the item relating to such section in the table of 
     sections for such chapter).
       (10) Section 4980G is amended to read as follows:

     ``SEC. 4980G. FAILURE OF EMPLOYER TO MAKE COMPARABLE HEALTH 
                   SAVINGS ACCOUNT CONTRIBUTIONS.

       ``(a) In General.--In the case of an employer who makes a 
     contribution to the health savings account of any employee 
     during a calendar year, there is hereby imposed a tax on the 
     failure of such employer to meet the requirements of 
     subsection (d) for such calendar year.
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) on any failure for any calendar year is the 
     amount equal to 35 percent of the aggregate amount 
     contributed by the employer to health savings accounts of 
     employees for taxable years of such employees ending with or 
     within such calendar year.
       ``(c) Waiver by Secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive relative to the failure involved.
       ``(d) Employer Required To Make Comparable Health Savings 
     Account Contributions for All Participating Employees.--
       ``(1) In general.--An employer meets the requirements of 
     this subsection for any calendar year if the employer makes 
     available comparable contributions to the health savings 
     accounts of all comparable participating employees for each 
     coverage period during such calendar year.
       ``(2) Comparable contributions.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `comparable contributions' means contributions--
       ``(i) which are the same amount, or
       ``(ii) which are the same percentage of the annual 
     deductible limit under the high deductible health plan 
     covering the employees.
       ``(B) Part-year employees.--In the case of an employee who 
     is employed by the employer for only a portion of the 
     calendar year, a contribution to the health savings account 
     of such employee shall be treated as comparable if it is an 
     amount which bears the same ratio to the comparable amount 
     (determined without regard to this subparagraph) as such 
     portion bears to the entire calendar year.
       ``(3) Comparable participating employees.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `comparable participating employees' means all employees--
       ``(i) who are eligible individuals covered under any high 
     deductible health plan of the employer, and
       ``(ii) who have the same category of coverage.
       ``(B) Categories of coverage.--For purposes of subparagraph 
     (B), the categories of coverage are self-only and family 
     coverage.
       ``(4) Part-time employees.--
       ``(A) In general .--Paragraph (3) shall be applied 
     separately with respect to part-time employees and other 
     employees.
       ``(B) Part-time employee.--For purposes of subparagraph 
     (A), the term `part-time employee' means any employee who is 
     customarily employed for fewer than 30 hours per week.
       ``(5) Special rule for non-highly compensated employees.--
     For purposes of applying this section to a contribution to a 
     health savings account of an employee who is not a highly 
     compensated employee (as defined in section 414(q)), highly 
     compensated employees shall not be treated as comparable 
     participating employees.
       ``(e) Controlled Groups.--For purposes of this section, all 
     persons treated as a single employer under subsection (b), 
     (c), (m), or (o) of section 414 shall be treated as 1 
     employer.
       ``(f) Definitions.--Terms used in this section which are 
     also used in section 223 have the respective meanings given 
     such terms in section 223.
       ``(g) Regulations.--The Secretary shall issue regulations 
     to carry out the purposes of this section.''.
       (11) Section 6051(a) is amended by striking paragraph (11).
       (12) Section 6051(a)(14)(A) is amended by striking 
     ``paragraphs (11) and (12)'' and inserting ``paragraph 
     (12)''.
       (d) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1312. DENIAL OF DEDUCTION FOR EXPENSES ATTRIBUTABLE TO 
                   THE TRADE OR BUSINESS OF BEING AN EMPLOYEE.

       (a) In General.--Part IX of subchapter B of chapter 1 is 
     amended by inserting after the item relating to section 262 
     the following new item:

     ``SEC. 262A. EXPENSES ATTRIBUTABLE TO BEING AN EMPLOYEE.

       ``(a) In General.--Except as otherwise provided in this 
     section, no deduction shall be allowed with respect to any 
     trade or business of the taxpayer which consists of the 
     performance of services by the taxpayer as an employee.
       ``(b) Exception for Above-the-line Deductions.--Subsection 
     (a) shall not apply to any deduction allowable (determined 
     without regard to subsection (a)) in determining adjusted 
     gross income.''.
       (b) Repeal of Certain Above-the-line Trade and Business 
     Deductions of Employees.--
       (1) In general.--Section 62(a)(2) is amended--
       (A) by striking subparagraphs (B), (C), and (D), and
       (B) by redesignating subparagraph (E) as subparagraph (B).
       (2) Conforming amendments.--
       (A) Section 62 is amended by striking subsections (b) and 
     (d) and by redesignating subsections (c) and (e) as 
     subsections (b) and (c), respectively.
       (B) Section 62(a)(20) is amended by striking ``subsection 
     (e)'' and inserting ``subsection (c)''.
       (c) Continued Exclusion of Working Condition Fringe 
     Benefits.--Section 132(d) is amended by inserting 
     ``(determined without regard to section 262A)'' after 
     ``section 162''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

    Subtitle E--Simplification and Reform of Exclusions and Taxable 
                              Compensation

     SEC. 1401. LIMITATION ON EXCLUSION FOR EMPLOYER-PROVIDED 
                   HOUSING.

       (a) In General.--Section 119 is amended by adding at the 
     end the following new subsection:
       ``(e) Limitation on Exclusion of Lodging.--
       ``(1) In general.--The aggregate amount excluded from gross 
     income of the taxpayer under subsections (a) and (d) with 
     respect to lodging for any taxable year shall not exceed 
     $50,000 (half such amount in the case of a married individual 
     filing a separate return).
       ``(2) Limitation to 1 home.--Subsections (a) and (d) 
     (separately and in combination) shall not apply with respect 
     to more than 1 residence of the taxpayer at any given time. 
     In the case of a joint return, the preceding sentence shall 
     apply separately to each spouse for any period during which 
     each spouse resides separate from the other spouse in a 
     residence which is provided in connection with the employment 
     of each spouse, respectively.
       ``(3) Limitation for highly compensated employees.--
       ``(A) Reduced for excess compensation.--In the case of an 
     individual whose compensation for the taxable year exceeds 
     the amount in effect under section 414(q)(1)(B)(i) for the 
     calendar in which such taxable year begins, the $50,000 
     amount under paragraph (1) shall be reduced (but not below 
     zero) by an amount equal to 50 percent of such excess. For 
     purposes of the preceding sentence, the term `compensation' 
     means wages (as defined in section 3121(a) (without regard to 
     the contribution and benefit base limitation in section 
     3121(a)(1)).
       ``(B) Exclusion denied for 5-percent owners.--In the case 
     of an individual who is a 5-percent owner (as defined in 
     section 416(i)(1)(B)(i)) of the employer at any time during 
     the taxable year, the amount under paragraph (1) shall be 
     zero.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1402. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL 
                   RESIDENCE.

       (a) Requirement That Residence Be Principal Residence for 5 
     Years During 8-year Period.--Subsection (a) of section 121 is 
     amended--
       (1) by striking ``5-year period'' and inserting ``8-year 
     period'', and
       (2) by striking ``2 years'' and inserting ``5 years''.
       (b) Application to Only 1 Sale or Exchange Every 5 Years.--
     Paragraph (3) of section 121(b) is amended to read as 
     follows:
       ``(3) Application to only 1 sale or exchange every 5 
     years.--Subsection (a) shall not apply to any sale or 
     exchange by the taxpayer if, during the 5-year period ending 
     on the date of such sale or exchange, there was any other 
     sale or exchange by the taxpayer to which subsection (a) 
     applied.''.
       (c) Phaseout Based on Modified Adjusted Gross Income.--
     Section 121 is amended by adding at the end the following new 
     subsection:
       ``(h) Phaseout Based on Modified Adjusted Gross Income.--
       ``(1) In general.--If the average modified adjusted gross 
     income of the taxpayer for the taxable year and the 2 
     preceding taxable years exceeds $250,000 (twice such amount 
     in the case of a joint return), the amount which would (but 
     for this subsection) be excluded from gross income under 
     subsection (a) for such taxable year shall be reduced (but 
     not below zero) by the amount of such excess.
       ``(2) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means, 
     with respect to any taxable year, adjusted gross income 
     determined after application of this section (but without 
     regard to subsection (b)(1) and this subsection).
       ``(3) Special rule for joint returns.--In the case of a 
     joint return, the average modified adjusted gross income of 
     the taxpayer shall be determined without regard to any 
     taxable year with respect to which the taxpayer did not file 
     a joint return.''.
       (d) Conforming Amendments.--
       (1) The following provisions of section 121 are each 
     amended by striking ``5-year period'' each place it appears 
     therein and inserting ``8-year period'':
       (A) Subsection (b)(5)(C)(ii)(I).
       (B) Subsection (c)(1)(B)(i)(I).
       (C) Subsection (d)(7)(B).
       (D) Subparagraphs (A) and (B) of subsection (d)(9).
       (E) Subsection (d)(10).
       (F) Subsection (d)(12)(A).
       (2) Section 121(c)(1)(B)(ii) is amended by striking ``2 
     years'' and inserting ``5 years'':
       (e) Effective Date.--The amendments made by this section 
     shall apply to sales and exchanges after December 31, 2017.

[[Page H9317]]

  


     SEC. 1403. REPEAL OF EXCLUSION, ETC., FOR EMPLOYEE 
                   ACHIEVEMENT AWARDS.

       (a) In General.--Section 74 is amended by striking 
     subsection (c).
       (b) Repeal of Limitation on Deduction.--Section 274 is 
     amended by striking subsection (j).
       (c) Conforming Amendments.--
       (1) Section 102(c)(2) is amended by striking the first 
     sentence.
       (2) Section 414(n)(3)(C) is amended by striking 
     ``274(j),''.
       (3) Section 414(t)(2) is amended by striking ``274(j),''.
       (4) Section 3121(a)(20) is amended by striking ``74(c)''.
       (5) Section 3231(e)(5) is amended by striking ``74(c),''.
       (6) Section 3306(b)(16) is amended by striking ``74(c),''.
       (7) Section 3401(a)(19) is amended by striking ``74(c),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1404. SUNSET OF EXCLUSION FOR DEPENDENT CARE ASSISTANCE 
                   PROGRAMS.

       (a) In General.--Section 129 is amended by adding at the 
     end the following new subsection:
       ``(f) Termination.--Subsection (a) shall not apply to 
     taxable years beginning after December 31, 2022.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1405. REPEAL OF EXCLUSION FOR QUALIFIED MOVING EXPENSE 
                   REIMBURSEMENT.

       (a) In General.--Section 132(a) is amended by striking 
     paragraph (6).
       (b) Conforming Amendments.--
       (1) Section 82 is amended by striking ``Except as provided 
     in section 132(a)(6), there'' and inserting ``There''.
       (2) Section 132 is amended by striking subsection (g).
       (3) Section 132(l) is amended by striking by striking 
     ``subsections (e) and (g)'' and inserting ``subsection (e)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1406. REPEAL OF EXCLUSION FOR ADOPTION ASSISTANCE 
                   PROGRAMS.

       (a) In General.--Part III of subchapter B of chapter 1 is 
     amended by striking section 137 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Conforming Amendments.--
       (1) Sections 414(n)(3)(C), 414(t)(2), 74(d)(2)(B), 
     86(b)(2)(A), 219(g)(3)(A)(ii) are each amended by striking 
     ``, 137''.
       (2) Section 1016(a), as amended by the preceding provision 
     of this Act, is amended by striking paragraph (26).
       (3) Section 6039D(d)(1), as amended by the preceding 
     provisions of this Act, is amended--
       (A) by striking ``, or 137'', and
       (B) by inserting ``or'' before ``125''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

 Subtitle F--Simplification and Reform of Savings, Pensions, Retirement

     SEC. 1501. REPEAL OF SPECIAL RULE PERMITTING 
                   RECHARACTERIZATION OF ROTH IRA CONTRIBUTIONS AS 
                   TRADITIONAL IRA CONTRIBUTIONS.

       (a) In General.--Section 408A(d) is amended by striking 
     paragraph (6) and by redesignating paragraph (7) as paragraph 
     (6).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1502. REDUCTION IN MINIMUM AGE FOR ALLOWABLE IN-SERVICE 
                   DISTRIBUTIONS.

       (a) In General.--Section 401(a)(36) is amended by striking 
     ``age 62'' and inserting ``age 59 \1/2\''.
       (b) Application to Governmental Section 457(b) Plans.--
     Clause (i) of section 457(d)(1)(A) is amended by inserting 
     ``(in the case of a plan maintained by an employer described 
     in subsection (e)(1)(A), age 59 \1/2\)'' before the comma at 
     the end.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2017.

     SEC. 1503. MODIFICATION OF RULES GOVERNING HARDSHIP 
                   DISTRIBUTIONS.

       (a) In General.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of the Treasury 
     shall modify Treasury Regulation section 1.401(k)-
     1(d)(3)(iv)(E) to--
       (1) delete the 6-month prohibition on contributions imposed 
     by paragraph (2) thereof, and
       (2) make any other modifications necessary to carry out the 
     purposes of section 401(k)(2)(B)(i)(IV) of the Internal 
     Revenue Code of 1986.
       (b) Effective Date.--The revised regulations under this 
     section shall apply to plan years beginning after December 
     31, 2017.

     SEC. 1504. MODIFICATION OF RULES RELATING TO HARDSHIP 
                   WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.

       (a) In General.--Section 401(k) is amended by adding at the 
     end the following:
       ``(14) Special rules relating to hardship withdrawals.--For 
     purposes of paragraph (2)(B)(i)(IV)--
       ``(A) Amounts which may be withdrawn.--The following 
     amounts may be distributed upon hardship of the employee:
       ``(i) Contributions to a profit-sharing or stock bonus plan 
     to which section 402(e)(3) applies.
       ``(ii) Qualified nonelective contributions (as defined in 
     subsection (m)(4)(C)).
       ``(iii) Qualified matching contributions described in 
     paragraph (3)(D)(ii)(I).
       ``(iv) Earnings on any contributions described in clause 
     (i), (ii), or (iii).
       ``(B) No requirement to take available loan.--A 
     distribution shall not be treated as failing to be made upon 
     the hardship of an employee solely because the employee does 
     not take any available loan under the plan.".''.
       (b) Conforming Amendment.--Section 401(k)(2)(B)(i)(IV) is 
     amended to read as follows:

       ``(IV) subject to the provisions of paragraph (14), upon 
     hardship of the employee, or".''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2017.

     SEC. 1505. EXTENDED ROLLOVER PERIOD FOR THE ROLLOVER OF PLAN 
                   LOAN OFFSET AMOUNTS IN CERTAIN CASES.

       (a) In General.--Paragraph (3) of section 402(c) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Rollover of certain plan loan offset amounts.--
       ``(i) In general.--In the case of a qualified plan loan 
     offset amount, paragraph (1) shall not apply to any transfer 
     of such amount made after the due date (including extensions) 
     for filing the return of tax for the taxable year in which 
     such amount is treated as distributed from a qualified 
     employer plan.
       ``(ii) Qualified plan loan offset amount.--For purposes of 
     this subparagraph, the term `qualified plan loan offset 
     amount' means a plan loan offset amount which is treated as 
     distributed from a qualified employer plan to a participant 
     or beneficiary solely by reason of--

       ``(I) the termination of the qualified employer plan, or
       ``(II) the failure to meet the repayment terms of the loan 
     from such plan because of the separation from service of the 
     participant (whether due to layoff, cessation of business, 
     termination of employment, or otherwise).

       ``(iii) Plan loan offset amount.--For purposes of clause 
     (ii), the term `plan loan offset amount' means the amount by 
     which the participant's accrued benefit under the plan is 
     reduced in order to repay a loan from the plan.
       ``(iv) Limitation.--This subparagraph shall not apply to 
     any plan loan offset amount unless such plan loan offset 
     amount relates to a loan to which section 72(p)(1) does not 
     apply by reason of section 72(p)(2).
       ``(v) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' has the 
     meaning given such term by section 72(p)(4).''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     402(c)(3) is amended by striking ``subparagraph (B)'' and 
     inserting ``subparagraphs (B) and (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 1506. MODIFICATION OF NONDISCRIMINATION RULES TO PROTECT 
                   OLDER, LONGER SERVICE PARTICIPANTS.

       (a) In General.--Section 401 is amended--
       (1) by redesignating subsection (o) as subsection (p), and
       (2) by inserting after subsection (n) the following new 
     subsection:
       ``(o) Special Rules for Applying Nondiscrimination Rules to 
     Protect Older, Longer Service and Grandfathered 
     Participants.--
       ``(1) Testing of defined benefit plans with closed classes 
     of participants.--
       ``(A) Benefits, rights, or features provided to closed 
     classes.--A defined benefit plan which provides benefits, 
     rights, or features to a closed class of participants shall 
     not fail to satisfy the requirements of subsection (a)(4) by 
     reason of the composition of such closed class or the 
     benefits, rights, or features provided to such closed class, 
     if--
       ``(i) for the plan year as of which the class closes and 
     the 2 succeeding plan years, such benefits, rights, and 
     features satisfy the requirements of subsection (a)(4) 
     (without regard to this subparagraph but taking into account 
     the rules of subparagraph (I)),
       ``(ii) after the date as of which the class was closed, any 
     plan amendment which modifies the closed class or the 
     benefits, rights, and features provided to such closed class 
     does not discriminate significantly in favor of highly 
     compensated employees, and
       ``(iii) the class was closed before April 5, 2017, or the 
     plan is described in subparagraph (C).
       ``(B) Aggregate testing with defined contribution plans 
     permitted on a benefits basis.--
       ``(i) In general.--For purposes of determining compliance 
     with subsection (a)(4) and section 410(b), a defined benefit 
     plan described in clause (iii) may be aggregated and tested 
     on a benefits basis with 1 or more defined contribution 
     plans, including with the portion of 1 or more defined 
     contribution plans which--

       ``(I) provides matching contributions (as defined in 
     subsection (m)(4)(A)),
       ``(II) provides annuity contracts described in section 
     403(b) which are purchased with matching contributions or 
     nonelective contributions, or
       ``(III) consists of an employee stock ownership plan 
     (within the meaning of section 4975(e)(7)) or a tax credit 
     employee stock ownership plan (within the meaning of section 
     409(a)).

       ``(ii) Special rules for matching contributions.--For 
     purposes of clause (i), if a defined benefit plan is 
     aggregated with a portion of a defined contribution plan 
     providing matching contributions--

       ``(I) such defined benefit plan must also be aggregated 
     with any portion of such defined contribution plan which 
     provides elective deferrals described in subparagraph (A) or 
     (C) of section 402(g)(3), and
       ``(II) such matching contributions shall be treated in the 
     same manner as nonelective contributions, including for 
     purposes of applying the rules of subsection (l).

[[Page H9318]]

       ``(iii) Plans described.--A defined benefit plan is 
     described in this clause if--

       ``(I) the plan provides benefits to a closed class of 
     participants,
       ``(II) for the plan year as of which the class closes and 
     the 2 succeeding plan years, the plan satisfies the 
     requirements of section 410(b) and subsection (a)(4) (without 
     regard to this subparagraph but taking into account the rules 
     of subparagraph (I)),
       ``(III) after the date as of which the class was closed, 
     any plan amendment which modifies the closed class or the 
     benefits provided to such closed class does not discriminate 
     significantly in favor of highly compensated employees, and
       ``(IV) the class was closed before April 5, 2017, or the 
     plan is described in subparagraph (C).

       ``(C) Plans described.--A plan is described in this 
     subparagraph if, taking into account any predecessor plan--
       ``(i) such plan has been in effect for at least 5 years as 
     of the date the class is closed, and
       ``(ii) during the 5-year period preceding the date the 
     class is closed, there has not been a substantial increase in 
     the coverage or value of the benefits, rights, or features 
     described in subparagraph (A) or in the coverage or benefits 
     under the plan described in subparagraph (B)(iii) (whichever 
     is applicable).
       ``(D) Determination of substantial increase for benefits, 
     rights, and features.--In applying subparagraph (C)(ii) for 
     purposes of subparagraph (A)(iii), a plan shall be treated as 
     having had a substantial increase in coverage or value of the 
     benefits, rights, or features described in subparagraph (A) 
     during the applicable 5-year period only if, during such 
     period--
       ``(i) the number of participants covered by such benefits, 
     rights, or features on the date such period ends is more than 
     50 percent greater than the number of such participants on 
     the first day of the plan year in which such period began, or
       ``(ii) such benefits, rights, and features have been 
     modified by 1 or more plan amendments in such a way that, as 
     of the date the class is closed, the value of such benefits, 
     rights, and features to the closed class as a whole is 
     substantially greater than the value as of the first day of 
     such 5-year period, solely as a result of such amendments.
       ``(E) Determination of substantial increase for aggregate 
     testing on benefits basis.--In applying subparagraph (C)(ii) 
     for purposes of subparagraph (B)(iii)(IV), a plan shall be 
     treated as having had a substantial increase in coverage or 
     benefits during the applicable 5-year period only if, during 
     such period--
       ``(i) the number of participants benefitting under the plan 
     on the date such period ends is more than 50 percent greater 
     than the number of such participants on the first day of the 
     plan year in which such period began, or
       ``(ii) the average benefit provided to such participants on 
     the date such period ends is more than 50 percent greater 
     than the average benefit provided on the first day of the 
     plan year in which such period began.
       ``(F) Certain employees disregarded.--For purposes of 
     subparagraphs (D) and (E), any increase in coverage or value 
     or in coverage or benefits, whichever is applicable, which is 
     attributable to such coverage and value or coverage and 
     benefits provided to employees--
       ``(i) who became participants as a result of a merger, 
     acquisition, or similar event which occurred during the 7-
     year period preceding the date the class is closed, or
       ``(ii) who became participants by reason of a merger of the 
     plan with another plan which had been in effect for at least 
     5 years as of the date of the merger,
     shall be disregarded, except that clause (ii) shall apply for 
     purposes of subparagraph (D) only if, under the merger, the 
     benefits, rights, or features under 1 plan are conformed to 
     the benefits, rights, or features of the other plan 
     prospectively.
       ``(G) Rules relating to average benefit.--For purposes of 
     subparagraph (E)--
       ``(i) the average benefit provided to participants under 
     the plan will be treated as having remained the same between 
     the 2 dates described in subparagraph (E)(ii) if the benefit 
     formula applicable to such participants has not changed 
     between such dates, and
       ``(ii) if the benefit formula applicable to 1 or more 
     participants under the plan has changed between such 2 dates, 
     then the average benefit under the plan shall be considered 
     to have increased by more than 50 percent only if--

       ``(I) the total amount determined under section 
     430(b)(1)(A)(i) for all participants benefitting under the 
     plan for the plan year in which the 5-year period described 
     in subparagraph (E) ends, exceeds
       ``(II) the total amount determined under section 
     430(b)(1)(A)(i) for all such participants for such plan year, 
     by using the benefit formula in effect for each such 
     participant for the first plan year in such 5-year period, by 
     more than 50 percent.

     In the case of a CSEC plan (as defined in section 414(y)), 
     the normal cost of the plan (as determined under section 
     433(j)(1)(B)) shall be used in lieu of the amount determined 
     under section 430(b)(1)(A)(i).
       ``(H) Treatment as single plan.--For purposes of 
     subparagraphs (E) and (G), a plan described in section 413(c) 
     shall be treated as a single plan rather than as separate 
     plans maintained by each participating employer.
       ``(I) Special rules.--For purposes of subparagraphs (A)(i) 
     and (B)(iii)(II), the following rules shall apply:
       ``(i) In applying section 410(b)(6)(C), the closing of the 
     class of participants shall not be treated as a significant 
     change in coverage under section 410(b)(6)(C)(i)(II).
       ``(ii) 2 or more plans shall not fail to be eligible to be 
     aggregated and treated as a single plan solely by reason of 
     having different plan years.
       ``(iii) Changes in the employee population shall be 
     disregarded to the extent attributable to individuals who 
     become employees or cease to be employees, after the date the 
     class is closed, by reason of a merger, acquisition, 
     divestiture, or similar event.
       ``(iv) Aggregation and all other testing methodologies 
     otherwise applicable under subsection (a)(4) and section 
     410(b) may be taken into account.
     The rule of clause (ii) shall also apply for purposes of 
     determining whether plans to which subparagraph (B)(i) 
     applies may be aggregated and treated as 1 plan for purposes 
     of determining whether such plans meet the requirements of 
     subsection (a)(4) and section 410(b).
       ``(J) Spun-off plans.--For purposes of this paragraph, if a 
     portion of a defined benefit plan described in subparagraph 
     (A) or (B)(iii) is spun off to another employer and the spun-
     off plan continues to satisfy the requirements of--
       ``(i) subparagraph (A)(i) or (B)(iii)(II), whichever is 
     applicable, if the original plan was still within the 3-year 
     period described in such subparagraph at the time of the spin 
     off, and
       ``(ii) subparagraph (A)(ii) or (B)(iii)(III), whichever is 
     applicable,
     the treatment under subparagraph (A) or (B) of the spun-off 
     plan shall continue with respect to such other employer.
       ``(2) Testing of defined contribution plans.--
       ``(A) Testing on a benefits basis.--A defined contribution 
     plan shall be permitted to be tested on a benefits basis if--
       ``(i) such defined contribution plan provides make-whole 
     contributions to a closed class of participants whose 
     accruals under a defined benefit plan have been reduced or 
     eliminated,
       ``(ii) for the plan year of the defined contribution plan 
     as of which the class eligible to receive such make-whole 
     contributions closes and the 2 succeeding plan years, such 
     closed class of participants satisfies the requirements of 
     section 410(b)(2)(A)(i) (determined by applying the rules of 
     paragraph (1)(I)),
       ``(iii) after the date as of which the class was closed, 
     any plan amendment to the defined contribution plan which 
     modifies the closed class or the allocations, benefits, 
     rights, and features provided to such closed class does not 
     discriminate significantly in favor of highly compensated 
     employees, and
       ``(iv) the class was closed before April 5, 2017, or the 
     defined benefit plan under clause (i) is described in 
     paragraph (1)(C) (as applied for purposes of paragraph 
     (1)(B)(iii)(IV)).
       ``(B) Aggregation with plans including matching 
     contributions.--
       ``(i) In general.--With respect to 1 or more defined 
     contribution plans described in subparagraph (A), for 
     purposes of determining compliance with subsection (a)(4) and 
     section 410(b), the portion of such plans which provides 
     make-whole contributions or other nonelective contributions 
     may be aggregated and tested on a benefits basis with the 
     portion of 1 or more other defined contribution plans which--

       ``(I) provides matching contributions (as defined in 
     subsection (m)(4)(A)),
       ``(II) provides annuity contracts described in section 
     403(b) which are purchased with matching contributions or 
     nonelective contributions, or
       ``(III) consists of an employee stock ownership plan 
     (within the meaning of section 4975(e)(7)) or a tax credit 
     employee stock ownership plan (within the meaning of section 
     409(a)).

       ``(ii) Special rules for matching contributions.--Rules 
     similar to the rules of paragraph (1)(B)(ii) shall apply for 
     purposes of clause (i).
       ``(C) Special rules for testing defined contribution plan 
     features providing matching contributions to certain older, 
     longer service participants.--In the case of a defined 
     contribution plan which provides benefits, rights, or 
     features to a closed class of participants whose accruals 
     under a defined benefit plan have been reduced or eliminated, 
     the plan shall not fail to satisfy the requirements of 
     subsection (a)(4) solely by reason of the composition of the 
     closed class or the benefits, rights, or features provided to 
     such closed class if the defined contribution plan and 
     defined benefit plan otherwise meet the requirements of 
     subparagraph (A) but for the fact that the make-whole 
     contributions under the defined contribution plan are made in 
     whole or in part through matching contributions.
       ``(D) Spun-off plans.--For purposes of this paragraph, if a 
     portion of a defined contribution plan described in 
     subparagraph (A) or (C) is spun off to another employer, the 
     treatment under subparagraph (A) or (C) of the spun-off plan 
     shall continue with respect to the other employer if such 
     plan continues to comply with the requirements of clauses 
     (ii) (if the original plan was still within the 3-year period 
     described in such clause at the time of the spin off) and 
     (iii) of subparagraph (A), as determined for purposes of 
     subparagraph (A) or (C), whichever is applicable.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Make-whole contributions.--Except as otherwise 
     provided in paragraph (2)(C), the term `make-whole 
     contributions' means nonelective allocations for each 
     employee in the class which are reasonably calculated, in a 
     consistent manner, to replace some or all of the retirement 
     benefits which the employee would have received under the 
     defined benefit plan and any other plan or qualified cash or 
     deferred arrangement under subsection (k)(2) if no change had 
     been made to such defined benefit plan and such other plan or 
     arrangement. For purposes of the preceding sentence, 
     consistency shall not be required with respect to employees 
     who were subject to different benefit formulas under the 
     defined benefit plan.
       ``(B) References to closed class of participants.--
     References to a closed class of participants and similar 
     references to a closed class

[[Page H9319]]

     shall include arrangements under which 1 or more classes of 
     participants are closed, except that 1 or more classes of 
     participants closed on different dates shall not be 
     aggregated for purposes of determining the date any such 
     class was closed.
       ``(C) Highly compensated employee.--The term `highly 
     compensated employee' has the meaning given such term in 
     section 414(q).".''.
       (b) Participation Requirements.--Paragraph (26) of section 
     401(a) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Protected participants.--
       ``(i) In general.--A plan shall be deemed to satisfy the 
     requirements of subparagraph (A) if--

       ``(I) the plan is amended--

       ``(aa) to cease all benefit accruals, or
       ``(bb) to provide future benefit accruals only to a closed 
     class of participants,

       ``(II) the plan satisfies subparagraph (A) (without regard 
     to this subparagraph) as of the effective date of the 
     amendment, and
       ``(III) the amendment was adopted before April 5, 2017, or 
     the plan is described in clause (ii).

       ``(ii) Plans described.--A plan is described in this clause 
     if the plan would be described in subsection (o)(1)(C), as 
     applied for purposes of subsection (o)(1)(B)(iii)(IV) and by 
     treating the effective date of the amendment as the date the 
     class was closed for purposes of subsection (o)(1)(C).
       ``(iii) Special rules.--For purposes of clause (i)(II), in 
     applying section 410(b)(6)(C), the amendments described in 
     clause (i) shall not be treated as a significant change in 
     coverage under section 410(b)(6)(C)(i)(II).
       ``(iv) Spun-off plans.--For purposes of this subparagraph, 
     if a portion of a plan described in clause (i) is spun off to 
     another employer, the treatment under clause (i) of the spun-
     off plan shall continue with respect to the other 
     employer.''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act, without regard to whether any 
     plan modifications referred to in such amendments are adopted 
     or effective before, on, or after such date of enactment.
       (2) Special rules.--
       (A) Election of earlier application.--At the election of 
     the plan sponsor, the amendments made by this section shall 
     apply to plan years beginning after December 31, 2013.
       (B) Closed classes of participants.--For purposes of 
     paragraphs (1)(A)(iii), (1)(B)(iii)(IV), and (2)(A)(iv) of 
     section 401(o) of the Internal Revenue Code of 1986 (as added 
     by this section), a closed class of participants shall be 
     treated as being closed before April 5, 2017, if the plan 
     sponsor's intention to create such closed class is reflected 
     in formal written documents and communicated to participants 
     before such date.
       (C) Certain post-enactment plan amendments.--A plan shall 
     not be treated as failing to be eligible for the application 
     of section 401(o)(1)(A), 401(o)(1)(B)(iii), or 401(a)(26) of 
     such Code (as added by this section) to such plan solely 
     because in the case of--
       (i) such section 401(o)(1)(A), the plan was amended before 
     the date of the enactment of this Act to eliminate 1 or more 
     benefits, rights, or features, and is further amended after 
     such date of enactment to provide such previously eliminated 
     benefits, rights, or features to a closed class of 
     participants, or
       (ii) such section 401(o)(1)(B)(iii) or section 401(a)(26), 
     the plan was amended before the date of the enactment of this 
     Act to cease all benefit accruals, and is further amended 
     after such date of enactment to provide benefit accruals to a 
     closed class of participants. Any such section shall only 
     apply if the plan otherwise meets the requirements of such 
     section and in applying such section, the date the class of 
     participants is closed shall be the effective date of the 
     later amendment.

    Subtitle G--Estate, Gift, and Generation-skipping Transfer Taxes

     SEC. 1601. INCREASE IN CREDIT AGAINST ESTATE, GIFT, AND 
                   GENERATION-SKIPPING TRANSFER TAX.

       (a) In General.--Section 2010(c)(3) is amended by striking 
     ``$5,000,000'' and inserting ``$10,000,000''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, generation-
     skipping transfers, and gifts made, after December 31, 2017.

     SEC. 1602. REPEAL OF ESTATE AND GENERATION-SKIPPING TRANSFER 
                   TAXES.

       (a) Estate Tax Repeal.--
       (1) In general.--Subchapter C of chapter 11 is amended by 
     adding at the end the following new section:

     ``SEC. 2210. TERMINATION.

       ``(a) In General.--Except as provided in subsection (b), 
     this chapter shall not apply to the estates of decedents 
     dying after December 31, 2024.
       ``(b) Certain Distributions From Qualified Domestic 
     Trusts.--In applying section 2056A with respect to the 
     surviving spouse of a decedent dying on or before December 
     31, 2024--
       ``(1) section 2056A(b)(1)(A) shall not apply to 
     distributions made after the 10-year period beginning on such 
     date, and
       ``(2) section 2056A(b)(1)(B) shall not apply after such 
     date.''.
       (2) Conforming amendments.--Section 1014(b) is amended--
       (A) in paragraph (6), by striking ``was includible in 
     determining'' and all that follows through the end and 
     inserting ``was includible (or would have been includible 
     without regard to section 2210) in determining the value of 
     the decedent's gross estate under chapter 11 of subtitle B'' 
     ,
       (B) in paragraph (9), by striking ``required to be 
     included'' through ``Code of 1939'' and inserting ``required 
     to be included (or would have been required to be included 
     without regard to section 2210) in determining the value of 
     the decedent's gross estate under chapter 11 of subtitle B'', 
     and
       (C) in paragraph (10), by striking ``Property includible in 
     the gross estate'' and inserting ``Property includible (or 
     which would have been includible without regard to section 
     2210) in the gross estate''.
       (3) Clerical amendment.--The table of sections for 
     subchapter C of chapter 11 is amended by adding at the end 
     the following new item:

``Sec. 2210. Termination.''.
       (b) Generation-skipping Transfer Tax Repeal.--
       (1) In general.--Subchapter G of chapter 13 of subtitle B 
     of such Code is amended by adding at the end the following 
     new section:

     ``SEC. 2664. TERMINATION.

       ``This chapter shall not apply to generation-skipping 
     transfers after December 31, 2024.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter G of chapter 13 of such Code is amended by adding 
     at the end the following new item:

``Sec. 2664. Termination.''.
       (c) Conforming Amendments Related to Gift Tax.--
       (1) Computation of gift tax.--Section 2502 is amended by 
     adding at the end the following new subsection:
       ``(d) Gifts Made After 2024.--
       ``(1) In general.--In the case of a gift made after 
     December 31, 2024, subsection (a) shall be applied by 
     substituting `subsection (d)(2)' for `section 2001(c)' and 
     `such subsection' for `such section'.
       ``(2) Rate schedule.--


``If the amount with respect to which    The tentative tax is:
 the tentative tax to be computed is:.
Not over $10,000.......................  18% of such amount.
Over $10,000 but not over $20,000......  $1,800, plus 20% of the excess
                                          over $10,000.
Over $20,000 but not over $40,000......  $3,800, plus 22% of the excess
                                          over $20,000.
Over $40,000 but not over $60,000......  $8,200, plus 24% of the excess
                                          over $40,000.
Over $60,000 but not over $80,000......  $13,000, plus 26% of the excess
                                          over $60,000.
Over $80,000 but not over $100,000.....  $18,200, plus 28% of the excess
                                          over $80,000.
Over $100,000 but not over $150,000....  $23,800, plus 30% of the excess
                                          over $100,000.
Over $150,000 but not over $250,000....  $38,800, plus 32% of the excess
                                          of $150,000.
Over $250,000 but not over $500,000....  $70,800, plus 34% of the excess
                                          over $250,000.
Over $500,000..........................  $155,800, plus 35% of the
                                          excess of $500,000.''.
 

       (2) Lifetime gift exemption.--Section 2505 is amended by 
     adding at the end the following new subsection:
       ``(d) Gifts Made After 2024.--
       ``(1) In general.--In the case of a gift made after 
     December 31, 2024, subsection (a)(1) shall be applied by 
     substituting `the amount of the tentative tax which would be 
     determined under the rate schedule set forth in section 
     2502(a)(2) if the amount with respect to which such tentative 
     tax is to be computed were $10,000,000' for `the applicable 
     credit amount in effect under section 2010(c) which would 
     apply if the donor died as of the end of the calendar year'.
       ``(2) Inflation adjustment.--
       ``(A) In general.--In the case of any calendar year after 
     2024, the dollar amount in subsection (a)(1) (after 
     application of this subsection) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by

[[Page H9320]]

       ``(ii) the cost-of-living adjustment determined under 
     section 1(c)(2)(A) of such calendar year by substituting 
     `calendar year 2011' for `calendar year 2016' in clause (ii) 
     thereof.
       ``(B) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $10,000, such amount shall be 
     rounded to the nearest multiple of $10,000.''.
       (3) Other conforming amendments related to gift tax.--
     Section 2801 is amended by adding at the end the following 
     new subsection:
       ``(g) Gifts Received After 2024.--In the case of a gift 
     received after December 31, 2024, subsection (a)(1) shall be 
     applied by substituting `section 2502(a)(2)' for `section 
     2001(c) as in effect on the date of such receipt'.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, generation-
     skipping transfers, and gifts made, after December 31, 2024.

                TITLE II--ALTERNATIVE MINIMUM TAX REPEAL

     SEC. 2001. REPEAL OF ALTERNATIVE MINIMUM TAX.

       (a) In General.--Subchapter A of chapter 1 is amended by 
     striking part VI (and by striking the item relating to such 
     part in the table of parts for subchapter A).
       (b) Credit for Prior Year Minimum Tax Liability.--
       (1) Limitation.--Subsection (c) of section 53 is amended to 
     read as follows:
       ``(c) Limitation.--The credit allowable under subsection 
     (a) shall not exceed the regular tax liability of the 
     taxpayer reduced by the sum of the credits allowed under 
     subparts A, B, and D.''.
       (2) Credits treated as refundable.--Section 53 is amended 
     by adding at the end the following new subsection:
       ``(e) Portion of Credit Treated as Refundable.--
       ``(1) In general.--In the case of any taxable year 
     beginning in 2019, 2020, 2021, or 2022, the limitation under 
     subsection (c) shall be increased by the AMT refundable 
     credit amount for such year.
       ``(2) AMT refundable credit amount.--For purposes of 
     paragraph (1), the AMT refundable credit amount is an amount 
     equal to 50 percent (100 percent in the case of a taxable 
     year beginning in 2022) of the excess (if any) of--
       ``(A) the minimum tax credit determined under subsection 
     (b) for the taxable year, over
       ``(B) the minimum tax credit allowed under subsection (a) 
     for such year (before the application of this subsection for 
     such year).
       ``(3) Credit refundable.--For purposes of this title (other 
     than this section), the credit allowed by reason of this 
     subsection shall be treated as a credit allowed under subpart 
     C (and not this subpart).
       ``(4) Short taxable years.--In the case of any taxable year 
     of less than 365 days, the AMT refundable credit amount 
     determined under paragraph (2) with respect to such taxable 
     year shall be the amount which bears the same ratio to such 
     amount determined without regard to this paragraph as the 
     number of days in such taxable year bears to 365.''.
       (3) Treatment of references.--Section 53(d) is amended by 
     adding at the end the following new paragraph:
       ``(3) AMT term references.--Any references in this 
     subsection to section 55, 56, or 57 shall be treated as a 
     reference to such section as in effect before its repeal by 
     the Tax Cuts and Jobs Act.''.
       (c) Conforming Amendments Related to AMT Repeal.--
       (1) Section 2(d) is amended by striking ``sections 1 and 
     55'' and inserting ``section 1''.
       (2) Section 5(a) is amended by striking paragraph (4).
       (3) Section 11(d) is amended by striking ``the taxes 
     imposed by subsection (a) and section 55'' and inserting 
     ``the tax imposed by subsection (a)''.
       (4) Section 12 is amended by striking paragraph (7).
       (5) Section 26(a) is amended to read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the taxpayer's regular tax liability 
     for the taxable year.''.
       (6) Section 26(b)(2) is amended by striking subparagraph 
     (A).
       (7) Section 26 is amended by striking subsection (c).
       (8) Section 38(c) is amended--
       (A) by striking paragraphs (1) through (5),
       (B) by redesignating paragraph (6) as paragraph (2),
       (C) by inserting before paragraph (2) (as so redesignated) 
     the following new paragraph:
       ``(1) In general.--The credit allowed under subsection (a) 
     for any taxable year shall not exceed the excess (if any) 
     of--
       ``(A) the sum of--
       ``(i) so much of the regular tax liability as does not 
     exceed $25,000, plus
       ``(ii) 75 percent of so much of the regular tax liability 
     as exceeds $25,000, over
       ``(B) the sum of the credits allowable under subparts A and 
     B of this part.'', and
       (D) by striking ``subparagraph (B) of paragraph (1)'' each 
     place it appears in paragraph (2) (as so redesignated) and 
     inserting ``clauses (i) and (ii) of paragraph (1)(A)''.
       (9) Section 39(a) is amended--
       (A) by striking ``or the eligible small business credits'' 
     in paragraph (3)(A), and
       (B) by striking paragraph (4).
       (10) Section 45D(g)(4)(B) is amended by striking ``or for 
     purposes of section 55''.
       (11) Section 54(c)(1) is amended to read as follows:
       ``(1) regular tax liability (as defined in section 26(b)), 
     over''.
       (12) Section 54A(c)(1)(A) is amended to read as follows:
       ``(A) regular tax liability (as defined in section 26(b)), 
     over''.
       (13) Section 148(b)(3) is amended to read as follows:
       ``(3) Tax-exempt bonds not treated as investment 
     property.--The term `investment property' does not include 
     any tax-exempt bond.''.
       (14) Section 168(k)(2) is amended by striking subparagraph 
     (G).
       (15) Section 168(k) is amended by striking paragraph (4).
       (16) Section 168(k)(5) is amended by striking subparagraph 
     (E).
       (17) Section 168(m)(2)(B)(i) is amended by striking 
     ``(determined without regard to paragraph (4) thereof)''.
       (18) Section 168(m)(2) is amended by striking subparagraph 
     (D).
       (19) Section 173 is amended by striking subsection (b).
       (20) Section 263(c) is amended by striking ``section 59(e) 
     or 291'' and inserting ``section 291''.
       (21) Section 263A(c) is amended by striking paragraph (6) 
     and by redesignating paragraph (7) (as amended) as paragraph 
     (6).
       (22) Section 382(l) is amended by striking paragraph (7) 
     and by redesignating paragraph (8) as paragraph (7).
       (23) Section 443 is amended by striking subsection (d) and 
     by redesignating subsection (e) as subsection (d).
       (24) Section 616 is amended by striking subsection (e).
       (25) Section 617 is amended by striking subsection (i).
       (26) Section 641(c) is amended--
       (A) in paragraph (2) by striking subparagraph (B) and by 
     redesignating subparagraphs (C) and (D) as subparagraphs (B) 
     and (C), respectively, and
       (B) in paragraph (3), by striking ``paragraph (2)(C)'' and 
     inserting ``paragraph (2)(B)''.
       (27) Subsections (b) and (c) of section 666 are each 
     amended by striking ``(other than the tax imposed by section 
     55)''.
       (28) Section 848 is amended by striking subsection (i).
       (29) Section 860E(a) is amended by striking paragraph (4).
       (30) Section 871(b)(1) is amended by striking ``or 55''.
       (31) Section 882(a)(1) is amended by striking ``55,''.
       (32) Section 897(a) is amended to read as follows:
       ``(a) Treatment as Effectively Connected With United States 
     Trade or Business.--For purposes of this title, gain or loss 
     of a nonresident alien individual or a foreign corporation 
     from the disposition of a United States real property 
     interest shall be taken into account--
       ``(1) in the case of a nonresident alien individual, under 
     section 871(b)(1), or
       ``(2) in the case of a foreign corporation, under section 
     882(a)(1),
     as if the taxpayer were engaged in a trade or business within 
     the United States during the taxable year and as if such gain 
     or loss were effectively connected with such trade or 
     business.''.
       (33) Section 904(k) is amended to read as follows:
       ``(k) Cross Reference.--For increase of limitation under 
     subsection (a) for taxes paid with respect to amounts 
     received which were included in the gross income of the 
     taxpayer for a prior taxable year as a United States 
     shareholder with respect to a controlled foreign corporation, 
     see section 960(b).''.
       (34) Section 911(f) is amended to read as follows:
       ``(f) Determination of Tax Liability.--
       ``(1) In general.--If, for any taxable year, any amount is 
     excluded from gross income of a taxpayer under subsection 
     (a), then, notwithstanding section 1, if such taxpayer has 
     taxable income for such taxable year, the tax imposed by 
     section 1 for such taxable year shall be equal to the excess 
     (if any) of--
       ``(A) the tax which would be imposed by section 1 for such 
     taxable year if the taxpayer's taxable income were increased 
     by the amount excluded under subsection (a) for such taxable 
     year, over
       ``(B) the tax which would be imposed by section 1 for such 
     taxable year if the taxpayer's taxable income were equal to 
     the amount excluded under subsection (a) for such taxable 
     year.
     For purposes of this paragraph, the amount excluded under 
     subsection (a) shall be reduced by the aggregate amount of 
     any deductions or exclusions disallowed under subsection 
     (d)(6) with respect to such excluded amount.
       ``(2) Treatment of capital gain excess.--
       ``(A) In general.--In applying section 1(h) for purposes of 
     determining the tax under paragraph (1)(A) for any taxable 
     year in which, without regard to this subsection, the 
     taxpayer's net capital gain exceeds taxable income (hereafter 
     in this subparagraph referred to as the capital gain 
     excess)--
       ``(i) the taxpayer's net capital gain (determined without 
     regard to section 1(h)(11)) shall be reduced (but not below 
     zero) by such capital gain excess,
       ``(ii) the taxpayer's qualified dividend income shall be 
     reduced by so much of such capital gain excess as exceeds the 
     taxpayer's net capital gain (determined without regard to 
     section 1(h)(11) and the reduction under clause (i)), and
       ``(iii) adjusted net capital gain, unrecaptured section 
     1250 gain, and 28-percent rate gain shall each be determined 
     after increasing the amount described in section 1(h)(4)(B) 
     by such capital gain excess.
       ``(B) Definitions.--Terms used in this paragraph which are 
     also used in section 1(h) shall have the respective meanings 
     given such terms by section 1(h).''.

[[Page H9321]]

       (35) Section 962(a)(1) is amended--
       (A) by striking ``sections 1 and 55'' and inserting 
     ``section 1'', and
       (B) by striking ``sections 11 and 55'' and inserting 
     ``section 11''.
       (36) Section 1016(a) is amended by striking paragraph (20).
       (37) Section 1202(a)(4) is amended by inserting ``and'' at 
     the end of subparagraph (A), by striking ``, and'' and 
     inserting a period at the end of subparagraph (B), and by 
     striking subparagraph (C).
       (38) Section 1374(b)(3)(B) is amended by striking the last 
     sentence thereof.
       (39) Section 1561(a) is amended--
       (A) by inserting ``and'' at the end of paragraph (1), by 
     striking ``, and'' at the end of paragraph (2) and inserting 
     a period, and by striking paragraph (3), and
       (B) by striking the last sentence.
       (40) Section 6015(d)(2)(B) is amended by striking ``or 
     55''.
       (41) Section 6211(b)(4)(A) is amended by striking``, 
     168(k)(4)''.
       (42) Section 6425(c)(1)(A) is amended to read as follows:
       ``(A) the tax imposed under section 11 or subchapter L of 
     chapter 1, whichever is applicable, over''.
       (43) Section 6654(d)(2) is amended--
       (A) in clause (i) of subparagraph (B), by striking ``, 
     alternative minimum taxable income,'', and
       (B) in clause (i) of subparagraph (C), by striking ``, 
     alternative minimum taxable income,''.
       (44) Section 6655(e)(2)(B)(i) is amended by striking ``The 
     taxable income and alternative minimum taxable income shall'' 
     and inserting ``Taxable income shall''.
       (45) Section 6655(g)(1)(A) is amended by adding ``plus'' at 
     the end of clause (i), by striking clause (ii), and by 
     redesignating clause (iii) as clause (ii).
       (46) Section 6662(e)(3)(C) is amended by striking ``the 
     regular tax (as defined in section 55(c))'' and inserting 
     ``the regular tax liability (as defined in section 26(b))''.
       (d) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2017.
       (2) Prior elections with respect to certain tax 
     preferences.--So much of the amendment made by subsection (a) 
     as relates to the repeal of section 59(e) of the Internal 
     Revenue Code of 1986 shall apply to amounts paid or incurred 
     after December 31, 2017.
       (3) Treatment of net operating loss carrybacks.--For 
     purposes of section 56(d) of the Internal Revenue Code of 
     1986 (as in effect before its repeal), the amount of any net 
     operating loss which may be carried back from a taxable year 
     beginning after December 31, 2017, to taxable years beginning 
     before January 1, 2018, shall be determined without regard to 
     any adjustments under section 56(d)(2)(A) of such Code (as so 
     in effect).

                     TITLE III--BUSINESS TAX REFORM

                         Subtitle A--Tax Rates

     SEC. 3001. REDUCTION IN CORPORATE TAX RATE.

       (a) In General.--Section 11(b) is amended to read as 
     follows:
       ``(b) Amount of Tax.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the amount of the tax imposed by subsection (a) 
     shall be 20 percent of taxable income.
       ``(2) Special rule for personal service corporations.--
       ``(A) In general.--In the case of a personal service 
     corporation (as defined in section 448(d)(2)), the amount of 
     the tax imposed by subsection (a) shall be 25 percent of 
     taxable income.
       ``(B) References to corporate rate.--Any reference to the 
     rate imposed under this section or to the highest rate in 
     effect under this section (or any similar reference) shall be 
     determined without regard to the rate imposed with respect to 
     personal service corporations (as so defined).''.
       (b) Conforming Amendments.--
       (1)(A) Part I of subchapter P of chapter 1 is amended by 
     striking section 1201 (and by striking the item relating to 
     such section in the table of sections for such part).
       (B) Section 12 is amended by striking paragraph (4).
       (C) Section 527(b) is amended--
       (i) by striking paragraph (2), and
       (ii) by striking all that precedes ``is hereby imposed'' 
     and inserting:
       ``(b) Tax Imposed.--A tax''.
       (D) Section 594(a) is amended by striking ``taxes imposed 
     by section 11 or 1201(a)'' and inserting ``tax imposed by 
     section 11''.
       (E) Section 691(c)(4) is amended by striking ``1201,''.
       (F) Section 801(a) is amended--
       (i) by striking paragraph (2), and
       (ii) by striking all that precedes ``is hereby imposed'' 
     and inserting:
       ``(a) Tax Imposed.--A tax''.
       (G) Section 831(e) is amended by striking paragraph (1) and 
     by redesignating paragraphs (2) and (3) as paragraphs (1) and 
     (2), respectively.
       (H) Sections 832(c)(5) and 834(b)(1)(D) are each amended by 
     striking ``sec. 1201 and following,''.
       (I) Section 852(b)(3)(A) is amended by striking ``section 
     1201(a)'' and inserting ``section 11(b)(1)''.
       (J) Section 857(b)(3) is amended--
       (i) by striking subparagraph (A) and redesignating 
     subparagraphs (B) through (F) as subparagraphs (A) through 
     (E), respectively,
       (ii) in subparagraph (C), as so redesignated--
       (I) by striking ``subparagraph (A)(ii)'' in clause (i) 
     thereof and inserting ``paragraph (1)'',
       (II) by striking ``the tax imposed by subparagraph 
     (A)(ii)'' in clauses (ii) and (iv) thereof and inserting 
     ``the tax imposed by paragraph (1) on undistributed capital 
     gain'',
       (iii) in subparagraph (E), as so redesignated, by striking 
     ``subparagraph (B) or (D)'' and inserting ``subparagraph (A) 
     or (C)'', and
       (iv) by adding at the end the following new subparagraph:
       ``(F) Undistributed capital gain.--For purposes of this 
     paragraph, the term `undistributed capital gain' means the 
     excess of the net capital gain over the deduction for 
     dividends paid (as defined in section 561) determined with 
     reference to capital gain dividends only.''.
       (K) Section 882(a)(1) is amended by striking ``, or 
     1201(a)''.
       (L) Section 1374(b) is amended by striking paragraph (4).
       (M) Section 1381(b) is amended by striking ``taxes imposed 
     by section 11 or 1201'' and inserting ``tax imposed by 
     section 11''.
       (N) Section 6655(g)(1)(A)(i) is amended by striking ``or 
     1201(a),''.
       (O) Section 7518(g)(6)(A) is amended by striking ``or 
     1201(a)''.
       (2) Section 1445(e)(1) is amended by striking ``35 percent 
     (or, to the extent provided in regulations, 20 percent)'' and 
     inserting ``20 percent''.
       (3) Section 1445(e)(2) is amended by striking ``35 
     percent'' and inserting ``20 percent''.
       (4) Section 1445(e)(6) is amended by striking ``35 percent 
     (or, to the extent provided in regulations, 20 percent)'' and 
     inserting ``20 percent''.
       (5)(A) Part I of subchapter B of chapter 5 is amended by 
     striking section 1551 (and by striking the item relating to 
     such section in the table of sections for such part).
       (B) Section 12 is amended by striking paragraph (6).
       (C) Section 535(c)(5) is amended to read as follows:
       ``(5) Cross reference.--For limitation on credit provided 
     in paragraph (2) or (3) in the case of certain controlled 
     corporations, see section 1561.''.
       (6)(A) Section 1561, as amended by the preceding provisions 
     of this Act, is amended to read as follows:

     ``SEC. 1561. LIMITATION ON ACCUMULATED EARNINGS CREDIT IN THE 
                   CASE OF CERTAIN CONTROLLED CORPORATIONS.

       ``(a) In General.--The component members of a controlled 
     group of corporations on a December 31 shall, for their 
     taxable years which include such December 31, be limited for 
     purposes of this subtitle to one $250,000 ($150,000 if any 
     component member is a corporation described in section 
     535(c)(2)(B)) amount for purposes of computing the 
     accumulated earnings credit under section 535(c)(2) and (3). 
     Such amount shall be divided equally among the component 
     members of such group on such December 31 unless the 
     Secretary prescribes regulations permitting an unequal 
     allocation of such amount.
       ``(b) Certain Short Taxable Years.--If a corporation has a 
     short taxable year which does not include a December 31 and 
     is a component member of a controlled group of corporations 
     with respect to such taxable year, then for purposes of this 
     subtitle, the amount to be used in computing the accumulated 
     earnings credit under section 535(c)(2) and (3) of such 
     corporation for such taxable year shall be the amount 
     specified in subsection (a) with respect to such group, 
     divided by the number of corporations which are component 
     members of such group on the last day of such taxable year. 
     For purposes of the preceding sentence, section 1563(b) shall 
     be applied as if such last day were substituted for December 
     31.''.
       (B) The table of sections for part II of subchapter B of 
     chapter 5 is amended by striking the item relating to section 
     1561 and inserting the following new item:

``Sec. 1561. Limitation on accumulated earnings credit in the case of 
              certain controlled corporations.''.
       (7) Section 7518(g)(6)(A) is amended--
       (A) by striking ``With respect to the portion'' and 
     inserting ``In the case of a taxpayer other than a 
     corporation, with respect to the portion'', and
       (B) by striking ``(34 percent in the case of a 
     corporation)''.
       (c) Reduction in Dividend Received Deductions to Reflect 
     Lower Corporate Income Tax Rates.--
       (1) Dividends received by corporations.--
       (A) In general.--Section 243(a)(1) is amended by striking 
     ``70 percent'' and inserting ``50 percent''.
       (B) Dividends from 20-percent owned corporations.--Section 
     243(c)(1) is amended--
       (i) by striking ``80 percent'' and inserting ``65 
     percent'', and
       (ii) by striking ``70 percent'' and inserting ``50 
     percent''.
       (C) Conforming amendment.--The heading for section 243(c) 
     is amended by striking ``Retention of 80-percent Dividend 
     Received Deduction'' and inserting ``Increased Percentage''.
       (2) Dividends received from fsc.--Section 245(c)(1)(B) is 
     amended--
       (A) by striking ``70 percent'' and inserting ``50 
     percent'', and
       (B) by striking ``80 percent'' and inserting ``65 
     percent''.
       (3) Limitation on aggregate amount of deductions.--Section 
     246(b)(3) is amended--
       (A) by striking ``80 percent'' in subparagraph (A) and 
     inserting ``65 percent'', and
       (B) by striking ``70 percent'' in subparagraph (B) and 
     inserting ``50 percent''.
       (4) Reduction in deduction where portfolio stock is debt-
     financed.--Section 246A(a)(1) is amended--
       (A) by striking ``70 percent'' and inserting ``50 
     percent'', and
       (B) by striking ``80 percent'' and inserting ``65 
     percent''.

[[Page H9322]]

       (5) Income from sources within the united states.--Section 
     861(a)(2) is amended--
       (A) by striking ``100/70th'' and inserting ``100/50th'' in 
     subparagraph (B), and
       (B) in the flush sentence at the end--
       (i) by striking ``100/80th'' and inserting ``100/65th'', 
     and
       (ii) by striking ``100/70th'' and inserting ``100/50th''.
       (d) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2017.
       (2) Certain conforming amendments.--The amendments made by 
     paragraphs (2), (3), and (4) of subsection (b) shall apply to 
     distributions after December 31, 2017.
       (e) Normalization Requirements.--
       (1) In general.--A normalization method of accounting shall 
     not be treated as being used with respect to any public 
     utility property for purposes of section 167 or 168 of the 
     Internal Revenue Code of 1986 if the taxpayer, in computing 
     its cost of service for ratemaking purposes and reflecting 
     operating results in its regulated books of account, reduces 
     the excess tax reserve more rapidly or to a greater extent 
     than such reserve would be reduced under the average rate 
     assumption method.
       (2) Alternative method for certain taxpayers.--If, as of 
     the first day of the taxable year that includes the date of 
     enactment of this Act--
       (A) the taxpayer was required by a regulatory agency to 
     compute depreciation for public utility property on the basis 
     of an average life or composite rate method, and
       (B) the taxpayer's books and underlying records did not 
     contain the vintage account data necessary to apply the 
     average rate assumption method,
     the taxpayer will be treated as using a normalization method 
     of accounting if, with respect to such jurisdiction, the 
     taxpayer uses the alternative method for public utility 
     property that is subject to the regulatory authority of that 
     jurisdiction.
       (3) Definitions.--For purposes of this subsection--
       (A) Excess tax reserve.--The term ``excess tax reserve'' 
     means the excess of--
       (i) the reserve for deferred taxes (as described in section 
     168(i)(9)(A)(ii) of the Internal Revenue Code of 1986 as in 
     effect on the day before the date of the enactment of this 
     Act), over
       (ii) the amount which would be the balance in such reserve 
     if the amount of such reserve were determined by assuming 
     that the corporate rate reductions provided in this Act were 
     in effect for all prior periods.
       (B) Average rate assumption method.--The average rate 
     assumption method is the method under which the excess in the 
     reserve for deferred taxes is reduced over the remaining 
     lives of the property as used in its regulated books of 
     account which gave rise to the reserve for deferred taxes. 
     Under such method, if timing differences for the property 
     reverse, the amount of the adjustment to the reserve for the 
     deferred taxes is calculated by multiplying--
       (i) the ratio of the aggregate deferred taxes for the 
     property to the aggregate timing differences for the property 
     as of the beginning of the period in question, by
       (ii) the amount of the timing differences which reverse 
     during such period.
       (C) Alternative method.--The ``alternative method'' is the 
     method in which the taxpayer--
       (i) computes the excess tax reserve on all public utility 
     property included in the plant account on the basis of the 
     weighted average life or composite rate used to compute 
     depreciation for regulatory purposes, and
       (ii) reduces the excess tax reserve ratably over the 
     remaining regulatory life of the property.
       (4) Tax increased for normalization violation.--If, for any 
     taxable year ending after the date of the enactment of this 
     Act, the taxpayer does not use a normalization method of 
     accounting, the taxpayer's tax for the taxable year shall be 
     increased by the amount by which it reduces its excess tax 
     reserve more rapidly than permitted under a normalization 
     method of accounting.

                       Subtitle B--Cost Recovery

     SEC. 3101. INCREASED EXPENSING.

       (a) 100 Percent Expensing.--Section 168(k)(1)(A) is amended 
     by striking ``50 percent'' and inserting ``100 percent''.
       (b) Extension Through January 1, 2023.--Section 168(k)(2) 
     is amended--
       (1) in subparagraph (A)(iii), by striking ``January 1, 
     2020'' and inserting ``January 1, 2023'',
       (2) in subparagraph (B)(i)(II), by striking ``January 1, 
     2021'' and inserting ``January 1, 2024'',
       (3) in subparagraph (B)(i)(III), by striking ``January 1, 
     2020'' and inserting ``January 1, 2023'',
       (4) in subparagraph (B)(ii), by striking ``January 1, 
     2020'' in each place it appears and inserting ``January 1, 
     2023'', and
       (5) in subparagraph (E)(i), by striking ``January 1, 2020'' 
     and replacing it with ``January 1, 2023''.
       (c) Application to Used Property.--
       (1) In general.--Section 168(k)(2)(A)(ii) is amended to 
     read as follows:
       ``(ii) the original use of which begins with the taxpayer 
     or the acquisition of which by the taxpayer meets the 
     requirements of clause (ii) of subparagraph (E), and''.
       (2) Acquisition requirements.--Section 168(k)(2)(E)(ii) is 
     amended to read as follows:
       ``(ii) Acquisition requirements.--An acquisition of 
     property meets the requirements of this clause if--

       ``(I) such property was not used by the taxpayer at any 
     time prior to such acquisition, and
       ``(II) the acquisition of such property meets the 
     requirements of paragraphs (2)(A), (2)(B), (2)(C), and (3) of 
     section 179(d).'',

       (3) Anti-abuse rules.--Section 168(k)(2)(E) is further 
     amended by amending clause (iii)(I) to read as follows:

       ``(I) property is used by a lessor of such property and 
     such use is the lessor's first use of such property,''.

       (d) Exception for Certain Trades and Businesses Not Subject 
     to Limitation on Interest Expense.--Section 168(k)(2), as 
     amended by section 2001, is amended by inserting after 
     subparagraph (F) the following new subparagraph:
       ``(G) Exception for property of certain businesses not 
     subject to limitation on interest expense.--The term 
     `qualified property' shall not include any property used in--
       ``(i) a trade or business described in subparagraph (B) or 
     (C) of section 163(j)(7), or
       ``(ii) a trade or business that has had floor plan 
     financing indebtedness (as defined in paragraph (9) of 
     section 163(j)), if the floor plan financing interest related 
     to such indebtedness was taken into account under paragraph 
     (1)(C) of such section.''.
       (e) Coordination With Section 280F.--Section 168(k)(2)(F) 
     is amended--
       (1) by striking ``$8,000'' in clauses (i) and (iii) and 
     inserting ``$16,000'', and
       (2) in clause (iii)--
       (A) by striking ``placed in service by the taxpayer after 
     December 31, 2017'' and inserting ``acquired by the taxpayer 
     before September 28, 2017, and placed in service by the 
     taxpayer after September 27, 2017'', and
       (B) by redesignating subclauses (I) and (II) as subclauses 
     (II) and (III) respectively, and inserting before clause 
     (II), as so redesignated, the following new subclause:

       ``(I) in the case of a passenger automobile placed in 
     service before January 1, 2018, `$8,000',''.

       (f) Conforming Amendments.--
       (1) Section 168(k)(2)(B)(i)(III), as amended, is amended by 
     inserting ``binding'' before ``contract''.
       (2) Section 168(k)(5) is amended by--
       (A) by striking ``January 1, 2020'' in subparagraph (A) and 
     inserting ``January 1, 2023'',
       (B) by striking ``50 percent'' in subparagraph (A)(i) and 
     inserting ``100 percent'', and
       (C) by striking subparagraph (F).
       (3) Section 168(k)(6) is amended to read as follows:
       ``(6) Phase down.--In the case of qualified property 
     acquired by the taxpayer before September 28, 2017, and 
     placed in service by the taxpayer after September 27, 2017, 
     paragraph (1)(A) shall be applied by substituting for `100 
     percent'--
       ``(A) `50 percent' in the case of--
       ``(i) property placed in service before January 1, 2018, 
     and
       ``(ii) property described in subparagraph (B) or (C) of 
     paragraph (2) which is placed in service in 2018,
       ``(B) `40 percent' in the case of--
       ``(i) property placed in service in 2018 (other than 
     property described in subparagraph (B) or (C) of paragraph 
     (2)), and
       ``(ii) property described in subparagraph (B) or (C) of 
     paragraph (2) which is placed in service in 2019, and
       ``(C) `30 percent' in the case of--
       ``(i) property placed in service in 2019 (other than 
     property described in subparagraph (B) or (C) of paragraph 
     (2)), and
       ``(ii) property described in subparagraph (B) or (C) of 
     paragraph (2) which is placed in service in 2020.''.
       (4) The heading of section 168(k) is amended by striking 
     ``Special Allowance for Certain Property Acquired After 
     December 31, 2007, and Before January 1, 2020'' and inserting 
     ``Full Expensing of Certain Property''.
       (5) Section 460(c)(6)(B)(ii) is amended by striking 
     ``January 1, 2020 (January 1, 2021 in the case of property 
     described in section 168(k)(2)(B))'' and inserting ``January 
     1, 2023 (January 1, 2024 in the case of property described in 
     section 168(k)(2)(B))''.
       (g) Effective Date.--
       (1) In general.--Except at provided by paragraph (2), the 
     amendments made by this section shall apply to property 
     which--
       (A) is acquired after September 27, 2017, and
       (B) is placed in service after such date.
     For purposes of the preceding sentence, property shall not be 
     treated as acquired after the date on which a written binding 
     contract is entered into for such acquisition.
       (2) Specified plants.--The amendments made by subsection 
     (f)(2) shall apply to specified plants planted or grafted 
     after September 27, 2017.
       (3) Transition rule.--In the case of any taxpayer's first 
     taxable year ending after September 27, 2017, the taxpayer 
     may elect (at such time and in such form and manner as the 
     Secretary of the Treasury, or his designee, may provide) to 
     apply section 168 of the Internal Revenue Code of 1986 
     without regard to the amendments made by this section.
       (4) Limitation on net operating loss carrybacks 
     attributable to full expensing.--In the case of any taxable 
     year which includes any portion of the period beginning on 
     September 28, 2017, and ending on December 31, 2017, the 
     amount of any net operating loss for such taxable year which 
     may be treated as a net operating loss carryback (including 
     any such carryback attributable to any specified liability 
     loss under section 172(b)(1)(C), any corporate equity 
     reduction interest loss under section 172(b)(1)(D), any 
     eligible loss under section 172(b)(1)(E), and any farming 
     loss under section 172(b)(1)(F)) shall be determined without 
     regard to the amendments made by this section. For purposes 
     of this paragraph, terms which are used in section 172 of the 
     Internal Revenue Code of 1986 (determined without regard to 
     the

[[Page H9323]]

     amendments made by section 3302) shall have the same meaning 
     as when used in such section.

                   Subtitle C--Small Business Reforms

     SEC. 3201. EXPANSION OF SECTION 179 EXPENSING.

       (a) Increased Dollar Limitations.--
       (1) In general.--Section 179(b) is amended--
       (A) by inserting ``($5,000,000, in the case of taxable 
     years beginning before January 1, 2023)'' after ``$500,000'' 
     in paragraph (1), and
       (B) by inserting ``($20,000,000, in the case of taxable 
     years beginning before January 1, 2023)'' after 
     ``$2,000,000'' in paragraph (2).
       (2) Inflation adjustment.--Section 179(b)(6) is amended to 
     read as follows:
       ``(6) Inflation adjustment.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2015 (2018 in the case of the $5,000,000 and 
     $20,000,000 amounts in subsection (b)), each dollar amount in 
     subsection (b) shall be increased by an amount equal to such 
     dollar amount multiplied by--
       ``(i) in the case of the $500,000 and $2,000,000 amounts in 
     subsection (b), the cost-of-living adjustment determined 
     under section 1(c)(2) for the calendar year in which the 
     taxable year begins, determined by substituting `calendar 
     year 2014' for `calendar year 2016' in subparagraph (A)(ii) 
     thereof, and
       ``(ii) in the case of the $5,000,000 and $20,000,000 
     amounts in subsection (b), the cost-of-living adjustment 
     determined under section 1(c)(2) for the calendar year in 
     which the taxable year begins, determined by substituting 
     `calendar year 2017' for `calendar year 2016' in subparagraph 
     (A)(ii) thereof.
       ``(B) Rounding.--The amount of any increase under 
     subparagraph (A) shall be rounded to the nearest multiple of 
     $10,000 ($100,000 in the case of the $5,000,000 and 
     $20,000,000 amounts in subsection (b)).''.
       (b) Application to Qualified Energy Efficient Heating and 
     Air-conditioning Property.--
       (1) In general.--Section 179(f)(2) is amended by striking 
     ``and'' at the end of subparagraph (B), by striking the 
     period at the end of subparagraph (C) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(D) qualified energy efficient heating and air-
     conditioning property.''.
       (2) Qualified energy efficient heating and air-conditioning 
     property.--Section 179(f) is amended by adding at the end the 
     following new paragraph:
       ``(3) Qualified energy efficient heating and air-
     conditioning property.--For purposes of this subsection--
       ``(A) In general.--The term `qualified energy efficient 
     heating and air-conditioning property' means any section 1250 
     property--
       ``(i) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable,
       ``(ii) which is installed as part of a building's heating, 
     cooling, ventilation, or hot water system, and
       ``(iii) which is within the scope of Standard 90.1-2007 or 
     any successor standard.
       ``(B) Standard 90.1-2007.--The term `Standard 90.1-2007' 
     means Standard 90.1-2007 of the American Society of Heating, 
     Refrigerating and Air-Conditioning Engineers and the 
     Illuminating Engineering Society of North America (as in 
     effect on the day before the date of the adoption of Standard 
     90.1-2010 of such Societies).''.
       (c) Effective Date.--
       (1) Increased dollar limitations.--The amendments made by 
     subsection (a) shall apply to taxable years beginning after 
     December 31, 2017.
       (2) Application to qualified energy efficient heating and 
     air-conditioning property.--The amendments made by subsection 
     (b) shall apply to property acquired and placed in service 
     after November 2, 2017. For purposes of the preceding 
     sentence, property shall not be treated as acquired after the 
     date on which a written binding contract is entered into for 
     such acquisition.

     SEC. 3202. SMALL BUSINESS ACCOUNTING METHOD REFORM AND 
                   SIMPLIFICATION.

       (a) Modification of Limitation on Cash Method of 
     Accounting.--
       (1) Increased limitation.--So much of section 448(c) as 
     precedes paragraph (2) is amended to read as follows:
       ``(c) Gross Receipts Test.--For purposes of this section--
       ``(1) In general.--A corporation or partnership meets the 
     gross receipts test of this subsection for any taxable year 
     if the average annual gross receipts of such entity for the 
     3-taxable-year period ending with the taxable year which 
     precedes such taxable year does not exceed $25,000,000.''.
       (2) Application of exception on annual basis.--Section 
     448(b)(3) is amended to read as follows:
       ``(3) Entities which meet gross receipts test.--Paragraphs 
     (1) and (2) of subsection (a) shall not apply to any 
     corporation or partnership for any taxable year if such 
     entity (or any predecessor) meets the gross receipts test of 
     subsection (c) for such taxable year.''.
       (3) Inflation adjustment.--Section 448(c) is amended by 
     adding at the end the following new paragraph:
       ``(4) Adjustment for inflation.--In the case of any taxable 
     year beginning after December 31, 2018, the dollar amount in 
     paragraph (1) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(c)(2) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2017' for 
     `calendar year 2016' in subparagraph (A)(ii) thereof.
     If any amount as increased under the preceding sentence is 
     not a multiple of $1,000,000, such amount shall be rounded to 
     the nearest multiple of $1,000,000.''.
       (4) Coordination with section 481.--Section 448(d)(7) is 
     amended to read as follows:
       ``(7) Coordination with section 481.--Any change in method 
     of accounting made pursuant to this section shall be treated 
     for purposes of section 481 as initiated by the taxpayer and 
     made with the consent of the Secretary.''.
       (5) Application of exception to corporations engaged in 
     farming.--
       (A) In general.--Section 447(c) is amended--
       (i) by inserting ``for any taxable year'' after ``not being 
     a corporation'' in the matter preceding paragraph (1), and
       (ii) by amending paragraph (2) to read as follows:
       ``(2) a corporation which meets the gross receipts test of 
     section 448(c) for such taxable year.''.
       (B) Coordination with section 481.--Section 447(f) is 
     amended to read as follows:
       ``(f) Coordination With Section 481.--Any change in method 
     of accounting made pursuant to this section shall be treated 
     for purposes of section 481 as initiated by the taxpayer and 
     made with the consent of the Secretary.''.
       (C) Conforming amendments.--Section 447 is amended--
       (i) by striking subsections (d), (e), (h), and (i), and
       (ii) by redesignating subsections (f) and (g) (as amended 
     by subparagraph (B)) as subsections (d) and (e), 
     respectively.
       (b) Exemption From UNICAP Requirements.--
       (1) In general.--Section 263A is amended by redesignating 
     subsection (i) as subsection (j) and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Exemption for Certain Small Businesses.--
       ``(1) In general.--In the case of any taxpayer (other than 
     a tax shelter prohibited from using the cash receipts and 
     disbursements method of accounting under section 448(a)(3)) 
     which meets the gross receipts test of section 448(c) for any 
     taxable year, this section shall not apply with respect to 
     such taxpayer for such taxable year.
       ``(2) Application of gross receipts test to individuals, 
     etc.-- In the case of any taxpayer which is not a corporation 
     or a partnership, the gross receipts test of section 448(c) 
     shall be applied in the same manner as if each trade or 
     business of such taxpayer were a corporation or partnership.
       ``(3) Coordination with section 481.--Any change in method 
     of accounting made pursuant to this subsection shall be 
     treated for purposes of section 481 as initiated by the 
     taxpayer and made with the consent of the Secretary.''.
       (2) Conforming amendment.--Section 263A(b)(2) is amended to 
     read as follows:
       ``(2) Property acquired for resale.--Real or personal 
     property described in section 1221(a)(1) which is acquired by 
     the taxpayer for resale.''.
       (c) Exemption From Inventories.--Section 471 is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Exemption for Certain Small Businesses.--
       ``(1) In general.--In the case of any taxpayer (other than 
     a tax shelter prohibited from using the cash receipts and 
     disbursements method of accounting under section 448(a)(3)) 
     which meets the gross receipts test of section 448(c) for any 
     taxable year--
       ``(A) subsection (a) shall not apply with respect to such 
     taxpayer for such taxable year, and
       ``(B) the taxpayer's method of accounting for inventory for 
     such taxable year shall not be treated as failing to clearly 
     reflect income if such method either--
       ``(i) treats inventory as non-incidental materials and 
     supplies, or
       ``(ii) conforms to such taxpayer's method of accounting 
     reflected in an applicable financial statement of the 
     taxpayer with respect to such taxable year or, if the 
     taxpayer does not have any applicable financial statement 
     with respect to such taxable year, the books and records of 
     the taxpayer prepared in accordance with the taxpayer's 
     accounting procedures.
       ``(2) Applicable financial statement.--For purposes of this 
     subsection, the term `applicable financial statement' means--
       ``(A) a financial statement which is certified as being 
     prepared in accordance with generally accepted accounting 
     principles and which is--
       ``(i) a 10-K (or successor form), or annual statement to 
     shareholders, required to be filed by the taxpayer with the 
     United States Securities and Exchange Commission,
       ``(ii) an audited financial statement of the taxpayer which 
     is used for--

       ``(I) credit purposes,
       ``(II) reporting to shareholders, partners, or other 
     proprietors, or to beneficiaries, or
       ``(III) any other substantial nontax purpose,

     but only if there is no statement of the taxpayer described 
     in clause (i), or
       ``(iii) filed by the taxpayer with any other Federal or 
     State agency for nontax purposes, but only if there is no 
     statement of the taxpayer described in clause (i) or (ii), or
       ``(B) a financial statement of the taxpayer which--
       ``(i) is used for a purpose described in subclause (I), 
     (II), or (III) of subparagraph (A)(ii), or
       ``(ii) filed by the taxpayer with any regulatory or 
     governmental body (whether domestic or foreign) specified by 
     the Secretary,
     but only if there is no statement of the taxpayer described 
     in subparagraph (A).
       ``(3) Application of gross receipts test to individuals, 
     etc.--In the case of any taxpayer which is not a corporation 
     or a partnership, the gross receipts test of section 448(c) 
     shall be applied in the same manner as if each trade or

[[Page H9324]]

     business of such taxpayer were a corporation or partnership.
       ``(4) Coordination with section 481.--Any change in method 
     of accounting made pursuant to this subsection shall be 
     treated for purposes of section 481 as initiated by the 
     taxpayer and made with the consent of the Secretary.''.
       (d) Exemption From Percentage Completion for Long-term 
     Contracts.--
       (1) In general.--Section 460(e)(1)(B) is amended--
       (A) by inserting ``(other than a tax shelter prohibited 
     from using the cash receipts and disbursements method of 
     accounting under section 448(a)(3))'' after ``taxpayer'' in 
     the matter preceding clause (i), and
       (B) by amending clause (ii) to read as follows:
       ``(ii) who meets the gross receipts test of section 448(c) 
     for the taxable year in which such contract is entered 
     into.''.
       (2) Conforming amendments.--Section 460(e) is amended by 
     striking paragraphs (2) and (3), by redesignating paragraphs 
     (4), (5), and (6) as paragraphs (3), (4), and (5), 
     respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Rules related to gross receipts test.--
       ``(A) Application of gross receipts test to individuals, 
     etc.-- For purposes of paragraph (1)(B)(ii), in the case of 
     any taxpayer which is not a corporation or a partnership, the 
     gross receipts test of section 448(c) shall be applied in the 
     same manner as if each trade or business of such taxpayer 
     were a corporation or partnership.
       ``(B) Coordination with section 481.--Any change in method 
     of accounting made pursuant to paragraph (1)(B)(ii) shall be 
     treated as initiated by the taxpayer and made with the 
     consent of the Secretary. Such change shall be effected on a 
     cut-off basis for all similarly classified contracts entered 
     into on or after the year of change.''.
       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2017.
       (2) Preservation of suspense account rules with respect to 
     any existing suspense accounts.--So much of the amendments 
     made by subsection (a)(5)(C) as relate to section 447(i) of 
     the Internal Revenue Code of 1986 shall not apply with 
     respect to any suspense account established under such 
     section before the date of the enactment of this Act.
       (3) Exemption from percentage completion for long-term 
     contracts.--The amendments made by subsection (d) shall apply 
     to contracts entered into after December 31, 2017, in taxable 
     years ending after such date.

     SEC. 3203. SMALL BUSINESS EXCEPTION FROM LIMITATION ON 
                   DEDUCTION OF BUSINESS INTEREST.

       (a) In General.--Section 163(j)(2), as amended by section 
     3301, is amended to read as follows:
       ``(2) Exemption for certain small businesses.--In the case 
     of any taxpayer (other than a tax shelter prohibited from 
     using the cash receipts and disbursements method of 
     accounting under section 448(a)(3)) which meets the gross 
     receipts test of section 448(c) for any taxable year, 
     paragraph (1) shall not apply to such taxpayer for such 
     taxable year. In the case of any taxpayer which is not a 
     corporation or a partnership, the gross receipts test of 
     section 448(c) shall be applied in the same manner as if such 
     taxpayer were a corporation or partnership.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3204. MODIFICATION OF TREATMENT OF S CORPORATION 
                   CONVERSIONS TO C CORPORATIONS.

       (a) Adjustments Attributable to Conversion From S 
     Corporation to C Corporation.--Section 481 is amended by 
     adding at the end the following new subsection:
       ``(d) Adjustments Attributable to Conversion From S 
     Corporation to C Corporation.--
       ``(1) In general.--In the case of an eligible terminated S 
     corporation, any adjustment required by subsection (a)(2) 
     which is attributable to such corporation's revocation 
     described in paragraph (2)(A)(ii) shall be taken into account 
     ratably during the 6-taxable year period beginning with the 
     year of change.
       ``(2) Eligible terminated s corporation.--For purposes of 
     this subsection, the term `eligible terminated S corporation' 
     means any C corporation--
       ``(A) which--
       ``(i) was an S corporation on the day before the date of 
     the enactment of the Tax Cuts and Jobs Act, and
       ``(ii) during the 2-year period beginning on the date of 
     such enactment makes a revocation of its election under 
     section 1362(a), and
       ``(B) the owners of the stock of which, determined on the 
     date such revocation is made, are the same owners (and in 
     identical proportions) as on the date of such enactment.''.
       (b) Cash Distributions Following Post-termination 
     Transition Period From S Corporation Status.--Section 1371 is 
     amended by adding at the end the following new subsection:
       ``(f) Cash Distributions Following Post-termination 
     Transition Period.--In the case of a distribution of money by 
     an eligible terminated S corporation (as defined in section 
     481(d)) after the post-termination transition period, the 
     accumulated adjustments account shall be allocated to such 
     distribution, and the distribution shall be chargeable to 
     accumulated earnings and profits, in the same ratio as the 
     amount of such accumulated adjustments account bears to the 
     amount of such accumulated earnings and profits.''.

  Subtitle D--Reform of Business-related Exclusions, Deductions, etc.

     SEC. 3301. INTEREST.

       (a) In General.--Section 163(j) is amended to read as 
     follows:
       ``(j) Limitation on Business Interest.--
       ``(1) In general.--In the case of any taxpayer for any 
     taxable year, the amount allowed as a deduction under this 
     chapter for business interest shall not exceed the sum of--
       ``(A) the business interest income of such taxpayer for 
     such taxable year,
       ``(B) 30 percent of the adjusted taxable income of such 
     taxpayer for such taxable year, plus
       ``(C) the floor plan financing interest of such taxpayer 
     for such taxable year.
     The amount determined under subparagraph (B) (after any 
     increases in such amount under paragraph (3)(A)(iii)) shall 
     not be less than zero.
       ``(2) Exemption for certain small businesses.--For 
     exemption for certain small businesses, see the amendment 
     made by section 3203 of the Tax Cuts and Jobs Act.
       ``(3) Application to partnerships, etc.--
       ``(A) In general.--In the case of any partnership--
       ``(i) this subsection shall be applied at the partnership 
     level and any deduction for business interest shall be taken 
     into account in determining the non-separately stated taxable 
     income or loss of the partnership,
       ``(ii) the adjusted taxable income of each partner of such 
     partnership shall be determined without regard to such 
     partner's distributive share of the non-separately stated 
     taxable income or loss of such partnership, and
       ``(iii) the amount determined under paragraph (1)(B) with 
     respect to each partner of such partnership shall be 
     increased by such partner's distributive share of such 
     partnership's excess amount.
       ``(B) Excess amount.--The term `excess amount' means, with 
     respect to any partnership, the excess (if any) of--
       ``(i) 30 percent of the adjusted taxable income of the 
     partnership, over
       ``(ii) the amount (if any) by which the business interest 
     of the partnership, reduced by floor plan financing interest, 
     exceeds the business interest income of the partnership.
       ``(C) Application to s corporations.--Rules similar to the 
     rules of subparagraphs (A) and (B) shall apply with respect 
     to any S corporation and its shareholders.
       ``(4) Business interest.--For purposes of this subsection, 
     the term `business interest' means any interest paid or 
     accrued on indebtedness properly allocable to a trade or 
     business. Such term shall not include investment interest 
     (within the meaning of subsection (d)).
       ``(5) Business interest income.--For purposes of this 
     subsection, the term `business interest income' means the 
     amount of interest includible in the gross income of the 
     taxpayer for the taxable year which is properly allocable to 
     a trade or business. Such term shall not include investment 
     income (within the meaning of subsection (d)).
       ``(6) Adjusted taxable income.--For purposes of this 
     subsection, the term `adjusted taxable income' means the 
     taxable income of the taxpayer--
       ``(A) computed without regard to--
       ``(i) any item of income, gain, deduction, or loss which is 
     not properly allocable to a trade or business,
       ``(ii) any business interest or business interest income,
       ``(iii) the amount of any net operating loss deduction 
     under section 172, and
       ``(iv) any deduction allowable for depreciation, 
     amortization, or depletion, and
       ``(B) computed with such other adjustments as the Secretary 
     may provide.
       ``(7) Trade or business.--For purposes of this subsection, 
     the term `trade or business' shall not include--
       ``(A) the trade or business of performing services as an 
     employee,
       ``(B) a real property trade or business (as such term is 
     defined in section 469(c)(7)(C)), or
       ``(C) the trade or business of the furnishing or sale of--
       ``(i) electrical energy, water, or sewage disposal 
     services,
       ``(ii) gas or steam through a local distribution system, or
       ``(iii) transportation of gas or steam by pipeline,
     if the rates for such furnishing or sale, as the case may be, 
     have been established or approved by a State or political 
     subdivision thereof, by any agency or instrumentality of the 
     United States, or by a public service or public utility 
     commission or other similar body of any State or political 
     subdivision thereof.
       ``(8) Carryforward of disallowed interest.--For 
     carryforward of interest disallowed under paragraph (1), see 
     subsection (o).
       ``(9) Floor plan financing interest defined.--For purposes 
     of this subsection--
       ``(A) In general.--The term `floor plan financing interest' 
     means interest paid or accrued on floor plan financing 
     indebtedness.
       ``(B) Floor plan financing indebtedness.--The term `floor 
     plan financing indebtedness' means indebtedness--
       ``(i) used to finance the acquisition of motor vehicles 
     held for sale to retail customers, and
       ``(ii) secured by the inventory so acquired.
       ``(C) Motor vehicle.--The term `motor vehicle' means a 
     motor vehicle that is any of the following:
       ``(i) An automobile.
       ``(ii) A truck.
       ``(iii) A recreational vehicle.
       ``(iv) A motorcycle.
       ``(v) A boat.
       ``(vi) Farm machinery or equipment.
       ``(vii) Construction machinery or equipment.''.
       (b) Carryforward of Disallowed Business Interest.--Section 
     163, after amendment by section 4302(a) and before amendment 
     by section

[[Page H9325]]

     4302(b), is amended by inserting after subsection (n) the 
     following new subsection:
       ``(o) Carryforward of Disallowed Business Interest.--The 
     amount of any business interest not allowed as a deduction 
     for any taxable year by reason of subsection (j) shall be 
     treated as business interest paid or accrued in the 
     succeeding taxable year. Business interest paid or accrued in 
     any taxable year (determined without regard to the preceding 
     sentence) shall not be carried past the 5th taxable year 
     following such taxable year, determined by treating business 
     interest as allowed as a deduction on a first-in, first-out 
     basis.''.
       (c) Treatment of Carryforward of Disallowed Business 
     Interest in Certain Corporate Acquisitions.--
       (1) In general.--Section 381(c) is amended by inserting 
     after paragraph (19) the following new paragraph:
       ``(20) Carryforward of disallowed interest.--The carryover 
     of disallowed interest described in section 163(o) to taxable 
     years ending after the date of distribution or transfer.''.
       (2) Application of limitation.--Section 382(d) is amended 
     by adding at the end the following new paragraph:
       ``(3) Application to carryforward of disallowed interest.--
     The term `pre-change loss' shall include any carryover of 
     disallowed interest described in section 163(o) under rules 
     similar to the rules of paragraph (1).''.
       (3) Conforming amendment.--Section 382(k)(1) is amended by 
     inserting after the first sentence the following: ``Such term 
     shall include any corporation entitled to use a carryforward 
     of disallowed interest described in section 381(c)(20).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3302. MODIFICATION OF NET OPERATING LOSS DEDUCTION.

       (a) Indefinite Carryforward of Net Operating Losses.--
     Section 172(b)(1)(A)(ii) is amended by striking ``to each of 
     the 20 taxable years'' and inserting ``to each taxable 
     year''.
       (b) Repeal of Net Operating Loss Carrybacks Other Than 1-
     year Carryback of Eligible Disaster Losses.--
       (1) In general.--Section 172(b)(1)(A)(i) is amended to read 
     as follows:
       ``(i) in the case of any portion of a net operating loss 
     for the taxable year which is an eligible disaster loss with 
     respect to the taxpayer, shall be a net operating loss 
     carryback to the taxable year preceding the taxable year of 
     such loss, and''.
       (2) Conforming amendments.--
       (A) Section 172(b)(1) is amended by striking subparagraphs 
     (B) through (F) and inserting the following:
       ``(B) Eligible disaster loss.--
       ``(i) In general.--For purposes of subparagraph (A)(i), the 
     term `eligible disaster loss' means--

       ``(I) in the case of a taxpayer which is a small business, 
     net operating losses attributable to federally declared 
     disasters (as defined by section 165(i)(5)), and
       ``(II) in the case of a taxpayer engaged in the trade or 
     business of farming, net operating losses attributable to 
     such federally declared disasters.

       ``(ii) Small business.--For purposes of this subparagraph, 
     the term `small business' means a corporation or partnership 
     which meets the gross receipts test of section 448(c) 
     (determined by substituting `$5,000,000' for `$25,000,000' 
     each place it appears therein) for the taxable year in which 
     the loss arose (or, in the case of a sole proprietorship, 
     which would meet such test if such proprietorship were a 
     corporation).
       ``(iii) Trade or business of farming.--For purposes of this 
     subparagraph, the trade or business of farming shall include 
     the trade or business of--

       ``(I) operating a nursery or sod farm, or
       ``(II) the raising or harvesting of trees bearing fruit, 
     nuts, or other crops, or ornamental trees.

     For purposes of subclause (II), an evergreen tree which is 
     more than 6 years old at the time severed from the roots 
     shall not be treated as an ornamental tree.''.
       (B) Section 172 is amended by striking subsections (f), 
     (g), and (h).
       (c) Limitation of Net Operating Loss to 90 Percent of 
     Taxable Income.--
       (1) In general.--Section 172(a) is amended to read as 
     follows:
       ``(a) Deduction Allowed.--There shall be allowed as a 
     deduction for the taxable year an amount equal to the lesser 
     of--
       ``(1) the aggregate of the net operating loss carryovers to 
     such year, plus the net operating loss carrybacks to such 
     year, or
       ``(2) 90 percent of taxable income computed without regard 
     to the deduction allowable under this section.
     For purposes of this subtitle, the term `net operating loss 
     deduction' means the deduction allowed by this subsection.''.
       (2) Coordination of limitation with carrybacks and 
     carryovers.--Section 172(b)(2) is amended by striking ``shall 
     be computed--'' and all that follows and inserting ``shall--
       ``(A) be computed with the modifications specified in 
     subsection (d) other than paragraphs (1), (4), and (5) 
     thereof, and by determining the amount of the net operating 
     loss deduction without regard to the net operating loss for 
     the loss year or for any taxable year thereafter,
       ``(B) not be considered to be less than zero, and
       ``(C) not exceed the amount determined under subsection 
     (a)(2) for such prior taxable year.''.
       (3) Conforming amendment.--Section 172(d)(6) is amended by 
     striking ``and'' at the end of subparagraph (A), by striking 
     the period at the end of subparagraph (B) and inserting ``; 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(C) subsection (a)(2) shall be applied by substituting 
     `real estate investment trust taxable income (as defined in 
     section 857(b)(2) but without regard to the deduction for 
     dividends paid (as defined in section 561))' for `taxable 
     income'.''.
       (d) Annual Increase of Indefinite Carryover Amounts.--
     Section 172(b) is amended by redesignating paragraph (3) as 
     paragraph (4) and by inserting after paragraph (2) the 
     following new paragraph:
       ``(3) Annual increase of indefinite carryover amounts.--For 
     purposes of paragraph (2)--
       ``(A) the amount of any indefinite net operating loss which 
     is carried to the next succeeding taxable year after the loss 
     year (within the meaning of paragraph (2)) shall be increased 
     by an amount equal to--
       ``(i) the amount of the loss which may be so carried over 
     to such succeeding taxable year (determined without regard to 
     this paragraph), multiplied by
       ``(ii) the sum of--

       ``(I) the annual Federal short-term rate (determined under 
     section 1274(d)) for the last month ending before the 
     beginning of such taxable year, plus
       ``(II) 4 percentage points, and

       ``(B) the amount of any indefinite net operating loss which 
     is carried to any succeeding taxable year (after such next 
     succeeding taxable year) shall be an amount equal to--
       ``(i) the excess of--

       ``(I) the amount of the loss carried to the prior taxable 
     year (after any increase under this paragraph with respect to 
     such amount), over
       ``(II) the amount by which such loss was reduced under 
     paragraph (2) by reason of the taxable income for such prior 
     taxable year, multiplied by

       ``(ii) a percentage equal to 100 percent plus the 
     percentage determined under subparagraph (A)(ii) with respect 
     to such succeeding taxable year.
     For purposes of the preceding sentence, the term `indefinite 
     net operating loss' means any net operating loss arising in a 
     taxable year beginning after December 31, 2017.''.
       (e) Effective Date.--
       (1) Carryforwards and carrybacks.--The amendments made by 
     subsections (a) and (b) shall apply to net operating losses 
     arising in taxable years beginning after December 31, 2017.
       (2) Net operating loss limited to 90 percent of taxable 
     income.--The amendments made by subsection (c) shall apply to 
     taxable years beginning after December 31, 2017.
       (3) Annual increase in carryover amounts.--The amendments 
     made by subsection (d) shall apply to amounts carried to 
     taxable years beginning after December 31, 2017.
       (4) Special rule for net disaster losses.--Notwithstanding 
     paragraph (1), the amendments made by subsection (b) shall 
     not apply to the portion of the net operating loss for any 
     taxable year which is a net disaster loss to which section 
     504(b) of the Disaster Tax Relief and Airport and Airway 
     Extension Act of 2017 applies.

     SEC. 3303. LIKE-KIND EXCHANGES OF REAL PROPERTY.

       (a) In General.--Section 1031(a)(1) is amended by striking 
     ``property'' each place it appears and inserting ``real 
     property''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1031(a) is amended to read as 
     follows:
       ``(2) Exception for real property held for sale.--This 
     subsection shall not apply to any exchange of real property 
     held primarily for sale.''.
       (2) Section 1031 is amended by striking subsections (e) and 
     (i).
       (3) Section 1031, as amended by paragraph (2), is amended 
     by inserting after subsection (d) the following new 
     subsection:
       ``(e) Application to Certain Partnerships.--For purposes of 
     this section, an interest in a partnership which has in 
     effect a valid election under section 761(a) to be excluded 
     from the application of all of subchapter K shall be treated 
     as an interest in each of the assets of such partnership and 
     not as an interest in a partnership.''.
       (4) Section 1031(h) is amended to read as follows:
       ``(h) Special Rules for Foreign Real Property.--Real 
     property located in the United States and real property 
     located outside the United States are not property of a like 
     kind.''.
       (5) The heading of section 1031 is amended by striking 
     ``property'' and inserting ``real property''.
       (6) The table of sections for part III of subchapter O of 
     chapter 1 is amended by striking the item relating to section 
     1031 and inserting the following new item:

``Sec. 1031. Exchange of real property held for productive use or 
              investment.''.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to exchanges completed after December 31, 2017.
       (2) Transition rule.--The amendments made by this section 
     shall not apply to any exchange if--
       (A) the property disposed of by the taxpayer in the 
     exchange is disposed of on or before December 31 2017, or
       (B) the property received by the taxpayer in the exchange 
     is received on or before December 31, 2017.

     SEC. 3304. REVISION OF TREATMENT OF CONTRIBUTIONS TO CAPITAL.

       (a) Inclusion of Contributions to Capital.--Part II of 
     subchapter B of chapter 1 is amended by inserting after 
     section 75 the following new section:

     ``SEC. 76. CONTRIBUTIONS TO CAPITAL.

       ``(a) In General.--Gross income includes any contribution 
     to the capital of any entity.

[[Page H9326]]

       ``(b) Treatment of Contributions in Exchange for Stock, 
     etc.--
       ``(1) In general.--In the case of any contribution of money 
     or other property to a corporation in exchange for stock of 
     such corporation--
       ``(A) such contribution shall not be treated for purposes 
     of subsection (a) as a contribution to the capital of such 
     corporation (and shall not be includible in the gross income 
     of such corporation), and
       ``(B) no gain or loss shall be recognized to such 
     corporation upon the issuance of such stock.
       ``(2) Treatment limited to value of stock.--For purposes of 
     this subsection, a contribution of money or other property to 
     a corporation shall be treated as being in exchange for stock 
     of such corporation only to the extent that the fair market 
     value of such money and other property does not exceed the 
     fair market value of such stock.
       ``(3) Application to entities other than corporations.--In 
     the case of any entity other than a corporation, rules 
     similar to the rules of paragraphs (1) and (2) shall apply in 
     the case of any contribution of money or other property to 
     such entity in exchange for any interest in such entity.
       ``(c) Treasury Stock Treated as Stock.--Any reference in 
     this section to stock shall be treated as including a 
     reference to treasury stock.''.
       (b) Basis of Corporation in Contributed Property.--
       (1) Contributions to capital.--Subsection (c) of section 
     362 is amended to read as follows:
       ``(c) Contributions to Capital.--If property other than 
     money is transferred to a corporation as a contribution to 
     the capital of such corporation (within the meaning of 
     section 76) then the basis of such property shall be the 
     greater of--
       ``(1) the basis determined in the hands of the transferor, 
     increased by the amount of gain recognized to the transferor 
     on such transfer, or
       ``(2) the amount included in gross income by such 
     corporation under section 76 with respect to such 
     contribution.''.
       (2) Contributions in exchange for stock.--Paragraph (2) of 
     section 362(a) is amended by striking ``contribution to 
     capital'' and inserting ``contribution in exchange for stock 
     of such corporation (determined under rules similar to the 
     rules of paragraphs (2) and (3) of section 76(b))''.
       (c) Conforming Amendments.--
       (1) Section 108(e) is amended by striking paragraph (6).
       (2) Part III of subchapter B of chapter 1 is amended by 
     striking section 118 (and by striking the item relating to 
     such section in the table of sections for such part).
       (3) The table of sections for part II of subchapter B of 
     chapter 1 is amended by inserting after the item relating to 
     section 75 the following new item:

``Sec. 76. Contributions to capital.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions made, and transactions entered 
     into, after the date of the enactment of this Act.

     SEC. 3305. REPEAL OF DEDUCTION FOR LOCAL LOBBYING EXPENSES.

       (a) In General.--Section 162(e) is amended by striking 
     paragraphs (2) and (7) and by redesignating paragraphs (3), 
     (4), (5), (6), and (8) as paragraphs (2), (3), (4), (5), and 
     (6), respectively.
       (b) Conforming Amendment.--Section 6033(e)(1)(B)(ii) is 
     amended by striking ``section 162(e)(5)(B)(ii)'' and 
     inserting ``section 162(e)(4)(B)(ii)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2017.

     SEC. 3306. REPEAL OF DEDUCTION FOR INCOME ATTRIBUTABLE TO 
                   DOMESTIC PRODUCTION ACTIVITIES.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by striking section 199 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Conforming Amendments.--
       (1) Sections 74(d)(2)(B), 86(b)(2)(A), 137(b)(3)(A), 
     219(g)(3)(A)(ii), and 246(b)(1) are each amended by striking 
     ``199,''.
       (2) Section 170(b)(2)(D), as amended by the preceding 
     provisions of this Act, is amended by striking clause (iv), 
     by redesignating clause (v) as clause (iv), and by inserting 
     ``and'' at the end of clause (iii).
       (3) Section 172(d) is amended by striking paragraph (7).
       (4) Section 613(a) is amended by striking ``and without the 
     deduction under section 199''.
       (5) Section 613A(d)(1) is amended by striking subparagraph 
     (B) and by redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (B), (C), and (D), respectively.
       (6) Section 1402(a) is amended by adding ``and'' at the end 
     of paragraph (15) and by striking paragraph (16).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3307. ENTERTAINMENT, ETC. EXPENSES.

       (a) Denial of Deduction.--Subsection (a) of section 274 is 
     amended to read as follows:
       ``(a) Entertainment, Amusement, Recreation, and Other 
     Fringe Benefits .--
       ``(1) In general.--No deduction otherwise allowable under 
     this chapter shall be allowed for amounts paid or incurred 
     for any of the following items:
       ``(A) Activity.--With respect to an activity which is of a 
     type generally considered to constitute entertainment, 
     amusement, or recreation.
       ``(B) Membership dues.--With respect to membership in any 
     club organized for business, pleasure, recreation or other 
     social purposes.
       ``(C) Amenity.--With respect to a de minimis fringe (as 
     defined in section 132(e)(1)) that is primarily personal in 
     nature and involving property or services that are not 
     directly related to the taxpayer's trade or business.
       ``(D) Facility.--With respect to a facility or portion 
     thereof used in connection with an activity referred to in 
     subparagraph (A), membership dues or similar amounts referred 
     to in subparagraph (B), or an amenity referred to in 
     subparagraph (C).
       ``(E) Qualified transportation fringe and parking 
     facility.--Which is a qualified transportation fringe (as 
     defined in section 132(f)) or which is a parking facility 
     used in connection with qualified parking (as defined in 
     section 132(f)(5)(C)).
       ``(F) On-premises athletic facility.--Which is an on-
     premises athletic facility as defined in section 
     132(j)(4)(B).
       ``(2) Special rules.--For purposes of applying paragraph 
     (1), an activity described in section 212 shall be treated as 
     a trade or business.
       ``(3) Regulations.--Under the regulations prescribed to 
     carry out this section, the Secretary shall include 
     regulations--
       ``(A) defining entertainment, amenities, recreation, 
     amusement, and facilities for purposes of this subsection,
       ``(B) providing for the appropriate allocation of 
     depreciation and other costs with respect to facilities used 
     for parking or for on-premises athletic facilities, and
       ``(C) specifying arrangements a primary purpose of which is 
     the avoidance of this subsection.''.
       (b) Exception for Certain Expenses Includible in Income of 
     Recipient.--
       (1) Expenses treated as compensation.--Paragraph (2) of 
     section 274(e) is amended to read as follows:
       ``(2) Expenses treated as compensation.--Expenses for 
     goods, services, and facilities, to the extent that the 
     expenses do not exceed the amount of the expenses which are 
     treated by the taxpayer, with respect to the recipient of the 
     entertainment, amusement, or recreation, as compensation to 
     an employee on the taxpayer's return of tax under this 
     chapter and as wages to such employee for purposes of chapter 
     24 (relating to withholding of income tax at source on 
     wages).''.
       (2) Expenses includible in income of persons who are not 
     employees.--Paragraph (9) of section 274(e) is amended by 
     striking ``to the extent that the expenses'' and inserting 
     ``to the extent that the expenses do not exceed the amount of 
     the expenses that''.
       (c) Exceptions for Reimbursed Expenses.--Paragraph (3) of 
     section 274(e) is amended to read as follows:
       ``(3) Reimbursed expenses.--
       ``(A) In general.--Expenses paid or incurred by the 
     taxpayer, in connection with the performance by him of 
     services for another person (whether or not such other person 
     is the taxpayer's employer), under a reimbursement or other 
     expense allowance arrangement with such other person, but 
     this paragraph shall apply--
       ``(i) where the services are performed for an employer, 
     only if the employer has not treated such expenses in the 
     manner provided in paragraph (2), or
       ``(ii) where the services are performed for a person other 
     than an employer, only if the taxpayer accounts (to the 
     extent provided by subsection (d)) to such person.
       ``(B) Exception.--Except as provided by the Secretary, 
     subparagraph (A) shall not apply--
       ``(i) in the case of an arrangement in which the person 
     other than the employer is an entity described in section 
     168(h)(2)(A), or
       ``(ii) to any other arrangement designated by the Secretary 
     as having the effect of avoiding the limitation under 
     subparagraph (A).''.
       (d) 50 Percent Limitation on Meals and Entertainment 
     Expenses.--Subsection (n) of section 274 is amended to read 
     as follows:
       ``(n) Limitation on Certain Expenses.--
       ``(1) In general.--The amount allowable as a deduction 
     under this chapter for any expense for food or beverages 
     (pursuant to subsection (e)(1)) or business meals (pursuant 
     to subsection (k)(1)) shall not exceed 50 percent of the 
     amount of such expense or item which would (but for this 
     paragraph) be allowable as a deduction under this chapter.
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     expense if--
       ``(A) such expense is described in paragraph (2), (3), (6), 
     (7), or (8) of subsection (e),
       ``(B) in the case of an expense for food or beverages, such 
     expense is excludable from the gross income of the recipient 
     under section 132 by reason of subsection (e) thereof 
     (relating to de minimis fringes) or under section 119 
     (relating to meals and lodging furnished for convenience of 
     employer), or
       ``(C) in the case of an employer who pays or reimburses 
     moving expenses of an employee, such expenses are includible 
     in the income of the employee under section 82.
       ``(3) Special rule for individuals subject to federal hours 
     of service.--In the case of any expenses for food or 
     beverages consumed while away from home (within the meaning 
     of section 162(a)(2)) by an individual during, or incident 
     to, the period of duty subject to the hours of service 
     limitations of the Department of Transportation, paragraph 
     (1) shall be applied by substituting `80 percent' for `50 
     percent'.''.
       (e) Conforming Amendments.--
       (1) Section 274(d) is amended--
       (A) by striking paragraph (2) and redesignating paragraphs 
     (3) and (4) as paragraphs (2) and (3), respectively, and
       (B) in the flush material following paragraph (3) (as so 
     redesignated)--
       (i) by striking ``, entertainment, amusement, recreation, 
     or'' in item (B), and
       (ii) by striking ``(D) the business relationship to the 
     taxpayer of persons entertained, using the facility or 
     property, or receiving the gift'' and inserting ``(D) the 
     business relationship to the taxpayer of the person receiving 
     the benefit''.

[[Page H9327]]

       (2) Section 274(e) is amended by striking paragraph (4) and 
     redesignating paragraphs (5), (6), (7), (8), and (9) as 
     paragraphs (4), (5), (6), (7), and (8), respectively.
       (3) Section 274(k)(2)(A) is amended by striking ``(4), (7), 
     (8), or (9)'' and inserting ``(6), (7), or (8)''.
       (4) Section 274 is amended by striking subsection (l).
       (5) Section 274(m)(1)(B)(ii) is amended by striking ``(4), 
     (7), (8), or (9)'' and inserting ``(6), (7), or (8)''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2017.

     SEC. 3308. UNRELATED BUSINESS TAXABLE INCOME INCREASED BY 
                   AMOUNT OF CERTAIN FRINGE BENEFIT EXPENSES FOR 
                   WHICH DEDUCTION IS DISALLOWED.

       (a) In General.--Section 512(a) is amended by adding at the 
     end the following new paragraph:
       ``(6) Increase in unrelated business taxable income by 
     disallowed fringe.--Unrelated business taxable income of an 
     organization shall be increased by any amount for which a 
     deduction is not allowable under this chapter by reason of 
     section 274 and which is paid or incurred by such 
     organization for any qualified transportation fringe (as 
     defined in section 132(f)), any parking facility used in 
     connection with qualified parking (as defined in section 
     132(f)(5)(C)), or any on-premises athletic facility (as 
     defined in section 132(j)(4)(B)). The preceding sentence 
     shall not apply to the extent the amount paid or incurred is 
     directly connected with an unrelated trade or business which 
     is regularly carried on by the organization. The Secretary 
     may issue such regulations or other guidance as may be 
     necessary or appropriate to carry out the purposes of this 
     paragraph, including regulations or other guidance providing 
     for the appropriate allocation of depreciation and other 
     costs with respect to facilities used for parking or for on-
     premises athletic facilities.
     ''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2017.

     SEC. 3309. LIMITATION ON DEDUCTION FOR FDIC PREMIUMS.

       (a) In General.--Section 162 is amended by redesignating 
     subsection (q) as subsection (r) and by inserting after 
     subsection (p) the following new subsection:
       ``(q) Disallowance of FDIC Premiums Paid by Certain Large 
     Financial Institutions.--
       ``(1) In general.--No deduction shall be allowed for the 
     applicable percentage of any FDIC premium paid or incurred by 
     the taxpayer.
       ``(2) Exception for small institutions.--Paragraph (1) 
     shall not apply to any taxpayer for any taxable year if the 
     total consolidated assets of such taxpayer (determined as of 
     the close of such taxable year) do not exceed 
     $10,000,000,000.
       ``(3) Applicable percentage.--For purposes of this 
     subsection, the term `applicable percentage' means, with 
     respect to any taxpayer for any taxable year, the ratio 
     (expressed as a percentage but not greater than 100 percent) 
     which--
       ``(A) the excess of--
       ``(i) the total consolidated assets of such taxpayer 
     (determined as of the close of such taxable year), over
       ``(ii) $10,000,000,000, bears to
       ``(B) $40,000,000,000.
       ``(4) FDIC premiums.--For purposes of this subsection, the 
     term `FDIC premium' means any assessment imposed under 
     section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)).
       ``(5) Total consolidated assets.--For purposes of this 
     subsection, the term `total consolidated assets' has the 
     meaning given such term under section 165 of the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (12 U.S.C. 
     5365).
       ``(6) Aggregation rule.--
       ``(A) In general.--Members of an expanded affiliated group 
     shall be treated as a single taxpayer for purposes of 
     applying this subsection.
       ``(B) Expanded affiliated group.--For purposes of this 
     paragraph, the term `expanded affiliated group' means an 
     affiliated group as defined in section 1504(a), determined--
       ``(i) by substituting `more than 50 percent' for `at least 
     80 percent' each place it appears, and
       ``(ii) without regard to paragraphs (2) and (3) of section 
     1504(b).
     A partnership or any other entity (other than a corporation) 
     shall be treated as a member of an expanded affiliated group 
     if such entity is controlled (within the meaning of section 
     954(d)(3)) by members of such group (including any entity 
     treated as a member of such group by reason of this 
     sentence).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3310. REPEAL OF ROLLOVER OF PUBLICLY TRADED SECURITIES 
                   GAIN INTO SPECIALIZED SMALL BUSINESS INVESTMENT 
                   COMPANIES.

       (a) In General.--Part III of subchapter O of chapter 1 is 
     amended by striking section 1044 (and by striking the item 
     relating to such section in the table of sections of such 
     part).
       (b) Conforming Amendments.--Section 1016(a)(23) is 
     amended--
       (1) by striking ``1044,'', and
       (2) by striking ``1044(d),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales after December 31, 2017.

     SEC. 3311. CERTAIN SELF-CREATED PROPERTY NOT TREATED AS A 
                   CAPITAL ASSET.

       (a) Patents, etc.--Section 1221(a)(3) is amended by 
     inserting ``a patent, invention, model or design (whether or 
     not patented), a secret formula or process,'' before ``a 
     copyright''.
       (b) Conforming Amendment.--Section 1231(b)(1)(C) is amended 
     by inserting ``a patent, invention, model or design (whether 
     or not patented), a secret formula or process,'' before ``a 
     copyright''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to dispositions after December 31, 2017.

     SEC. 3312. REPEAL OF SPECIAL RULE FOR SALE OR EXCHANGE OF 
                   PATENTS.

       (a) In General.--Part IV of subchapter P of chapter 1 is 
     amended by striking section 1235 (and by striking the item 
     relating to such section in the table of sections of such 
     part).
       (b) Conforming Amendments.--
       (1) Section 483(d) is amended by striking paragraph (4).
       (2) Section 901(l)(5) is amended by striking ``without 
     regard to section 1235 or any similar rule'' and inserting 
     ``without regard to any provision which treats a disposition 
     as a sale or exchange of a capital asset held for more than 1 
     year or any similar provision''.
       (3) Section 1274(c)(3) is amended by striking subparagraph 
     (E) and redesignating subparagraph (F) as subparagraph (E).
       (c) Effective Date.--The amendments made by this section 
     shall apply to dispositions after December 31, 2017.

     SEC. 3313. REPEAL OF TECHNICAL TERMINATION OF PARTNERSHIPS.

       (a) In General.--Paragraph (1) of section 708(b) is 
     amended--
       (1) by striking ``, or'' at the end of subparagraph (A) and 
     all that follows and inserting a period, and
       (2) by striking ``only if--'' and all that follows through 
     ``no part of any business'' and inserting the following: 
     ``only if no part of any business''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years beginning after 
     December 31, 2017.

     SEC. 3314. RECHARACTERIZATION OF CERTAIN GAINS IN THE CASE OF 
                   PARTNERSHIP PROFITS INTERESTS HELD IN 
                   CONNECTION WITH PERFORMANCE OF INVESTMENT 
                   SERVICES.

       (a) In General.--Part IV of subchapter O of chapter 1 is 
     amended--
       (1) by redesignating section 1061 as section 1062, and
       (2) by inserting after section 1060 the following new 
     section:

     ``SEC. 1061. PARTNERSHIP INTERESTS HELD IN CONNECTION WITH 
                   PERFORMANCE OF SERVICES.

       ``(a) In General.--If one or more applicable partnership 
     interests are held by a taxpayer at any time during the 
     taxable year, the excess (if any) of--
       ``(1) the taxpayer's net long-term capital gain with 
     respect to such interests for such taxable year, over
       ``(2) the taxpayer's net long-term capital gain with 
     respect to such interests for such taxable year computed by 
     applying paragraphs (3) and (4) of sections 1222 by 
     substituting `3 years' for `1 year',
     shall be treated as short-term capital gain.
       ``(b) Special Rule.--To the extent provided by the 
     Secretary, subsection (a) shall not apply to income or gain 
     attributable to any asset not held for portfolio investment 
     on behalf of third party investors.
       ``(c) Applicable Partnership Interest.--For purposes of 
     this section--
       ``(1) In general.--Except as provided in this paragraph or 
     paragraph (4), the term `applicable partnership interest' 
     means any interest in a partnership which, directly or 
     indirectly, is transferred to (or is held by) the taxpayer in 
     connection with the performance of substantial services by 
     the taxpayer, or any other related person, in any applicable 
     trade or business. The previous sentence shall not apply to 
     an interest held by a person who is employed by another 
     entity that is conducting a trade or business (other than an 
     applicable trade or business) and only provides services to 
     such other entity.
       ``(2) Applicable trade or business.--The term `applicable 
     trade or business' means any activity conducted on a regular, 
     continuous, and substantial basis which, regardless of 
     whether the activity is conducted in one or more entities, 
     consists, in whole or in part, of--
       ``(A) raising or returning capital, and
       ``(B) either--
       ``(i) investing in (or disposing of) specified assets (or 
     identifying specified assets for such investing or 
     disposition), or
       ``(ii) developing specified assets.
       ``(3) Specified asset.--The term `specified asset' means 
     securities (as defined in section 475(c)(2) without regard to 
     the last sentence thereof), commodities (as defined in 
     section 475(e)(2)), real estate held for rental or 
     investment, cash or cash equivalents, options or derivative 
     contracts with respect to any of the foregoing, and an 
     interest in a partnership to the extent of the partnership's 
     proportionate interest in any of the foregoing.
       ``(4) Exceptions.--The term `applicable partnership 
     interest' shall not include--
       ``(A) any interest in a partnership directly or indirectly 
     held by a corporation, or
       ``(B) any capital interest in the partnership which 
     provides the taxpayer with a right to share in partnership 
     capital commensurate with--
       ``(i) the amount of capital contributed (determined at the 
     time of receipt of such partnership interest), or
       ``(ii) the value of such interest subject to tax under 
     section 83 upon the receipt or vesting of such interest.
       ``(5) Third party investor.--The term `third party 
     investor' means a person who--
       ``(A) holds an interest in the partnership which does not 
     constitute property held in connection with an applicable 
     trade or business; and

[[Page H9328]]

       ``(B) is not (and has not been) actively engaged, and is 
     (and was) not related to a person so engaged, in (directly or 
     indirectly) providing substantial services described in 
     paragraph (1) for such partnership or any applicable trade or 
     business.
       ``(d) Transfer of Applicable Partnership Interest to 
     Related Person.--
       ``(1) In general.--If a taxpayer transfers any applicable 
     partnership interest, directly or indirectly, to a person 
     related to the taxpayer, the taxpayer shall include in gross 
     income (as short term capital gain) the excess (if any) of--
       ``(A) so much of the taxpayer's long-term capital gains 
     with respect to such interest for such taxable year 
     attributable to the sale or exchange of any asset held for 
     not more than 3 years as is allocable to such interest, over
       ``(B) any amount treated as short term capital gain under 
     subsection (a) with respect to the transfer of such interest.
       ``(2) Related person.--For purposes of this paragraph, a 
     person is related to the taxpayer if--
       ``(A) the person is a member of the taxpayer's family 
     within the meaning of section 318(a)(1), or
       ``(B) the person performed a service within the current 
     calendar year or the preceding three calendar years in any 
     applicable trade or business in which or for which the 
     taxpayer performed a service.
       ``(e) Reporting.--The Secretary shall require such 
     reporting (at the time and in the manner prescribed by the 
     Secretary) as is necessary to carry out the purposes of this 
     section.
       ``(f) Regulations.--The Secretary shall issue such 
     regulations or other guidance as is necessary or appropriate 
     to carry out the purposes of this section''.
       (b) Coordination With Section 83.--Subsection (e) of 
     section 83 is amended by striking ``or'' at the end of 
     paragraph (4), by striking the period at the end of paragraph 
     (5) and inserting ``, or'', and by adding at the end the 
     following new paragraph:
       ``(6) a transfer of an applicable partnership interest to 
     which section 1061 applies.''.
       (c) Clerical Amendment.--The table of sections for part IV 
     of subchapter O of chapter 1 is amended by striking the item 
     relating to 1061 and inserting the following new items:

``Sec. 1061. Partnership interests held in connection with performance 
              of services.
``Sec. 1062. Cross references.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3315. AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
                   EXPENDITURES.

       (a) In General.--Section 174 is amended to read as follows:

     ``SEC. 174. AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
                   EXPENDITURES.

       ``(a) In General.--In the case of a taxpayer's specified 
     research or experimental expenditures for any taxable year--
       ``(1) except as provided in paragraph (2), no deduction 
     shall be allowed for such expenditures, and
       ``(2) the taxpayer shall--
       ``(A) charge such expenditures to capital account, and
       ``(B) be allowed an amortization deduction of such 
     expenditures ratably over the 5-year period (15-year period 
     in the case of any specified research or experimental 
     expenditures which are attributable to foreign research 
     (within the meaning of section 41(d)(4)(F))) beginning with 
     the midpoint of the taxable year in which such expenditures 
     are paid or incurred.
       ``(b) Specified Research or Experimental Expenditures.--For 
     purposes of this section, the term `specified research or 
     experimental expenditures' means, with respect to any taxable 
     year, research or experimental expenditures which are paid or 
     incurred by the taxpayer during such taxable year in 
     connection with the taxpayer's trade or business.
       ``(c) Special Rules.--
       ``(1) Land and other property.--This section shall not 
     apply to any expenditure for the acquisition or improvement 
     of land, or for the acquisition or improvement of property to 
     be used in connection with the research or experimentation 
     and of a character which is subject to the allowance under 
     section 167 (relating to allowance for depreciation, etc.) or 
     section 611 (relating to allowance for depletion); but for 
     purposes of this section allowances under section 167, and 
     allowances under section 611, shall be considered as 
     expenditures.
       ``(2) Exploration expenditures.--This section shall not 
     apply to any expenditure paid or incurred for the purpose of 
     ascertaining the existence, location, extent, or quality of 
     any deposit of ore or other mineral (including oil and gas).
       ``(3) Software development.--For purposes of this section, 
     any amount paid or incurred in connection with the 
     development of any software shall be treated as a research or 
     experimental expenditure.
       ``(d) Treatment Upon Disposition, Retirement, or 
     Abandonment.--If any property with respect to which specified 
     research or experimental expenditures are paid or incurred is 
     disposed, retired, or abandoned during the period during 
     which such expenditures are allowed as an amortization 
     deduction under this section, no deduction shall be allowed 
     with respect to such expenditures on account of such 
     disposition, retirement, or abandonment and such amortization 
     deduction shall continue with respect to such 
     expenditures.''.
       (b) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1 is amended by striking the item 
     relating to section 174 and inserting the following new item:

``Sec. 174. Amortization of research and experimental expenditures.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2022.

     SEC. 3316. UNIFORM TREATMENT OF EXPENSES IN CONTINGENCY FEE 
                   CASES.

       (a) In General.--Section 162, as amended by the preceding 
     provisions of this Act, is amended by redesignating 
     subsection (r) as subsection (s) and by inserting after 
     subsection (q) the following new subsection:
       ``(r) Expenses in Contingency Fee Cases.--No deduction 
     shall be allowed under subsection (a) to a taxpayer for any 
     expense--
       ``(1) paid or incurred in the course of the trade or 
     business of practicing law, and
       ``(2) resulting from a case for which the taxpayer is 
     compensated primarily on a contingent basis,
     until such time as such contingency is resolved.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenses and costs paid or incurred in taxable 
     years beginning after the date of the enactment of this Act.

                 Subtitle E--Reform of Business Credits

     SEC. 3401. REPEAL OF CREDIT FOR CLINICAL TESTING EXPENSES FOR 
                   CERTAIN DRUGS FOR RARE DISEASES OR CONDITIONS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by striking section 45C (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended by striking paragraph (12).
       (2) Section 280C is amended by striking subsection (b).
       (3) Section 6501(m) is amended by striking ``45C(d)(4),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2017.

     SEC. 3402. REPEAL OF EMPLOYER-PROVIDED CHILD CARE CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by striking section 45F (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended by striking paragraph (15).
       (2) Section 1016(a) is amended by striking paragraph (28).
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years beginning after December 31, 2017.
       (2) Basis adjustments.--The amendment made by subsection 
     (b)(2) shall apply to credits determined for taxable years 
     beginning after December 31, 2017.

     SEC. 3403. REPEAL OF REHABILITATION CREDIT.

       (a) In General.--Subpart E of part IV of subchapter A of 
     chapter 1 is amended by striking section 47 (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendments.--
       (1) Section 170(f)(14)(A) is amended by inserting ``(as in 
     effect before its repeal by the Tax Cuts and Jobs Act)'' 
     after ``section 47''.
       (2) Section 170(h)(4) is amended--
       (A) by striking ``(as defined in section 47(c)(3)(B))'' in 
     subparagraph (C)(ii), and
       (B) by adding at the end the following new subparagraph:
       ``(D) Registered historic district.--The term `registered 
     historic district' means--
       ``(i) any district listed in the National Register, and
       ``(ii) any district--

       ``(I) which is designated under a statute of the 
     appropriate State or local government, if such statute is 
     certified by the Secretary of the Interior to the Secretary 
     as containing criteria which will substantially achieve the 
     purpose of preserving and rehabilitating buildings of 
     historic significance to the district, and
       ``(II) which is certified by the Secretary of the Interior 
     to the Secretary as meeting substantially all of the 
     requirements for the listing of districts in the National 
     Register.''.

       (3) Section 469(i)(3) is amended by striking subparagraph 
     (B).
       (4) Section 469(i)(6)(B) is amended--
       (A) by striking ``in the case of--'' and all that follows 
     and inserting ``in the case of any credit determined under 
     section 42 for any taxable year.'', and
       (B) by striking ``, rehabilitation credit,'' in the heading 
     thereof.
       (5) Section 469(k)(1) is amended by striking ``, or any 
     rehabilitation credit determined under section 47,''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts paid 
     or incurred after December 31, 2017.
       (2) Transition rule.--In the case of qualified 
     rehabilitation expenditures (within the meaning of section 47 
     of the Internal Revenue Code of 1986 as in effect before its 
     repeal) with respect to any building--
       (A) owned or leased (as permitted by section 47 of the 
     Internal Revenue Code of 1986 as in effect before its repeal) 
     by the taxpayer at all times after December 31, 2017, and
       (B) with respect to which the 24-month period selected by 
     the taxpayer under section 47(c)(1)(C) of such Code begins 
     not later than the end of the 180-day period beginning on the 
     date of the enactment of this Act,

[[Page H9329]]

      the amendments made by this section shall apply to such 
     expenditures paid or incurred after the end of the taxable 
     year in which the 24-month period referred to in subparagraph 
     (B) ends.

     SEC. 3404. REPEAL OF WORK OPPORTUNITY TAX CREDIT.

       (a) In General.--Subpart F of part IV of subchapter A of 
     chapter 1 is amended by striking section 51 (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Clerical Amendment.--The heading of such subpart F (and 
     the item relating to such subpart in the table of subparts 
     for part IV of subchapter A of chapter 1) are each amended by 
     striking ``Rules for Computing Work Opportunity Credit'' and 
     inserting ``Special Rules''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred to individuals who 
     begin work for the employer after December 31, 2017.

     SEC. 3405. REPEAL OF DEDUCTION FOR CERTAIN UNUSED BUSINESS 
                   CREDITS.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by striking section 196 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3406. TERMINATION OF NEW MARKETS TAX CREDIT.

       (a) In General.--Section 45D(f) is amended--
       (1) by striking ``2019'' in paragraph (1)(G) and inserting 
     ``2017'', and
       (2) by striking ``2024'' in paragraph (3) and inserting 
     ``2022''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after December 31, 
     2017.

     SEC. 3407. REPEAL OF CREDIT FOR EXPENDITURES TO PROVIDE 
                   ACCESS TO DISABLED INDIVIDUALS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by striking section 44 (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendment.--Section 38(b) is amended by 
     striking paragraph (7).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3408. MODIFICATION OF CREDIT FOR PORTION OF EMPLOYER 
                   SOCIAL SECURITY TAXES PAID WITH RESPECT TO 
                   EMPLOYEE TIPS.

       (a) Credit Determined With Respect to Minimum Wage as in 
     Effect.--Section 45B(b)(1)(B) is amended by striking ``as in 
     effect on January 1, 2007, and''.
       (b) Information Return Requirement.--Section 45B is amended 
     by redesignating subsections (c) and (d) as subsections (d) 
     and (e), respectively, and by inserting after subsection (b) 
     the following new subsection:
       ``(c) Information Return Requirement.--
       ``(1) In general.--No credit shall be determined under 
     subsection (a) with respect to any food or beverage 
     establishment of any taxpayer for any taxable year unless 
     such taxpayer has, with respect to the calendar year which 
     ends in or with such taxable year--
       ``(A) made a report to the Secretary showing the 
     information described in section 6053(c)(1) with respect to 
     such food or beverage establishment, and
       ``(B) furnished written statements to each employee of such 
     food or beverage establishment showing the information 
     described in section 6053(c)(2).
       ``(2) Allocation of 10 percent of gross receipts.--For 
     purposes of determining the information referred to in 
     subparagraphs (A) and (B), section 6053(c)(3)(A)(i) shall be 
     applied by substituting `10 percent' for `8 percent'. For 
     purposes of section 6053(c)(5), any reference to section 
     6053(c)(3)(B) contained therein shall be treated as including 
     a reference to this paragraph.
       ``(3) Food or beverage establishment.--For purposes of this 
     subsection, the term `food or beverage establishment' means 
     any trade or business (or portion thereof) which would be a 
     large food or beverage establishment (as defined in section 
     6053(c)(4)) if such section were applied without regard to 
     subparagraph (C) thereof.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                       Subtitle F--Energy Credits

     SEC. 3501. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED 
                   FROM CERTAIN RENEWABLE RESOURCES.

       (a) Termination of Inflation Adjustment.--Section 45(b)(2) 
     is amended--
       (1) by striking ``The 1.5 cent amount'' and inserting the 
     following:
       ``(A) In general.--The 1.5 cent amount'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Termination.--Subparagraph (A) shall not apply with 
     respect to any electricity or refined coal produced at a 
     facility the construction of which begins after the date of 
     the enactment of this subparagraph.''.
       (b) Special Rule for Determination of Beginning of 
     Construction.--Section 45(e) is amended by adding at the end 
     the following new paragraph:
       ``(12) Special rule for determining beginning of 
     construction.--For purposes of subsection (d), the 
     construction of any facility, modification, improvement, 
     addition, or other property shall not be treated as beginning 
     before any date unless there is a continuous program of 
     construction which begins before such date and ends on the 
     date that such property is placed in service.''.
       (c) Effective Dates.--
       (1) Termination of inflation adjustment.--The amendments 
     made by subsection (a) shall apply to taxable years ending 
     after the date of the enactment of this Act.
       (2) Special rule for determination of beginning of 
     construction.--The amendment made by subsection (b) shall 
     apply to taxable years beginning before, on, or after the 
     date of the enactment of this Act.

     SEC. 3502. MODIFICATION OF THE ENERGY INVESTMENT TAX CREDIT.

       (a) Extension of Solar Energy Property.--Section 
     48(a)(3)(A)(ii) is amended by striking ``periods ending 
     before January 1, 2017'' and inserting ``property the 
     construction of which begins before January 1, 2022''.
       (b) Extension of Qualified Fuel Cell Property.--Section 
     48(c)(1)(D) is amended by striking ``for any period after 
     December 31, 2016'' and inserting ``the construction of which 
     does not begin before January 1, 2022''.
       (c) Extension of Qualified Microturbine Property.--Section 
     48(c)(2)(D) is amended by striking ``for any period after 
     December 31, 2016'' and inserting ``the construction of which 
     does not begin before January 1, 2022''.
       (d) Extension of Combined Heat and Power System Property.--
     Section 48(c)(3)(A)(iv) is amended by striking ``which is 
     placed in service before January 1, 2017'' and inserting 
     ``the construction of which begins before January 1, 2022''.
       (e) Extension of Qualified Small Wind Energy Property.--
     Section 48(c)(4)(C) is amended by striking ``for any period 
     after December 31, 2016'' and inserting ``the construction of 
     which does not begin before January 1, 2022''.
       (f) Extension of Thermal Energy Property.--Section 
     48(a)(3)(A)(vii) is amended by striking ``periods ending 
     before January 1, 2017'' and inserting ``property the 
     construction of which begins before January 1, 2022''.
       (g) Phaseout of 30 Percent Credit Rate for Fuel Cell and 
     Small Wind Energy Property.--Section 48(a) is amended by 
     adding at the end the following new paragraph:
       ``(7) Phaseout for qualified fuel cell property and 
     qualified small wind energy property.--
       ``(A) In general.--In the case of qualified fuel cell 
     property or qualified small wind energy property, the 
     construction of which begins before January 1, 2022, the 
     energy percentage determined under paragraph (2) shall be 
     equal to--
       ``(i) in the case of any property the construction of which 
     begins after December 31, 2019, and before January 1, 2021, 
     26 percent, and
       ``(ii) in the case of any property the construction of 
     which begins after December 31, 2020, and before January 1, 
     2022, 22 percent.
       ``(B) Placed in service deadline.--In the case of any 
     qualified fuel cell property or qualified small wind energy 
     property, the construction of which begins before January 1, 
     2022, and which is not placed in service before January 1, 
     2024, the energy percentage determined under paragraph (2) 
     shall be equal to 10 percent.''.
       (h) Phaseout for Fiber-optic Solar Energy Property.--
     Subparagraphs (A) and (B) of section 48(a)(6) are each 
     amended by inserting ``or (3)(A)(ii)'' after ``paragraph 
     (3)(A)(i)''.
       (i) Termination of Solar Energy Property.--Section 
     48(a)(3)(A)(i) is amended by inserting ``, the construction 
     of which begins before January 1, 2028, and'' after 
     ``equipment''.
       (j) Termination of Geothermal Energy Property.--Section 
     48(a)(3)(A)(iii) is amended by inserting ``, the construction 
     of which begins before January 1, 2028, and'' after 
     ``equipment''.
       (k) Special Rule for Determination of Beginning of 
     Construction.--Section 48(c) is amended by adding at the end 
     the following new paragraph:
       ``(5) Special rule for determining beginning of 
     construction.--The construction of any facility, 
     modification, improvement, addition, or other property shall 
     not be treated as beginning before any date unless there is a 
     continuous program of construction which begins before such 
     date and ends on the date that such property is placed in 
     service.''.
       (l) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to periods after December 31, 2016, under rules similar to 
     the rules of section 48(m) of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990).
       (2) Extension of combined heat and power system property.--
     The amendment made by subsection (d) shall apply to property 
     placed in service after December 31, 2016.
       (3) Phaseouts and terminations.--The amendments made by 
     subsections (g), (h), (i), and (j) shall take effect on the 
     date of the enactment of this Act.
       (4) Special rule for determination of beginning of 
     construction.--The amendment made by subsection (k) shall 
     apply to taxable years beginning before, on, or after the 
     date of the enactment of this Act.

     SEC. 3503. EXTENSION AND PHASEOUT OF RESIDENTIAL ENERGY 
                   EFFICIENT PROPERTY.

       (a) Extension.--Section 25D(h) is amended by striking 
     ``December 31, 2016 (December 31, 2021, in the case of any 
     qualified solar electric property expenditures and qualified 
     solar water heating property expenditures)'' and inserting 
     ``December 31, 2021''.
       (b) Phaseout.--
       (1) In general.--Paragraphs (3), (4), and (5) of section 
     25D(a) are amended by striking ``30 percent'' each place it 
     appears and inserting ``the applicable percentage''.
       (2) Conforming amendment.--Section 25D(g) of such Code is 
     amended by striking ``paragraphs (1) and (2) of''.

[[Page H9330]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2016.

     SEC. 3504. REPEAL OF ENHANCED OIL RECOVERY CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by striking section 43 (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended by striking paragraph (6).
       (2) Section 6501(m) is amended by striking ``43,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3505. REPEAL OF CREDIT FOR PRODUCING OIL AND GAS FROM 
                   MARGINAL WELLS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by striking section 45I (and by striking 
     the item relating to such section in the table of sections 
     for such subpart).
       (b) Conforming Amendment.--Section 38(b) is amended by 
     striking paragraph (19).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3506. MODIFICATIONS OF CREDIT FOR PRODUCTION FROM 
                   ADVANCED NUCLEAR POWER FACILITIES.

       (a) Treatment of Unutilized Limitation Amounts.--Section 
     45J(b) is amended--
       (1) in paragraph (4), by inserting ``or any amendment to'' 
     after ``enactment of''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Allocation of unutilized limitation.--
       ``(A) In general.--Any unutilized national megawatt 
     capacity limitation shall be allocated by the Secretary under 
     paragraph (3) as rapidly as is practicable after December 31, 
     2020--
       ``(i) first to facilities placed in service on or before 
     such date to the extent that such facilities did not receive 
     an allocation equal to their full nameplate capacity; and
       ``(ii) then to facilities placed in service after such date 
     in the order in which such facilities are placed in service.
       ``(B) Unutilized national megawatt capacity limitation.--
     The term `unutilized national megawatt capacity limitation' 
     means the excess (if any) of--
       ``(i) 6,000 megawatts, over
       ``(ii) the aggregate amount of national megawatt capacity 
     limitation allocated by the Secretary before January 1, 2021, 
     reduced by any amount of such limitation which was allocated 
     to a facility which was not placed in service before such 
     date.
       ``(C) Coordination with other provisions.--In the case of 
     any unutilized national megawatt capacity limitation 
     allocated by the Secretary pursuant to this paragraph--
       ``(i) such allocation shall be treated for purposes of this 
     section in the same manner as an allocation of national 
     megawatt capacity limitation; and
       ``(ii) subsection (d)(1)(B) shall not apply to any facility 
     which receives such allocation.''.
       (b) Transfer of Credit by Certain Public Entities.--
       (1) In general.--Section 45J is amended--
       (A) by redesignating subsection (e) as subsection (f); and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Transfer of Credit by Certain Public Entities.--
       ``(1) In general.--If, with respect to a credit under 
     subsection (a) for any taxable year--
       ``(A) the taxpayer would be a qualified public entity; and
       ``(B) such entity elects the application of this paragraph 
     for such taxable year with respect to all (or any portion 
     specified in such election) of such credit,
     the eligible project partner specified in such election (and 
     not the qualified public entity) shall be treated as the 
     taxpayer for purposes of this title with respect to such 
     credit (or such portion thereof).
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Qualified public entity.--The term `qualified public 
     entity' means--
       ``(i) a Federal, State, or local government entity, or any 
     political subdivision, agency, or instrumentality thereof;
       ``(ii) a mutual or cooperative electric company described 
     in section 501(c)(12) or section 1381(a)(2); or
       ``(iii) a not-for-profit electric utility which has or had 
     received a loan or loan guarantee under the Rural 
     Electrification Act of 1936.
       ``(B) Eligible project partner.--The term `eligible project 
     partner' means--
       ``(i) any person responsible for, or participating in, the 
     design or construction of the advanced nuclear power facility 
     to which the credit under subsection (a) relates;
       ``(ii) any person who participates in the provision of the 
     nuclear steam supply system to the advanced nuclear power 
     facility to which the credit under subsection (a) relates;
       ``(iii) any person who participates in the provision of 
     nuclear fuel to the advanced nuclear power facility to which 
     the credit under subsection (a) relates; or
       ``(iv) any person who has an ownership interest in such 
     facility.
       ``(3) Special rules.--
       ``(A) Application to partnerships.--In the case of a credit 
     under subsection (a) which is determined at the partnership 
     level--
       ``(i) for purposes of paragraph (1)(A), a qualified public 
     entity shall be treated as the taxpayer with respect to such 
     entity's distributive share of such credit; and
       ``(ii) the term `eligible project partner' shall include 
     any partner of the partnership.
       ``(B) Taxable year in which credit taken into account.--In 
     the case of any credit (or portion thereof) with respect to 
     which an election is made under paragraph (1), such credit 
     shall be taken into account in the first taxable year of the 
     eligible project partner ending with, or after, the qualified 
     public entity's taxable year with respect to which the credit 
     was determined.
       ``(C) Treatment of transfer under private use rules.--For 
     purposes of section 141(b)(1), any benefit derived by an 
     eligible project partner in connection with an election under 
     this subsection shall not be taken into account as a private 
     business use.''.
       (2) Special rule for proceeds of transfers for mutual or 
     cooperative electric companies.--Section 501(c)(12) of such 
     Code is amended by adding at the end the following new 
     subparagraph:
       ``(I) In the case of a mutual or cooperative electric 
     company described in this paragraph or an organization 
     described in section 1381(a)(2), income received or accrued 
     in connection with an election under section 45J(e)(1) shall 
     be treated as an amount collected from members for the sole 
     purpose of meeting losses and expenses.''.
       (c) Effective Dates.--
       (1) Treatment of unutilized limitation amounts.--The 
     amendment made by subsection (a) shall take effect on the 
     date of the enactment of this Act.
       (2) Transfer of credit by certain public entities.--The 
     amendments made by subsection (b) shall apply to taxable 
     years beginning after the date of the enactment of this Act.

                        Subtitle G--Bond Reforms

     SEC. 3601. TERMINATION OF PRIVATE ACTIVITY BONDS.

       (a) In General.--Paragraph (1) of section 103(b) is 
     amended--
       (1) by striking ``which is not a qualified bond (within the 
     meaning of section 141)'', and
       (2) by striking ``which is not a qualified bond'' in the 
     heading thereof.
       (b) Conforming Amendments.--
       (1) Subpart A of part IV of subchapter B of chapter 1 is 
     amended by striking sections 142, 143, 144, 145, 146, and 147 
     (and by striking each of the items relating to such sections 
     in the table of sections for such subpart).
       (2) Section 25 is amended by adding at the end the 
     following new subsection:
       ``(j) Coordination With Repeal of Private Activity Bonds.--
     Any reference to section 143, 144, or 146 shall be treated as 
     a reference to such section as in effect before its repeal by 
     the Tax Cuts and Jobs Act.''.
       (3) Section 26(b)(2) is amended by striking subparagraph 
     (D).
       (4) Section 141(b) is amended by striking paragraphs (5) 
     and (9).
       (5) Section 141(d) is amended by striking paragraph (5).
       (6) Section 141 is amended by striking subsection (e).
       (7) Section 148(f)(4) is amended--
       (A) by striking ``(determined in accordance with section 
     147(b)(2)(A))'' in the flush matter following subparagraph 
     (A)(ii) and inserting ``(determined by taking into account 
     the respective issue prices of the bonds issued as part of 
     the issue)'', and
       (B) by striking the last sentence of subparagraph (D)(v).
       (8) Clause (iv) of section 148(f)(4)(C) is amended to read 
     as follows:
       ``(iv) Construction issue.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `construction issue' means any 
     issue if at least 75 percent of the available construction 
     proceeds of such issue are to be used for construction 
     expenditures.
       ``(II) Construction.--The term `construction' includes 
     reconstruction and rehabilitation.''.

       (9) Section 149(b)(3) is amended by striking subparagraph 
     (C).
       (10) Section 149(e)(2) is amended--
       (A) by striking subparagraphs (C), (D), and (F) and by 
     redesignating subparagraphs (E) and (G) as subparagraphs (C) 
     and (D), respectively, and
       (B) by striking the second sentence.
       (11) Section 149(f)(6) is amended--
       (A) by striking subparagraph (B), and
       (B) by striking ``For purposes of this subsection'' and all 
     that follows through ``The term'' and inserting the 
     following: ``For purposes of this subsection, the term''.
       (12) Section 150(e)(3) is amended to read as follows:
       ``(3) Public approval requirement.--A bond shall not be 
     treated as part of an issue which meets the requirements of 
     paragraph (1) unless such bond satisfies the requirements of 
     section 147(f)(2) (as in effect before its repeal by the Tax 
     Cuts and Jobs Act).''.
       (13) Section 269A(b)(3) is amended by striking 
     ``144(a)(3)'' and inserting ``414(n)(6)(A)''.
       (14) Section 414(m)(5) is amended by striking ``section 
     144(a)(3)'' and inserting ``subsection (n)(6)(A)''.
       (15) Section 414(n)(6)(A) is amended to read as follows:
       ``(A) Related persons.--A person is a related person to 
     another person if--
       ``(i) the relationship between such persons would result in 
     a disallowance of losses under section 267 or 707(b), or
       ``(ii) such persons are members of the same controlled 
     group of corporations (as defined in section 1563(a), except 
     that `more than 50 percent' shall be substituted for `at 
     least 80 percent' each place it appears therein).''.
       (16) Section 6045(e)(4)(B) is amended by inserting ``(as in 
     effect before its repeal by the Tax Cuts and Jobs Act)'' 
     after ``section 143(m)(3)''.
       (17) Section 6654(f)(1) is amended by inserting ``(as in 
     effect before its repeal by the Tax Cuts and Jobs Act)'' 
     after ``section 143(m)''.

[[Page H9331]]

       (18) Section 7871(c) is amended--
       (A) by striking paragraphs (2) and (3), and
       (B) by striking ``Tax-exempt Bonds.--'' and all that 
     follows through ``Subsection (a) of section 103'' and 
     inserting the following: ``Tax-exempt Bonds.--Subsection (a) 
     of section 103''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2017.

     SEC. 3602. REPEAL OF ADVANCE REFUNDING BONDS.

       (a) In General.--Paragraph (1) of section 149(d) is amended 
     by striking ``as part of an issue described in paragraph (2), 
     (3), or (4).'' and inserting ``to advance refund another 
     bond.''.
       (b) Conforming Amendments.--
       (1) Section 149(d) is amended by striking paragraphs (2), 
     (3), (4), and (6) and by redesignating paragraphs (5) and (7) 
     as paragraphs (2) and (3).
       (2) Section 148(f)(4)(C) is amended by striking clause 
     (xiv) and by redesignating clauses (xv) to (xvii) as clauses 
     (xiv) to (xvi).
       (c) Effective Date.--The amendments made by this section 
     shall apply to advance refunding bonds issued after December 
     31, 2017.

     SEC. 3603. REPEAL OF TAX CREDIT BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 is 
     amended by striking subparts H, I, and J (and by striking the 
     items relating to such subparts in the table of subparts for 
     such part).
       (b) Payments to Issuers.--Subchapter B of chapter 65 is 
     amended by striking section 6431 (and by striking the item 
     relating to such section in the table of sections for such 
     subchapter).
       (c) Conforming Amendments.--
       (1) Part IV of subchapter U of chapter 1 is amended by 
     striking section 1397E (and by striking the item relating to 
     such section in the table of sections for such part).
       (2) Section 54(l)(3)(B) is amended by inserting ``(as in 
     effect before its repeal by the Tax Cuts and Jobs Act)'' 
     after ``section 1397E(I)''.
       (3) Section 6211(b)(4)(A) is amended by striking ``, and 
     6431'' and inserting ``and'' before ``36B''.
       (4) Section 6401(b)(1) is amended by striking ``G, H, I, 
     and J'' and inserting ``and G''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2017.

     SEC. 3604. NO TAX EXEMPT BONDS FOR PROFESSIONAL STADIUMS.

       (a) In General.--Section 103(b), as amended by this Act, is 
     further amended by adding at the end the following new 
     paragraph:
       ``(4) Professional stadium bond.--Any professional stadium 
     bond.''.
       (b) Professional Stadium Bond Defined.--Subsection (c) of 
     section 103 is amended by adding at the end the following new 
     paragraph:
       ``(3) Professional stadium bond.--The term `professional 
     stadium bond' means any bond issued as part of an issue any 
     proceeds of which are used to finance or refinance capital 
     expenditures allocable to a facility (or appurtenant real 
     property) which, during at least 5 days during any calendar 
     year, is used as a stadium or arena for professional sports 
     exhibitions, games, or training.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after November 2, 2017.

                         Subtitle H--Insurance

     SEC. 3701. NET OPERATING LOSSES OF LIFE INSURANCE COMPANIES.

       (a) In General.--Section 805(b) is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (b) Conforming Amendments.--
       (1) Part I of subchapter L of chapter 1 is amended by 
     striking section 810 (and by striking the item relating to 
     such section in the table of sections for such part).
       (2) Part III of subchapter L of chapter 1 is amended by 
     striking section 844 (and by striking the item relating to 
     such section in the table of sections for such part).
       (3) Section 381 is amended by striking subsection (d).
       (4) Section 805(a)(4)(B)(ii) is amended to read as follows:
       ``(ii) the deduction allowed under section 172,''.
       (5) Section 805(a) is amended by striking paragraph (5).
       (6) Section 953(b)(1)(B) is amended to read as follows:
       ``(B) So much of section 805(a)(8) as relates to the 
     deduction allowed under section 172.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to losses arising in taxable years beginning 
     after December 31, 2017.

     SEC. 3702. REPEAL OF SMALL LIFE INSURANCE COMPANY DEDUCTION.

       (a) In General.--Part I of subchapter L of chapter 1 is 
     amended by striking section 806 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Conforming Amendments.--
       (1) Section 453B(e) is amended--
       (A) by striking ``(as defined in section 806(b)(3))'' in 
     paragraph (2)(B), and
       (B) by adding at the end the following new paragraph:
       ``(3) Noninsurance business.--
       ``(A) In general.--For purposes of this subsection, the 
     term `noninsurance business' means any activity which is not 
     an insurance business.
       ``(B) Certain activities treated as insurance businesses.--
     For purposes of subparagraph (A), any activity which is not 
     an insurance business shall be treated as an insurance 
     business if--
       ``(i) it is of a type traditionally carried on by life 
     insurance companies for investment purposes, but only if the 
     carrying on of such activity (other than in the case of real 
     estate) does not constitute the active conduct of a trade or 
     business, or
       ``(ii) it involves the performance of administrative 
     services in connection with plans providing life insurance, 
     pension, or accident and health benefits.''.
       (2) Section 465(c)(7)(D)(v)(II) is amended by striking 
     ``section 806(b)(3)'' and inserting ``section 453B(e)(3)''.
       (3) Section 801(a)(2) is amended by striking subparagraph 
     (C).
       (4) Section 804 is amended by striking ``means--'' and all 
     that follows and inserting ``means the general deductions 
     provided in section 805.''.
       (5) Section 805(a)(4)(B), as amended by section 3701, is 
     amended by striking clause (i) and by redesignating clauses 
     (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
     respectively.
       (6) Section 805(b)(2)(A) is amended by striking clause 
     (iii) and by redesignating clauses (iv) and (v) as clauses 
     (iii) and (iv), respectively.
       (7) Section 842(c) is amended by striking paragraph (1) and 
     by redesignating paragraphs (2) and (3) as paragraphs (1) and 
     (2), respectively.
       (8) Section 953(b)(1), as amended by section 3701, is 
     amended by striking subparagraph (A) and by redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3703. SURTAX ON LIFE INSURANCE COMPANY TAXABLE INCOME.

       (a) In General.--Section 801(a)(1) is amended--
       (1) by striking ``consist of a tax'' and insert ``consist 
     of the sum of--
       ``(A) a tax'', and
       (2) by striking the period at the end and inserting ``, 
     and'', and
       (3) by adding at the end the following new subparagraph:
       ``(B) a tax equal to 8 percent of the life insurance 
     company taxable income.''.

     SEC. 3704. ADJUSTMENT FOR CHANGE IN COMPUTING RESERVES.

       (a) In General.--Paragraph (1) of section 807(f) is amended 
     to read as follows:
       ``(1) Treatment as change in method of accounting.--If the 
     basis for determining any item referred to in subsection (c) 
     as of the close of any taxable year differs from the basis 
     for such determination as of the close of the preceding 
     taxable year, then so much of the difference between--
       ``(A) the amount of the item at the close of the taxable 
     year, computed on the new basis, and
       ``(B) the amount of the item at the close of the taxable 
     year, computed on the old basis,
     as is attributable to contracts issued before the taxable 
     year shall be taken into account under section 481 as 
     adjustments attributable to a change in method of accounting 
     initiated by the taxpayer and made with the consent of the 
     Secretary.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3705. REPEAL OF SPECIAL RULE FOR DISTRIBUTIONS TO 
                   SHAREHOLDERS FROM PRE-1984 POLICYHOLDERS 
                   SURPLUS ACCOUNT.

       (a) In General.--Subpart D of part I of subchapter L is 
     amended by striking section 815 (and by striking the item 
     relating to such section in the table of sections for such 
     subpart).
       (b) Conforming Amendment.--Section 801 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
       (d) Phased Inclusion of Remaining Balance of Policyholders 
     Surplus Accounts.--In the case of any stock life insurance 
     company which has a balance (determined as of the close of 
     such company's last taxable year beginning before January 1, 
     2018) in an existing policyholders surplus account (as 
     defined in section 815 of the Internal Revenue Code of 1986, 
     as in effect before its repeal), the tax imposed by section 
     801 of such Code for the first 8 taxable years beginning 
     after December 31, 2017, shall be the amount which would be 
     imposed by such section for such year on the sum of--
       (1) life insurance company taxable income for such year 
     (within the meaning of such section 801 but not less than 
     zero), plus
       (2) \1/8\ of such balance.

     SEC. 3706. MODIFICATION OF PRORATION RULES FOR PROPERTY AND 
                   CASUALTY INSURANCE COMPANIES.

       (a) In General.--Section 832(b)(5)(B) is amended by 
     striking ``15 percent'' and inserting ``26.25 percent''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3707. MODIFICATION OF DISCOUNTING RULES FOR PROPERTY AND 
                   CASUALTY INSURANCE COMPANIES.

       (a) Modification of Rate of Interest Used to Discount 
     Unpaid Losses.--Paragraph (2) of section 846(c) is amended to 
     read as follows:
       ``(2) Determination of annual rate.--The annual rate 
     determined by the Secretary under this paragraph for any 
     calendar year shall be a rate determined on the basis of the 
     corporate bond yield curve (as defined in section 
     430(h)(2)(D)(i)).''.
       (b) Modification of Computational Rules for Loss Payment 
     Patterns.--Section 846(d)(3) is amended by striking 
     subparagraphs (B) through (G) and inserting the following new 
     subparagraphs:
       ``(B) Treatment of certain losses.--Losses which would have 
     been treated as paid in the last year of the period 
     applicable under subparagraph (A)(i) or (A)(ii) shall be 
     treated as paid in the following manner:
       ``(i) 3-year loss payment pattern.--

       ``(I) In general.--The period taken into account under 
     subparagraph (A)(i) shall be extended to the extent required 
     under subclause (II).

[[Page H9332]]

       ``(II) Computation of extension.--The amount of losses 
     which would have been treated as paid in the 3d year after 
     the accident year shall be treated as paid in such 3d year 
     and each subsequent year in an amount equal to the average of 
     the losses treated as paid in the 1st and 2d years after the 
     accident year (or, if lesser, the portion of the unpaid 
     losses not theretofore taken into account). To the extent 
     such unpaid losses have not been treated as paid before the 
     18th year after the accident year, they shall be treated as 
     paid in such 18th year.

       ``(ii) 10-year loss payment pattern.--

       ``(I) In general.--The period taken into account under 
     subparagraph (A)(ii) shall be extended to the extent required 
     under subclause (II).
       ``(II) Computation of extension.--The amount of losses 
     which would have been treated as paid in the 10th year after 
     the accident year shall be treated as paid in such 10th year 
     and each subsequent year in an amount equal to the amount of 
     the average of the losses treated as paid in the 7th, 8th, 
     and 9th years after the accident year (or, if lesser, the 
     portion of the unpaid losses not theretofore taken into 
     account). To the extent such unpaid losses have not been 
     treated as paid before the 25th year after the accident year, 
     they shall be treated as paid in such 25th year.''.

       (c) Repeal of Historical Payment Pattern Election.--Section 
     846 is amended by striking subsection (e) and by 
     redesignating subsections (f) and (g) as subsections (e) and 
     (f), respectively.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.
       (e) Transitional Rule.--For the first taxable year 
     beginning after December 31, 2017--
       (1) the unpaid losses and the expenses unpaid (as defined 
     in paragraphs (5)(B) and (6) of section 832(b) of the 
     Internal Revenue Code of 1986) at the end of the preceding 
     taxable year, and
       (2) the unpaid losses as defined in sections 807(c)(2) and 
     805(a)(1) of such Code at the end of the preceding taxable 
     year,
     shall be determined as if the amendments made by this section 
     had applied to such unpaid losses and expenses unpaid in the 
     preceding taxable year and by using the interest rate and 
     loss payment patterns applicable to accident years ending 
     with calendar year 2018, and any adjustment shall be taken 
     into account ratably in such first taxable year and the 7 
     succeeding taxable years. For subsequent taxable years, such 
     amendments shall be applied with respect to such unpaid 
     losses and expenses unpaid by using the interest rate and 
     loss payment patterns applicable to accident years ending 
     with calendar year 2018.

     SEC. 3708. REPEAL OF SPECIAL ESTIMATED TAX PAYMENTS.

       (a) In General.--Part III of subchapter L of chapter 1 is 
     amended by striking section 847 (and by striking the item 
     relating to such section in the table of sections for such 
     part).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                        Subtitle I--Compensation

     SEC. 3801. MODIFICATION OF LIMITATION ON EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) Repeal of Performance-based Compensation and Commission 
     Exceptions for Limitation on Excessive Employee 
     Remuneration.--
       (1) In general.--Section 162(m)(4) is amended by striking 
     subparagraphs (B) and (C) and by redesignating subparagraphs 
     (D), (E), (F), and (G) as subparagraphs (B), (C), (D), and 
     (E), respectively.
       (2) Conforming amendments.--
       (A) Paragraphs (5)(E) and (6)(D) of section 162(m) are each 
     amended by striking ``subparagraphs (B), (C), and (D)'' and 
     inserting ``subparagraph (B)''.
       (B) Paragraphs (5)(G) and (6)(G) of section 162(m) are each 
     amended by striking ``(F) and (G)'' and inserting ``(D) and 
     (E)''.
       (b) Expansion of Applicable Employer.--Section 162(m)(2) is 
     amended to read as follows:
       ``(2) Publicly held corporation.--For purposes of this 
     subsection, the term `publicly held corporation' means any 
     corporation which is an issuer (as defined in section 3 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c))--
       ``(A) the securities of which are required to be registered 
     under section 12 of such Act (15 U.S.C. 78l), or
       ``(B) that is required to file reports under section 15(d) 
     of such Act (15 U.S.C. 78o(d)).''.
       (c) Modification of Definition of Covered Employees.--
     Section 162(m)(3) is amended--
       (1) in subparagraph (A), by striking ``as of the close of 
     the taxable year, such employee is the chief executive 
     officer of the taxpayer or is'' and inserting ``such employee 
     is the principal executive officer or principal financial 
     officer of the taxpayer at any time during the taxable year, 
     or was'',
       (2) in subparagraph (B)--
       (A) by striking ``4'' and inserting ``3'', and
       (B) by striking ``(other than the chief executive 
     officer)'' and inserting ``(other than the principal 
     executive officer or principal financial officer)'', and
       (3) by striking ``or'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``, or'', and by adding at the end the following:
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2016.
     Such term shall include any employee who would be described 
     in subparagraph (B) if the reporting described in such 
     subparagraph were required as so described.''.
       (d) Special Rule for Remuneration Paid to Beneficiaries, 
     etc.--Section 162(m)(4), as amended by subsection (a), is 
     amended by adding at the end the following new subparagraph:
       ``(F) Special rule for remuneration paid to beneficiaries, 
     etc.--Remuneration shall not fail to be applicable employee 
     remuneration merely because it is includible in the income 
     of, or paid to, a person other than the covered employee, 
     including after the death of the covered employee.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3802. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZATION 
                   EXECUTIVE COMPENSATION.

       (a) In General.--Subchapter D of chapter 42 is amended by 
     adding at the end the following new section:

     ``SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION EXECUTIVE 
                   COMPENSATION.

       ``(a) Tax Imposed.--There is hereby imposed a tax equal to 
     20 percent of the sum of--
       ``(1) so much of the remuneration paid (other than any 
     excess parachute payment) by an applicable tax-exempt 
     organization for the taxable year with respect to employment 
     of any covered employee in excess of $1,000,000, plus
       ``(2) any excess parachute payment paid by such an 
     organization to any covered employee.
       ``(b) Liability for Tax.--The employer shall be liable for 
     the tax imposed under subsection (a).
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable tax-exempt organization.--The term 
     `applicable tax-exempt organization' means any organization 
     that for the taxable year--
       ``(A) is exempt from taxation under section 501(a),
       ``(B) is a farmers' cooperative organization described in 
     section 521(b)(1),
       ``(C) has income excluded from taxation under section 
     115(1), or
       ``(D) is a political organization described in section 
     527(e)(1).
       ``(2) Covered employee.--For purposes of this section, the 
     term `covered employee' means any employee (including any 
     former employee) of an applicable tax-exempt organization if 
     the employee--
       ``(A) is one of the 5 highest compensated employees of the 
     organization for the taxable year, or
       ``(B) was a covered employee of the organization (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2016.
       ``(3) Remuneration.--For purposes of this section, the term 
     `remuneration' means wages (as defined in section 3401(a)), 
     except that such term shall not include any designated Roth 
     contribution (as defined in section 402A(c)).
       ``(4) Remuneration from related organizations.--
       ``(A) In general.--Remuneration of a covered employee paid 
     by an applicable tax-exempt organization shall include any 
     remuneration paid with respect to employment of such employee 
     by any related person or governmental entity.
       ``(B) Related organizations.--A person or governmental 
     entity shall be treated as related to an applicable tax-
     exempt organization if such person or governmental entity--
       ``(i) controls, or is controlled by, the organization,
       ``(ii) is controlled by one or more persons that control 
     the organization,
       ``(iii) is a supported organization (as defined in section 
     509(f)(2)) during the taxable year with respect to the 
     organization,
       ``(iv) is a supporting organization described in section 
     509(a)(3) during the taxable year with respect to the 
     organization, or
       ``(v) in the case of an organization that is a voluntary 
     employees' beneficiary association described in section 
     501(a)(9), establishes, maintains, or makes contributions to 
     such voluntary employees' beneficiary association.
       ``(C) Liability for tax.--In any case in which remuneration 
     from more than one employer is taken into account under this 
     paragraph in determining the tax imposed by subsection (a), 
     each such employer shall be liable for such tax in an amount 
     which bears the same ratio to the total tax determined under 
     subsection (a) with respect to such remuneration as--
       ``(i) the amount of remuneration paid by such employer with 
     respect to such employee, bears to
       ``(ii) the amount of remuneration paid by all such 
     employers to such employee.
       ``(5) Excess parachute payment.--For purposes determining 
     the tax imposed by subsection (a)(2)--
       ``(A) In general.--The term `excess parachute payment' 
     means an amount equal to the excess of any parachute payment 
     over the portion of the base amount allocated to such 
     payment.
       ``(B) Parachute payment.--The term `parachute payment' 
     means any payment in the nature of compensation to (or for 
     the benefit of) a covered employee if--
       ``(i) such payment is contingent on such employee's 
     separation from employment with the employer, and
       ``(ii) the aggregate present value of the payments in the 
     nature of compensation to (or for the benefit of) such 
     individual which are contingent on such separation equals or 
     exceeds an amount equal to 3 times the base amount.
     Such term does not include any payment described in section 
     280G(b)(6) (relating to exemption for payments under 
     qualified plans) or any payment made under or to an annuity 
     contract described in section 403(b) or a plan described in 
     section 457(b).
       ``(C) Base amount.--Rules similar to the rules of 
     280G(b)(3) shall apply for purposes of determining the base 
     amount.
       ``(D) Property transfers; present value.--Rules similar to 
     the rules of paragraphs (3) and (4) of section 280G(d) shall 
     apply.
       ``(6) Coordination with deduction limitation.--Remuneration 
     the deduction for which is

[[Page H9333]]

     not allowed by reason of section 162(m) shall not be taken 
     into account for purposes of this section.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to prevent avoidance of the 
     purposes of this section through the performance of services 
     other than as an employee.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter D of chapter 42 is amended by adding at the end 
     the following new item:

``Sec. 4960. Tax on excess exempt organization executive 
              compensation.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 3803. TREATMENT OF QUALIFIED EQUITY GRANTS.

       (a) In General.--
       (1) Election to defer income.--Section 83 is amended by 
     adding at the end the following new subsection:
       ``(i) Qualified Equity Grants.--
       ``(1) In general.--For purposes of this subtitle, if 
     qualified stock is transferred to a qualified employee who 
     makes an election with respect to such stock under this 
     subsection--
       ``(A) except as provided in subparagraph (B), no amount 
     shall be included in income under subsection (a) for the 
     first taxable year in which the rights of the employee in 
     such stock are transferable or are not subject to a 
     substantial risk of forfeiture, whichever is applicable, and
       ``(B) an amount equal to the amount which would be included 
     in income of the employee under subsection (a) (determined 
     without regard to this subsection) shall be included in 
     income for the taxable year of the employee which includes 
     the earliest of--
       ``(i) the first date such qualified stock becomes 
     transferable (including transferable to the employer),
       ``(ii) the date the employee first becomes an excluded 
     employee,
       ``(iii) the first date on which any stock of the 
     corporation which issued the qualified stock becomes readily 
     tradable on an established securities market (as determined 
     by the Secretary, but not including any market unless such 
     market is recognized as an established securities market by 
     the Secretary for purposes of a provision of this title other 
     than this subsection),
       ``(iv) the date that is 5 years after the first date the 
     rights of the employee in such stock are transferable or are 
     not subject to a substantial risk of forfeiture, whichever 
     occurs earlier, or
       ``(v) the date on which the employee revokes (at such time 
     and in such manner as the Secretary may provide) the election 
     under this subsection with respect to such stock.
       ``(2) Qualified stock.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified stock' means, with respect to any qualified 
     employee, any stock in a corporation which is the employer of 
     such employee, if--
       ``(i) such stock is received--

       ``(I) in connection with the exercise of an option, or
       ``(II) in settlement of a restricted stock unit, and

       ``(ii) such option or restricted stock unit was provided by 
     the corporation--

       ``(I) in connection with the performance of services as an 
     employee, and
       ``(II) during a calendar year in which such corporation was 
     an eligible corporation.

       ``(B) Limitation.--The term `qualified stock' shall not 
     include any stock if the employee may sell such stock to, or 
     otherwise receive cash in lieu of stock from, the corporation 
     at the time that the rights of the employee in such stock 
     first become transferable or not subject to a substantial 
     risk of forfeiture.
       ``(C) Eligible corporation.--For purposes of subparagraph 
     (A)(ii)(II)--
       ``(i) In general.--The term `eligible corporation' means, 
     with respect to any calendar year, any corporation if--

       ``(I) no stock of such corporation (or any predecessor of 
     such corporation) is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     during any preceding calendar year, and
       ``(II) such corporation has a written plan under which, in 
     such calendar year, not less than 80 percent of all employees 
     who provide services to such corporation in the United States 
     (or any possession of the United States) are granted stock 
     options, or restricted stock units, with the same rights and 
     privileges to receive qualified stock.

       ``(ii) Same rights and privileges.--For purposes of clause 
     (i)(II)--

       ``(I) except as provided in subclauses (II) and (III), the 
     determination of rights and privileges with respect to stock 
     shall be determined in a similar manner as provided under 
     section 423(b)(5),
       ``(II) employees shall not fail to be treated as having the 
     same rights and privileges to receive qualified stock solely 
     because the number of shares available to all employees is 
     not equal in amount, so long as the number of shares 
     available to each employee is more than a de minimis amount, 
     and
       ``(III) rights and privileges with respect to the exercise 
     of an option shall not be treated as the same as rights and 
     privileges with respect to the settlement of a restricted 
     stock unit.

       ``(iii) Employee.--For purposes of clause (i)(II), the term 
     `employee' shall not include any employee described in 
     section 4980E(d)(4) or any excluded employee.
       ``(iv) Special rule for calendar years before 2018.--In the 
     case of any calendar year beginning before January 1, 2018, 
     clause (i)(II) shall be applied without regard to whether the 
     rights and privileges with respect to the qualified stock are 
     the same.
       ``(3) Qualified employee; excluded employee.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified employee' means any 
     individual who--
       ``(i) is not an excluded employee, and
       ``(ii) agrees in the election made under this subsection to 
     meet such requirements as determined by the Secretary to be 
     necessary to ensure that the withholding requirements of the 
     corporation under chapter 24 with respect to the qualified 
     stock are met.
       ``(B) Excluded employee.--The term `excluded employee' 
     means, with respect to any corporation, any individual--
       ``(i) who was a 1-percent owner (within the meaning of 
     section 416(i)(1)(B)(ii)) at any time during the 10 preceding 
     calendar years,
       ``(ii) who is or has been at any prior time--

       ``(I) the chief executive officer of such corporation or an 
     individual acting in such a capacity, or
       ``(II) the chief financial officer of such corporation or 
     an individual acting in such a capacity,

       ``(iii) who bears a relationship described in section 
     318(a)(1) to any individual described in subclause (I) or 
     (II) of clause (ii), or
       ``(iv) who has been for any of the 10 preceding taxable 
     years one of the 4 highest compensated officers of such 
     corporation determined with respect to each such taxable year 
     on the basis of the shareholder disclosure rules for 
     compensation under the Securities Exchange Act of 1934 (as if 
     such rules applied to such corporation).
       ``(4) Election.--
       ``(A) Time for making election.--An election with respect 
     to qualified stock shall be made under this subsection no 
     later than 30 days after the first time the rights of the 
     employee in such stock are transferable or are not subject to 
     a substantial risk of forfeiture, whichever occurs earlier, 
     and shall be made in a manner similar to the manner in which 
     an election is made under subsection (b).
       ``(B) Limitations.--No election may be made under this 
     section with respect to any qualified stock if--
       ``(i) the qualified employee has made an election under 
     subsection (b) with respect to such qualified stock,
       ``(ii) any stock of the corporation which issued the 
     qualified stock is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     at any time before the election is made, or
       ``(iii) such corporation purchased any of its outstanding 
     stock in the calendar year preceding the calendar year which 
     includes the first time the rights of the employee in such 
     stock are transferable or are not subject to a substantial 
     risk of forfeiture, unless--

       ``(I) not less than 25 percent of the total dollar amount 
     of the stock so purchased is deferral stock, and
       ``(II) the determination of which individuals from whom 
     deferral stock is purchased is made on a reasonable basis.

       ``(C) Definitions and special rules related to limitation 
     on stock redemptions.--
       ``(i) Deferral stock.--For purposes of this paragraph, the 
     term `deferral stock' means stock with respect to which an 
     election is in effect under this subsection.
       ``(ii) Deferral stock with respect to any individual not 
     taken into account if individual holds deferral stock with 
     longer deferral period.--Stock purchased by a corporation 
     from any individual shall not be treated as deferral stock 
     for purposes of clause (iii) if such individual (immediately 
     after such purchase) holds any deferral stock with respect to 
     which an election has been in effect under this subsection 
     for a longer period than the election with respect to the 
     stock so purchased.
       ``(iii) Purchase of all outstanding deferral stock.--The 
     requirements of subclauses (I) and (II) of subparagraph 
     (B)(iii) shall be treated as met if the stock so purchased 
     includes all of the corporation's outstanding deferral stock.
       ``(iv) Reporting.--Any corporation which has outstanding 
     deferral stock as of the beginning of any calendar year and 
     which purchases any of its outstanding stock during such 
     calendar year shall include on its return of tax for the 
     taxable year in which, or with which, such calendar year ends 
     the total dollar amount of its outstanding stock so purchased 
     during such calendar year and such other information as the 
     Secretary may require for purposes of administering this 
     paragraph.
       ``(5) Controlled groups.--For purposes of this subsection, 
     all corporations which are members of the same controlled 
     group of corporations (as defined in section 1563(a)) shall 
     be treated as one corporation.
       ``(6) Notice requirement.--Any corporation that transfers 
     qualified stock to a qualified employee shall, at the time 
     that (or a reasonable period before) an amount attributable 
     to such stock would (but for this subsection) first be 
     includible in the gross income of such employee--
       ``(A) certify to such employee that such stock is qualified 
     stock, and
       ``(B) notify such employee--
       ``(i) that the employee may elect to defer income on such 
     stock under this subsection, and
       ``(ii) that, if the employee makes such an election--

       ``(I) the amount of income recognized at the end of the 
     deferral period will be based on the value of the stock at 
     the time at which the rights of the employee in such stock 
     first become transferable or not subject to substantial risk 
     of forfeiture, notwithstanding whether the value of the stock 
     has declined during the deferral period,
       ``(II) the amount of such income recognized at the end of 
     the deferral period will be subject to withholding under 
     section 3401(i) at the rate determined under section 3402(t), 
     and
       ``(III) the responsibilities of the employee (as determined 
     by the Secretary under paragraph (3)(A)(ii)) with respect to 
     such withholding.

       ``(7) Restricted stock units.--This section (other than 
     this subsection), including any election under subsection 
     (b), shall not apply to restricted stock units.''.

[[Page H9334]]

       (2) Deduction by employer.--Subsection (h) of section 83 is 
     amended by striking ``or (d)(2)'' and inserting ``(d)(2), or 
     (i)''.
       (b) Withholding.--
       (1) Time of withholding.--Section 3401 is amended by adding 
     at the end the following new subsection:
       ``(i) Qualified Stock for Which an Election Is in Effect 
     Under Section 83(i).--For purposes of subsection (a), 
     qualified stock (as defined in section 83(i)) with respect to 
     which an election is made under section 83(i) shall be 
     treated as wages--
       ``(1) received on the earliest date described in section 
     83(i)(1)(B), and
       ``(2) in an amount equal to the amount included in income 
     under section 83 for the taxable year which includes such 
     date.''.
       (2) Amount of withholding.--Section 3402 is amended by 
     adding at the end the following new subsection:
       ``(t) Rate of Withholding for Certain Stock.--In the case 
     of any qualified stock (as defined in section 83(i)) with 
     respect to which an election is made under section 83(i)--
       ``(1) the rate of tax under subsection (a) shall not be 
     less than the maximum rate of tax in effect under section 1, 
     and
       ``(2) such stock shall be treated for purposes of section 
     3501(b) in the same manner as a non-cash fringe benefit.''.
       (c) Coordination With Other Deferred Compensation Rules.--
       (1) Election to apply deferral to statutory options.--
       (A) Incentive stock options.--Section 422(b) is amended by 
     adding at the end the following: ``Such term shall not 
     include any option if an election is made under section 83(i) 
     with respect to the stock received in connection with the 
     exercise of such option.''.
       (B) Employee stock purchase plans.--Section 423(a) is 
     amended by adding at the end the following flush sentence:
     ``The preceding sentence shall not apply to any share of 
     stock with respect to which an election is made under section 
     83(i).''.
       (2) Exclusion from definition of nonqualified deferred 
     compensation plan.--Subsection (d) of section 409A is amended 
     by adding at the end the following new paragraph:
       ``(7) Treatment of qualified stock.--An arrangement under 
     which an employee may receive qualified stock (as defined in 
     section 83(i)(2)) shall not be treated as a nonqualified 
     deferred compensation plan solely because of an employee's 
     election, or ability to make an election, to defer 
     recognition of income under section 83(i).''.
       (d) Information Reporting.--Section 6051(a) is amended by 
     striking ``and'' at the end of paragraph (13), by striking 
     the period at the end of paragraph (14) and inserting a 
     comma, and by inserting after paragraph (14) the following 
     new paragraphs:
       ``(15) the amount excludable from gross income under 
     subparagraph (A) of section 83(i)(1),
       ``(16) the amount includible in gross income under 
     subparagraph (B) of section 83(i)(1) with respect to an event 
     described in such subparagraph which occurs in such calendar 
     year, and
       ``(17) the aggregate amount of income which is being 
     deferred pursuant to elections under section 83(i), 
     determined as of the close of the calendar year.''.
       (e) Penalty for Failure of Employer To Provide Notice of 
     Tax Consequences.--Section 6652 is amended by adding at the 
     end the following new subsection:
       ``(o) Failure to Provide Notice Under Section 83(i).--In 
     the case of each failure to provide a notice as required by 
     section 83(i)(6), at the time prescribed therefor, unless it 
     is shown that such failure is due to reasonable cause and not 
     to willful neglect, there shall be paid, on notice and demand 
     of the Secretary and in the same manner as tax, by the person 
     failing to provide such notice, an amount equal to $100 for 
     each such failure, but the total amount imposed on such 
     person for all such failures during any calendar year shall 
     not exceed $50,000.''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to stock 
     attributable to options exercised, or restricted stock units 
     settled, after December 31, 2017.
       (2) Requirement to provide notice.--The amendments made by 
     subsection (e) shall apply to failures after December 31, 
     2017.
       (g) Transition Rule.--Until such time as the Secretary (or 
     the Secretary's delegate) issue regulations or other guidance 
     for purposes of implementing the requirements of paragraph 
     (2)(C)(i)(II) of section 83(i) of the Internal Revenue Code 
     of 1986 (as added by this section), or the requirements of 
     paragraph (6) of such section, a corporation shall be treated 
     as being in compliance with such requirements (respectively) 
     if such corporation complies with a reasonable good faith 
     interpretation of such requirements.

        TITLE IV--TAXATION OF FOREIGN INCOME AND FOREIGN PERSONS

    Subtitle A--Establishment of Participation Exemption System for 
                       Taxation of Foreign Income

     SEC. 4001. DEDUCTION FOR FOREIGN-SOURCE PORTION OF DIVIDENDS 
                   RECEIVED BY DOMESTIC CORPORATIONS FROM 
                   SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       (a) In General.--Part VIII of subchapter B of chapter 1 is 
     amended by inserting after section 245 the following new 
     section:

     ``SEC. 245A. DEDUCTION FOR FOREIGN-SOURCE PORTION OF 
                   DIVIDENDS RECEIVED BY DOMESTIC CORPORATIONS 
                   FROM SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--In the case of any dividend received 
     from a specified 10-percent owned foreign corporation by a 
     domestic corporation which is a United States shareholder 
     with respect to such foreign corporation, there shall be 
     allowed as a deduction an amount equal to the foreign-source 
     portion of such dividend.
       ``(b) Specified 10-percent Owned Foreign Corporation.--For 
     purposes of this section, the term `specified 10-percent 
     owned foreign corporation' means any foreign corporation with 
     respect to which any domestic corporation is a United States 
     shareholder. Such term shall not include any passive foreign 
     investment company (within the meaning of subpart D of part 
     VI of subchapter P) that is not a controlled foreign 
     corporation.
       ``(c) Foreign-source Portion.--For purposes of this 
     section--
       ``(1) In general.--The foreign-source portion of any 
     dividend is an amount which bears the same ratio to such 
     dividend as--
       ``(A) the post-1986 undistributed foreign earnings of the 
     specified 10-percent owned foreign corporation, bears to
       ``(B) the total post-1986 undistributed earnings of such 
     foreign corporation.
       ``(2) Post-1986 undistributed earnings.--The term `post-
     1986 undistributed earnings' means the amount of the earnings 
     and profits of the specified 10-percent owned foreign 
     corporation (computed in accordance with sections 964(a) and 
     986) accumulated in taxable years beginning after December 
     31, 1986--
       ``(A) as of the close of the taxable year of the specified 
     10-percent owned foreign corporation in which the dividend is 
     distributed, and
       ``(B) without diminution by reason of dividends distributed 
     during such taxable year.
       ``(3) Post-1986 undistributed foreign earnings.--The term 
     `post-1986 undistributed foreign earnings' means the portion 
     of the post-1986 undistributed earnings which is attributable 
     to neither--
       ``(A) income described in subparagraph (A) of section 
     245(a)(5), nor
       ``(B) dividends described in subparagraph (B) of such 
     section (determined without regard to section 245(a)(12)).
       ``(4) Treatment of distributions from earnings before 
     1987.--
       ``(A) In general.--In the case of any dividend paid out of 
     earnings and profits of the specified 10-percent owned 
     foreign corporation (computed in accordance with sections 
     964(a) and 986) accumulated in taxable years beginning before 
     January 1, 1987--
       ``(i) paragraphs (1), (2), and (3) shall be applied without 
     regard to the phrase `post-1986' each place it appears, and
       ``(ii) paragraph (2) shall be applied by substituting 
     `after the date specified in section 316(a)(1)' for `in 
     taxable years beginning after December 31, 1986'.
       ``(B) Dividends paid first out of post-1986 earnings.--
     Dividends shall be treated as paid out of post-1986 
     undistributed earnings to the extent thereof.
       ``(5) Treatment of certain dividends in excess of 
     undistributed earnings.--In the case of any dividend from the 
     specified 10-percent owned foreign corporation which is in 
     excess of undistributed earnings (as determined under 
     paragraph (2) after taking into account the modifications 
     described in clauses (i) and (ii) of paragraph (4)(A)), the 
     foreign-source portion of such dividend is an amount which 
     bears the same ratio to such dividend as--
       ``(A) the portion of the earnings and profits described in 
     subparagraph (B) which is attributable to neither income 
     described in paragraph (3)(A) nor dividends described in 
     paragraph (3)(B), bears to
       ``(B) the earnings and profits of such corporation for the 
     taxable year in which such distribution is made (computed as 
     of the close of the taxable year without diminution by reason 
     of any distributions made during the taxable year).
       ``(d) Disallowance of Foreign Tax Credit, etc.--
       ``(1) In general.--No credit shall be allowed under section 
     901 for any taxes paid or accrued (or treated as paid or 
     accrued) with respect to any dividend for which a deduction 
     is allowed under this section.
       ``(2) Denial of deduction.--No deduction shall be allowed 
     under this chapter for any tax for which credit is not 
     allowable under section 901 by reason of paragraph (1) 
     (determined by treating the taxpayer as having elected the 
     benefits of subpart A of part III of subchapter N).
       ``(e) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section.''.
       (b) Application of Holding Period Requirement.--Section 
     246(c) is amended--
       (1) by striking ``or 245'' in paragraph (1) and inserting 
     ``245, or 245A'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Special rules for foreign source portion of dividends 
     received from specified 10-percent owned foreign 
     corporations.--
       ``(A) 6-month holding period requirement.--For purposes of 
     section 245A--
       ``(i) paragraph (1)(A) shall be applied--

       ``(I) by substituting `180 days' for `45 days'each place it 
     appears, and
       ``(II) by substituting `361-day period' for `91-day 
     period', and

       ``(ii) paragraph (2) shall not apply.
       ``(B) Status must be maintained during holding period.--For 
     purposes of applying paragraph (1) with respect to section 
     245A, the taxpayer shall be treated as holding the stock 
     referred to in paragraph (1) for any period only if--
       ``(i) the specified 10-percent owned foreign corporation 
     referred to in section 245A(a) is a specified 10-percent 
     owned foreign corporation for such period, and
       ``(ii) the taxpayer is a United States shareholder with 
     respect to such specified 10-percent owned foreign 
     corporation for such period.''.

[[Page H9335]]

       (c) Application of Rules Generally Applicable to Deductions 
     for Dividends Received.--
       (1) Treatment of dividends from certain corporations.--
     Section 246(a)(1) is amended by striking ``and 245'' and 
     inserting ``245, and 245A''.
       (2) Coordination with section 1059.--Section 1059(b)(2)(B) 
     is amended by striking ``or 245'' and inserting ``245, or 
     245A''.
       (d) Coordination With Foreign Tax Credit Limitation.--
     Section 904(b) is amended by adding at the end the following 
     new paragraph:
       ``(5) Treatment of dividends for which deduction is allowed 
     under section 245a.--For purposes of subsection (a), in the 
     case of a United States shareholder with respect to a 
     specified 10-percent owned foreign corporation, such 
     shareholder's taxable income from sources without the United 
     States (and entire taxable income) shall be determined 
     without regard to--
       ``(A) the foreign-source portion of any dividend received 
     from such foreign corporation, and
       ``(B) any deductions properly allocable or apportioned to--
       ``(i) income (other than subpart F income (as defined in 
     section 952) and foreign high return amounts (as defined in 
     section 951A(b)) with respect to stock of such specified 10-
     percent owned foreign corporation, or
       ``(ii) such stock (to the extent income with respect to 
     such stock is other than subpart F income (as so defined) or 
     foreign high return amounts (as so defined)).
     Any term which is used in section 245A and in this paragraph 
     shall have the same meaning for purposes of this paragraph as 
     when used in such section.''.
       (e) Conforming Amendments.--
       (1) Section 245(a)(4) is amended by striking ``section 
     902(c)(1)'' and inserting ``section 245A(c)(2) applied by 
     substituting `qualified 10-percent owned foreign corporation' 
     for `specified 10-percent owned foreign corporation' each 
     place it appears''.
       (2) Section 951(b) is amended by striking ``subpart'' and 
     inserting ``title''.
       (3) Section 957(a) is amended by striking ``subpart'' in 
     the matter preceding paragraph (1) and inserting ``title''.
       (4) The table of sections for part VIII of subchapter B of 
     chapter 1 is amended by inserting after section 245 the 
     following new item:

``Sec. 245A. Deduction for foreign-source portion of dividends received 
              by domestic corporations from specified 10-percent owned 
              foreign corporations.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to distributions made after (and, in the case of 
     the amendments made by subsection (d), deductions with 
     respect to taxable years ending after) December 31, 2017.

     SEC. 4002. APPLICATION OF PARTICIPATION EXEMPTION TO 
                   INVESTMENTS IN UNITED STATES PROPERTY.

       (a) In General.--Section 956(a) is amended in the matter 
     preceding paragraph (1) by inserting ``(other than a 
     corporation)'' after ``United States shareholder''.
       (b) Regulatory Authority to Prevent Abuse.--Section 956(e) 
     is amended by striking ``including regulations to prevent'' 
     and inserting ``including regulations--
       ``(1) to address United States shareholders that are 
     partnerships with corporate partners, and
       ``(2) to prevent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017.

     SEC. 4003. LIMITATION ON LOSSES WITH RESPECT TO SPECIFIED 10-
                   PERCENT OWNED FOREIGN CORPORATIONS.

       (a) Basis in Specified 10-percent Owned Foreign Corporation 
     Reduced by Nontaxed Portion of Dividend for Purposes of 
     Determining Loss.--
       (1) In general.--Section 961 is amended by adding at the 
     end the following new subsection:
       ``(d) Basis in Specified 10-percent Owned Foreign 
     Corporation Reduced by Nontaxed Portion of Dividend for 
     Purposes of Determining Loss.--If a domestic corporation 
     received a dividend from a specified 10-percent owned foreign 
     corporation (as defined in section 245A) in any taxable year, 
     solely for purposes of determining loss on any disposition of 
     stock of such foreign corporation in such taxable year or any 
     subsequent taxable year, the basis of such domestic 
     corporation in such stock shall be reduced (but not below 
     zero) by the amount of any deduction allowable to such 
     domestic corporation under section 245A with respect to such 
     stock except to the extent such basis was reduced under 
     section 1059 by reason of a dividend for which such a 
     deduction was allowable.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to distributions made after December 31, 2017.
       (b) Treatment of Foreign Branch Losses Transferred to 
     Specified 10-percent Owned Foreign Corporations.--
       (1) In general.--Part II of subchapter B of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 91. CERTAIN FOREIGN BRANCH LOSSES TRANSFERRED TO 
                   SPECIFIED 10-PERCENT OWNED FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--If a domestic corporation transfers 
     substantially all of the assets of a foreign branch (within 
     the meaning of section 367(a)(3)(C)) to a specified 10-
     percent owned foreign corporation (as defined in section 
     245A) with respect to which it is a United States shareholder 
     after such transfer, such domestic corporation shall include 
     in gross income for the taxable year which includes such 
     transfer an amount equal to the transferred loss amount with 
     respect to such transfer.
       ``(b) Transferred Loss Amount.--For purposes of this 
     section, the term `transferred loss amount' means, with 
     respect to any transfer of substantially all of the assets of 
     a foreign branch, the excess (if any) of--
       ``(1) the sum of losses--
       ``(A) which were incurred by the foreign branch after 
     December 31, 2017, and before the transfer, and
       ``(B) with respect to which a deduction was allowed to the 
     taxpayer, over
       ``(2) the sum of--
       ``(A) any taxable income of such branch for a taxable year 
     after the taxable year in which the loss was incurred and 
     through the close of the taxable year of the transfer, and
       ``(B) any amount which is recognized under section 
     904(f)(3) on account of the transfer.
       ``(c) Reduction for Recognized Gains.--
       ``(1) In general.--In the case of a transfer not described 
     in section 367(a)(3)(C), the transferred loss amount shall be 
     reduced (but not below zero) by the amount of gain recognized 
     by the taxpayer on account of the transfer (other than 
     amounts taken into account under subsection (c)(2)(B)).
       ``(2) Coordination with recognition under section 367.--In 
     the case of a transfer described in section 367(a)(3)(C), the 
     transferred loss amount shall not exceed the excess (if any) 
     of--
       ``(A) the excess of the amount described in section 
     367(a)(3)(C)(i) over the amount described in section 
     367(a)(3)(C)(ii) with respect to such transfer, over
       ``(B) the amount of gain recognized under section 
     367(a)(3)(C) with respect to such transfer.
       ``(d) Source of Income.--Amounts included in gross income 
     under this section shall be treated as derived from sources 
     within the United States.
       ``(e) Basis Adjustments.--Consistent with such regulations 
     or other guidance as the Secretary may prescribe, proper 
     adjustments shall be made in the adjusted basis of the 
     taxpayer's stock in the specified 10-percent owned foreign 
     corporation to which the transfer is made, and in the 
     transferee's adjusted basis in the property transferred, to 
     reflect amounts included in gross income under this 
     section.''.
       (2) Amounts recognized under section 367 on transfer of 
     foreign branch with previously deducted losses treated as 
     united states source.--Section 367(a)(3)(C) is amended by 
     striking ``outside'' in the last sentence and inserting 
     ``within''.
       (3) Clerical amendment.--The table of sections for part II 
     of subchapter B of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 91. Certain foreign branch losses transferred to specified 10-
              percent owned foreign corporations.''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to transfers after December 31, 2017.

     SEC. 4004. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
                   TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
                   TAXATION.

       (a) In General.--Section 965 is amended to read as follows:

     ``SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME UPON 
                   TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF 
                   TAXATION.

       ``(a) Treatment of Deferred Foreign Income as Subpart F 
     Income.--In the case of the last taxable year of a deferred 
     foreign income corporation which begins before January 1, 
     2018, the subpart F income of such foreign corporation (as 
     otherwise determined for such taxable year under section 952) 
     shall be increased by the greater of--
       ``(1) the accumulated post-1986 deferred foreign income of 
     such corporation determined as of November 2, 2017, or
       ``(2) the accumulated post-1986 deferred foreign income of 
     such corporation determined as of December 31, 2017.
       ``(b) Reduction in Amounts Included in Gross Income of 
     United States Shareholders of Specified Foreign Corporations 
     With Deficits in Earnings and Profits.--
       ``(1) In general.--In the case of a taxpayer which is a 
     United States shareholder with respect to at least one 
     deferred foreign income corporation and at least one E&P 
     deficit foreign corporation, the amount which would (but for 
     this subsection) be taken into account under section 
     951(a)(1) by reason of subsection (a) as such United States 
     shareholder's pro rata share of the subpart F income of each 
     deferred foreign income corporation shall be reduced (but not 
     below zero) by the amount of such United States shareholder's 
     aggregate foreign E&P deficit which is allocated under 
     paragraph (2) to such deferred foreign income corporation.
       ``(2) Allocation of aggregate foreign e&p deficit.--The 
     aggregate foreign E&P deficit of any United States 
     shareholder shall be allocated among the deferred foreign 
     income corporations of such United States shareholder in an 
     amount which bears the same proportion to such aggregate as--
       ``(A) such United States shareholder's pro rata share of 
     the accumulated post-1986 deferred foreign income of each 
     such deferred foreign income corporation, bears to
       ``(B) the aggregate of such United States shareholder's pro 
     rata share of the accumulated post-1986 deferred foreign 
     income of all deferred foreign income corporations of such 
     United States shareholder.
       ``(3) Definitions related to e&p deficits.--For purposes of 
     this subsection--
       ``(A) Aggregate foreign e&p deficit.--The term `aggregate 
     foreign E&P deficit' means, with respect to any United States 
     shareholder, the aggregate of such shareholder's pro rata 
     shares of the specified E&P deficits of the E&P deficit 
     foreign corporations of such shareholder.

[[Page H9336]]

       ``(B) E&P deficit foreign corporation.--The term `E&P 
     deficit foreign corporation' means, with respect to any 
     taxpayer, any specified foreign corporation with respect to 
     which such taxpayer is a United States shareholder, if--
       ``(i) such specified foreign corporation has a deficit in 
     post-1986 earnings and profits, and
       ``(ii) as of November 2, 2017--

       ``(I) such corporation was a specified foreign corporation, 
     and
       ``(II) such taxpayer was a United States shareholder of 
     such corporation.

       ``(C) Specified e&p deficit.--The term `specified E&P 
     deficit' means, with respect to any E&P deficit foreign 
     corporation, the amount of the deficit referred to in 
     subparagraph (B).
       ``(4) Netting among united states shareholders in same 
     affiliated group.--
       ``(A) In general.--In the case of any affiliated group 
     which includes at least one E&P net surplus shareholder and 
     one E&P net deficit shareholder, the amount which would (but 
     for this paragraph) be taken into account under section 
     951(a)(1) by reason of subsection (a) by each such E&P net 
     surplus shareholder shall be reduced (but not below zero) by 
     such shareholder's applicable share of the affiliated group's 
     aggregate unused E&P deficit.
       ``(B) E&P net surplus shareholder.--For purposes of this 
     paragraph, the term `E&P net surplus shareholder' means any 
     United States shareholder which would (determined without 
     regard to this paragraph) take into account an amount greater 
     than zero under section 951(a)(1) by reason of subsection 
     (a).
       ``(C) E&P net deficit shareholder.--For purposes of this 
     paragraph, the term `E&P net deficit shareholder' means any 
     United States shareholder if--
       ``(i) the aggregate foreign E&P deficit with respect to 
     such shareholder (as defined in paragraph (3)(A)), exceeds
       ``(ii) the amount which would (but for this subsection) be 
     taken into account by such shareholder under section 
     951(a)(1) by reason of subsection (a).
       ``(D) Aggregate unused e&p deficit.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `aggregate unused E&P deficit' 
     means, with respect to any affiliated group, the lesser of--

       ``(I) the sum of the excesses described in subparagraph 
     (C), determined with respect to each E&P net deficit 
     shareholder in such group, or
       ``(II) the amount determined under subparagraph (E)(ii).

       ``(ii) Reduction with respect to e&p net deficit 
     shareholders which are not wholly owned by the affiliated 
     group.--If the group ownership percentage of any E&P net 
     deficit shareholder is less than 100 percent, the amount of 
     the excess described in subparagraph (C) which is taken into 
     account under clause (i)(I) with respect to such E&P net 
     deficit shareholder shall be such group ownership percentage 
     of such amount.
       ``(E) Applicable share.--For purposes of this paragraph, 
     the term `applicable share' means, with respect to any E&P 
     net surplus shareholder in any affiliated group, the amount 
     which bears the same proportion to such group's aggregate 
     unused E&P deficit as--
       ``(i) the product of--

       ``(I) such shareholder's group ownership percentage, 
     multiplied by
       ``(II) the amount which would (but for this paragraph) be 
     taken into account under section 951(a)(1) by reason of 
     subsection (a) by such shareholder, bears to

       ``(ii) the aggregate amount determined under clause (i) 
     with respect to all E&P net surplus shareholders in such 
     group.
       ``(F) Group ownership percentage.--For purposes of this 
     paragraph, the term `group ownership percentage' means, with 
     respect to any United States shareholder in any affiliated 
     group, the percentage of the value of the stock of such 
     United States shareholder which is held by other includible 
     corporations in such affiliated group. Notwithstanding the 
     preceding sentence, the group ownership percentage of the 
     common parent of the affiliated group is 100 percent. Any 
     term used in this subparagraph which is also used in section 
     1504 shall have the same meaning as when used in such 
     section.
       ``(c) Application of Participation Exemption to Included 
     Income.--
       ``(1) In general.--In the case of a United States 
     shareholder of a deferred foreign income corporation, there 
     shall be allowed as a deduction for the taxable year in which 
     an amount is included in the gross income of such United 
     States shareholder under section 951(a)(1) by reason of this 
     section an amount equal to the sum of--
       ``(A) the United States shareholder's 7 percent rate 
     equivalent percentage of the excess (if any) of--
       ``(i) the amount so included as gross income, over
       ``(ii) the amount of such United States shareholder's 
     aggregate foreign cash position, plus
       ``(B) the United States shareholder's 14 percent rate 
     equivalent percentage of so much of the amount described in 
     subparagraph (A)(ii) as does not exceed the amount described 
     in subparagraph (A)(i).
       ``(2) 7 and 14 percent rate equivalent percentages.--For 
     purposes of this subsection--
       ``(A) 7 percent rate equivalent percentage.--The term `7 
     percent rate equivalent percentage' means, with respect to 
     any United States shareholder for any taxable year, the 
     percentage which would result in the amount to which such 
     percentage applies being subject to a 7 percent rate of tax 
     determined by only taking into account a deduction equal to 
     such percentage of such amount and the highest rate of tax 
     specified in section 11 for such taxable year. In the case of 
     any taxable year of a United States shareholder to which 
     section 15 applies, the highest rate of tax under section 11 
     before the effective date of the change in rates and the 
     highest rate of tax under section 11 after the effective date 
     of such change shall each be taken into account under the 
     preceding sentence in the same proportions as the portion of 
     such taxable year which is before and after such effective 
     date, respectively.
       ``(B) 14 percent rate equivalent percentage.--The term `14 
     percent rate equivalent percentage' means, with respect to 
     any United States shareholder for any taxable year, the 
     percentage determined under subparagraph (A) applied by 
     substituting `14 percent rate of tax' for `7 percent rate of 
     tax'.
       ``(3) Aggregate foreign cash position.--For purposes of 
     this subsection--
       ``(A) In general.--The term `aggregate foreign cash 
     position' means, with respect to any United States 
     shareholder, one-third of the sum of--
       ``(i) the aggregate of such United States shareholder's pro 
     rata share of the cash position of each specified foreign 
     corporation of such United States shareholder determined as 
     of November 2, 2017,
       ``(ii) the aggregate described in clause (i) determined as 
     of the close of the last taxable year of each such specified 
     foreign corporation which ends before November 2, 2017, and
       ``(iii) the aggregate described in clause (i) determined as 
     of the close of the taxable year of each such specified 
     foreign corporation which precedes the taxable year referred 
     to in clause (ii).
     In the case of any foreign corporation which did not exist as 
     of the determination date described in clause (ii) or (iii), 
     this subparagraph shall be applied separately to such foreign 
     corporation by not taking into account such clause and by 
     substituting `one-half (100 percent in the case that both 
     clauses (ii) and (iii) are disregarded)' for `one-third'.
       ``(B) Cash position.--For purposes of this paragraph, the 
     cash position of any specified foreign corporation is the sum 
     of--
       ``(i) cash held by such foreign corporation,
       ``(ii) the net accounts receivable of such foreign 
     corporation, plus
       ``(iii) the fair market value of the following assets held 
     by such corporation:

       ``(I) Actively traded personal property for which there is 
     an established financial market.
       ``(II) Commercial paper, certificates of deposit, the 
     securities of the Federal government and of any State or 
     foreign government.
       ``(III) Any foreign currency.
       ``(IV) Any obligation with a term of less than one year.
       ``(V) Any asset which the Secretary identifies as being 
     economically equivalent to any asset described in this 
     subparagraph.

       ``(C) Net accounts receivable.--For purposes of this 
     paragraph, the term `net accounts receivable' means, with 
     respect to any specified foreign corporation, the excess (if 
     any) of--
       ``(i) such corporation's accounts receivable, over
       ``(ii) such corporation's accounts payable (determined 
     consistent with the rules of section 461).
       ``(D) Prevention of double counting.--
       ``(i) In general.--The applicable percentage of each 
     specified cash position of a specified foreign corporation 
     shall not be taken into account by--

       ``(I) the United States shareholder referred to in clause 
     (ii) with respect to such position, or
       ``(II) any United States shareholder which is an includible 
     corporation in the same affiliated group as such United 
     States shareholder referred to in clause (ii).

       ``(ii) Specified cash position.--For purposes of this 
     subparagraph, the term `specified cash position' means--

       ``(I) amounts described in subparagraph (B)(ii) to the 
     extent such amounts are receivable from another specified 
     foreign corporation with respect to any United States 
     shareholder,
       ``(II) amounts described in subparagraph (B)(iii)(I) to the 
     extent such amounts consist of an equity interest in another 
     specified foreign corporation with respect to any United 
     States shareholder, and
       ``(III) amounts described in subparagraph (B)(iii)(IV) to 
     the extent that another specified foreign corporation with 
     respect to any United States shareholder is obligated to 
     repay such amount.

       ``(iii) Applicable percentage.--For purposes of this 
     subparagraph, the term `applicable percentage' means--

       ``(I) with respect to each specified cash position 
     described in subclause (I) or (III) of clause (ii), the pro 
     rata share of the United States shareholder referred to in 
     clause (ii) with respect to the specified foreign corporation 
     referred to in such clause, and
       ``(II) with respect to each specified cash position 
     described in clause (ii)(II), the ratio (expressed as a 
     percentage and not in excess of 100 percent) of the United 
     States shareholder's pro rata share of the cash position of 
     the specified foreign corporation referred to in such clause 
     divided by the amount of such specified cash position.

      For purposes of this subparagraph, a separate applicable 
     percentage shall be determined under each of subclauses (I) 
     and (II) with respect to each specified foreign corporation 
     referred to in clause (ii) with respect to which a specified 
     cash position is determined for the specified foreign 
     corporation referred to in clause (i).
       ``(iv) Reduction with respect to affiliated group members 
     not wholly owned by the affiliated group.--For purposes of 
     clause (i)(II), in the case of an includible corporation the 
     group ownership percentage of which is less than 100 percent 
     (as determined under subsection (b)(4)(F)), the amount not 
     take into account by reason of such clause shall be the

[[Page H9337]]

     group ownership percentage of such amount (determined without 
     regard to this clause).
       ``(E) Certain blocked assets not taken into account.--A 
     cash position of a specified foreign corporation shall not be 
     taken into account under subparagraph (A) if such position 
     could not (as of the date that it would otherwise have been 
     taken into account under clause (i), (ii), or (iii) of 
     subparagraph (A)) have been distributed by such specified 
     foreign corporation to United States shareholders of such 
     specified foreign corporation because of currency or other 
     restrictions or limitations imposed under the laws of any 
     foreign country (within the meaning of section 964(b)).
       ``(F) Cash positions of certain non-corporate entities 
     taken into account.--An entity (other than a domestic 
     corporation) shall be treated as a specified foreign 
     corporation of a United States shareholder for purposes of 
     determining such United States shareholder's aggregate 
     foreign cash position if any interest in such entity is held 
     by a specified foreign corporation of such United States 
     shareholder (determined after application of this 
     subparagraph) and such entity would be a specified foreign 
     corporation of such United States shareholder if such entity 
     were a foreign corporation.
       ``(G) Time of certain determinations.--For purposes of this 
     paragraph, the determination of whether a person is a United 
     States shareholder, whether a person is a specified foreign 
     corporation, and the pro rata share of a United States 
     shareholder with respect to a specified foreign corporation, 
     shall be determined as of the end of the taxable year 
     described in subsection (a).
       ``(H) Anti-abuse.--If the Secretary determines that the 
     principal purpose of any transaction was to reduce the 
     aggregate foreign cash position taken into account under this 
     subsection, such transaction shall be disregarded for 
     purposes of this subsection.
       ``(d) Deferred Foreign Income Corporation; Accumulated 
     Post-1986 Deferred Foreign Income.--For purposes of this 
     section--
       ``(1) Deferred foreign income corporation.--The term 
     `deferred foreign income corporation' means, with respect to 
     any United States shareholder, any specified foreign 
     corporation of such United States shareholder which has 
     accumulated post-1986 deferred foreign income (as of the date 
     referred to in paragraph (1) or (2) of subsection (a), 
     whichever is applicable with respect to such foreign 
     corporation) greater than zero.
       ``(2) Accumulated post-1986 deferred foreign income.--The 
     term `accumulated post-1986 deferred foreign income' means 
     the post-1986 earnings and profits except to the extent such 
     earnings--
       ``(A) are attributable to income of the specified foreign 
     corporation which is effectively connected with the conduct 
     of a trade or business within the United States and subject 
     to tax under this chapter, or
       ``(B) if distributed, would be excluded from the gross 
     income of a United States shareholder under section 959.
     To the extent provided in regulations or other guidance 
     prescribed by the Secretary, in the case of any controlled 
     foreign corporation which has shareholders which are not 
     United States shareholders, accumulated post-1986 deferred 
     foreign income shall be appropriately reduced by amounts 
     which would be described in subparagraph (B) if such 
     shareholders were United States shareholders.
       ``(3) Post-1986 earnings and profits.--The term `post-1986 
     earnings and profits' means the earnings and profits of the 
     foreign corporation (computed in accordance with sections 
     964(a) and 986) accumulated in taxable years beginning after 
     December 31, 1986, and determined--
       ``(A) as of the date referred to in paragraph (1) or (2) of 
     subsection (a), whichever is applicable with respect to such 
     foreign corporation,
       ``(B) without diminution by reason of dividends distributed 
     during the taxable year ending with or including such date, 
     and
       ``(C) increased by the amount of any qualified deficit 
     (within the meaning of section 952(c)(1)(B)(ii)) arising 
     before January 1, 2018, which is treated as a qualified 
     deficit (within the meaning of such section as amended by the 
     Tax Cuts and Jobs Act) for purposes of such foreign 
     corporation's first taxable year beginning after December 31, 
     2017.
       ``(e) Specified Foreign Corporation.--
       ``(1) In general.--For purposes of this section, the term 
     `specified foreign corporation' means--
       ``(A) any controlled foreign corporation, and
       ``(B) any foreign corporation with respect to which one or 
     more domestic corporations is a United States shareholder 
     (determined without regard to section 958(b)(4)).
       ``(2) Application to certain foreign corporations.--For 
     purposes of sections 951 and 961, a foreign corporation 
     described in paragraph (1)(B) shall be treated as a 
     controlled foreign corporation solely for purposes of taking 
     into account the subpart F income of such corporation under 
     subsection (a) (and for purposes of applying subsection (f)).
       ``(3) Exception for passive foreign investment companies.--
     The term `specified foreign corporation' shall not include 
     any passive foreign investment company (within the meaning of 
     subpart D of part VI of subchapter P) that is not a 
     controlled foreign corporation.
       ``(f) Determinations of Pro Rata Share.--For purposes of 
     this section, the determination of any United States 
     shareholder's pro rata share of any amount with respect to 
     any specified foreign corporation shall be determined under 
     rules similar to the rules of section 951(a)(2) by treating 
     such amount in the same manner as subpart F income (and by 
     treating such specified foreign corporation as a controlled 
     foreign corporation).
       ``(g) Disallowance of Foreign Tax Credit, etc.--
       ``(1) In general.--No credit shall be allowed under section 
     901 for the applicable percentage of any taxes paid or 
     accrued (or treated as paid or accrued) with respect to any 
     amount for which a deduction is allowed under this section.
       ``(2) Applicable percentage.--For purposes of this 
     subsection, the term `applicable percentage' means the amount 
     (expressed as a percentage) equal to the sum of--
       ``(A) 80 percent of the ratio of--
       ``(i) the excess to which subsection (c)(1)(A) applies, 
     divided by
       ``(ii) the sum of such excess plus the amount to which 
     subsection (c)(1)(B) applies, plus
       ``(B) 60 percent of the ratio of--
       ``(i) the amount to which subsection (c)(1)(B) applies, 
     divided by
       ``(ii) the sum described in subparagraph (A)(ii).
       ``(3) Denial of deduction.--No deduction shall be allowed 
     under this chapter for any tax for which credit is not 
     allowable under section 901 by reason of paragraph (1) 
     (determined by treating the taxpayer as having elected the 
     benefits of subpart A of part III of subchapter N).
       ``(4) Coordination with section 78.--With respect to the 
     taxes treated as paid or accrued by a domestic corporation 
     with respect to amounts which are includible in gross income 
     of such domestic corporation by reason of this section, 
     section 78 shall apply only to so much of such taxes as bears 
     the same proportion to the amount of such taxes as--
       ``(A) the excess of--
       ``(i) the amounts which are includible in gross income of 
     such domestic corporation by reason of this section, over
       ``(ii) the deduction allowable under subsection (c) with 
     respect to such amounts, bears to
       ``(B) such amounts.
       ``(5) Extension of foreign tax credit carryover period.--
     With respect to any taxes paid or accrued (or treated as paid 
     or accrued) with respect to any amount for which a deduction 
     is allowed under this section, section 904(c) shall be 
     applied by substituting `first 20 succeeding taxable years' 
     for `first 10 succeeding taxable years'.
       ``(h) Election to Pay Liability in Installments.--
       ``(1) In general.--In the case of a United States 
     shareholder of a deferred foreign income corporation, such 
     United States shareholder may elect to pay the net tax 
     liability under this section in 8 equal installments.
       ``(2) Date for payment of installments.--If an election is 
     made under paragraph (1), the first installment shall be paid 
     on the due date (determined without regard to any extension 
     of time for filing the return) for the return of tax for the 
     taxable year described in subsection (a) and each succeeding 
     installment shall be paid on the due date (as so determined) 
     for the return of tax for the taxable year following the 
     taxable year with respect to which the preceding installment 
     was made.
       ``(3) Acceleration of payment.--If there is an addition to 
     tax for failure to timely pay any installment required under 
     this subsection, a liquidation or sale of substantially all 
     the assets of the taxpayer (including in a title 11 or 
     similar case), a cessation of business by the taxpayer, or 
     any similar circumstance, then the unpaid portion of all 
     remaining installments shall be due on the date of such event 
     (or in the case of a title 11 or similar case, the day before 
     the petition is filed). The preceding sentence shall not 
     apply to the sale of substantially all the assets of a 
     taxpayer to a buyer if such buyer enters into an agreement 
     with the Secretary under which such buyer is liable for the 
     remaining installments due under this subsection in the same 
     manner as if such buyer were the taxpayer.
       ``(4) Proration of deficiency to installments.--If an 
     election is made under paragraph (1) to pay the net tax 
     liability under this section in installments and a deficiency 
     has been assessed with respect to such net tax liability, the 
     deficiency shall be prorated to the installments payable 
     under paragraph (1). The part of the deficiency so prorated 
     to any installment the date for payment of which has not 
     arrived shall be collected at the same time as, and as a part 
     of, such installment. The part of the deficiency so prorated 
     to any installment the date for payment of which has arrived 
     shall be paid upon notice and demand from the Secretary. This 
     subsection shall not apply if the deficiency is due to 
     negligence, to intentional disregard of rules and 
     regulations, or to fraud with intent to evade tax.
       ``(5) Election.--Any election under paragraph (1) shall be 
     made not later than the due date for the return of tax for 
     the taxable year described in subsection (a) and shall be 
     made in such manner as the Secretary may provide.
       ``(6) Net tax liability under this section.--For purposes 
     of this subsection--
       ``(A) In general.--The net tax liability under this section 
     with respect to any United States shareholder is the excess 
     (if any) of--
       ``(i) such taxpayer's net income tax for the taxable year 
     in which an amount is included in the gross income of such 
     United States shareholder under section 951(a)(1) by reason 
     of this section, over
       ``(ii) such taxpayer's net income tax for such taxable year 
     determined--

       ``(I) without regard to this section, and
       ``(II) without regard to any income, deduction, or credit, 
     properly attributable to a dividend received by such United 
     States shareholder from any deferred foreign income 
     corporation.

       ``(B) Net income tax.--The term `net income tax' means the 
     regular tax liability reduced by the credits allowed under 
     subparts A, B, and D of part IV of subchapter A.
       ``(i) Special Rules for S Corporation Shareholders.--
       ``(1) In general.--In the case of any S corporation which 
     is a United States shareholder of

[[Page H9338]]

     a deferred foreign income corporation, each shareholder of 
     such S corporation may elect to defer payment of such 
     shareholder's net tax liability under this section with 
     respect to such S corporation until the shareholder's taxable 
     year which includes the triggering event with respect to such 
     liability. Any net tax liability payment of which is deferred 
     under the preceding sentence shall be assessed on the return 
     as an addition to tax in the shareholder's taxable year which 
     includes such triggering event.
       ``(2) Triggering event.--
       ``(A) In general.--In the case of any shareholder's net tax 
     liability under this section with respect to any S 
     corporation, the triggering event with respect to such 
     liability is whichever of the following occurs first:
       ``(i) Such corporation ceases to be an S corporation 
     (determined as of the first day of the first taxable year 
     that such corporation is not an S corporation).
       ``(ii) A liquidation or sale of substantially all the 
     assets of such S corporation (including in a title 11 or 
     similar case), a cessation of business by such S corporation, 
     such S corporation ceases to exist, or any similar 
     circumstance.
       ``(iii) A transfer of any share of stock in such S 
     corporation by the taxpayer (including by reason of death, or 
     otherwise).
       ``(B) Partial transfers of stock.--In the case of a 
     transfer of less than all of the taxpayer's shares of stock 
     in the S corporation, such transfer shall only be a 
     triggering event with respect to so much of the taxpayer's 
     net tax liability under this section with respect to such S 
     corporation as is properly allocable to such stock.
       ``(C) Transfer of liability.--A transfer described in 
     clause (iii) shall not be treated as a triggering event if 
     the transferee enters into an agreement with the Secretary 
     under which such transferee is liable for net tax liability 
     with respect to such stock in the same manner as if such 
     transferee were the taxpayer.
       ``(3) Net tax liability.--A shareholder's net tax liability 
     under this section with respect to any S corporation is the 
     net tax liability under this section which would be 
     determined under subsection (h)(6) if the only subpart F 
     income taken into account by such shareholder by reason of 
     this section were allocations from such S corporation.
       ``(4) Election to pay deferred liability in installments.--
     In the case of a taxpayer which elects to defer payment under 
     paragraph (1)--
       ``(A) subsection (h) shall be applied separately with 
     respect to the liability to which such election applies,
       ``(B) an election under subsection (h) with respect to such 
     liability shall be treated as timely made if made not later 
     than the due date for the return of tax for the taxable year 
     in which the triggering event with respect to such liability 
     occurs,
       ``(C) the first installment under subsection (h) with 
     respect to such liability shall be paid not later than such 
     due date (but determined without regard to any extension of 
     time for filing the return), and
       ``(D) if the triggering event with respect to any net tax 
     liability is described in paragraph (2)(A)(ii), an election 
     under subsection (h) with respect to such liability may be 
     made only with the consent of the Secretary.
       ``(5) Joint and several liability of s corporation.--If any 
     shareholder of an S corporation elects to defer payment under 
     paragraph (1), such S corporation shall be jointly and 
     severally liable for such payment and any penalty, addition 
     to tax, or additional amount attributable thereto.
       ``(6) Extension of limitation on collection.--
     Notwithstanding any other provision of law, any limitation on 
     the time period for the collection of a liability deferred 
     under this subsection shall not be treated as beginning 
     before the date of the triggering event with respect to such 
     liability.
       ``(7) Annual reporting of net tax liability.--
       ``(A) In general.--Any shareholder of an S corporation 
     which makes an election under paragraph (1) shall report the 
     amount of such shareholder's deferred net tax liability on 
     such shareholder's return of tax for the taxable year for 
     which such election is made and on the return of tax for each 
     taxable year thereafter until such amount has been fully 
     assessed on such returns.
       ``(B) Deferred net tax liability.--For purposes of this 
     paragraph, the term `deferred net tax liability' means, with 
     respect to any taxable year, the amount of net tax liability 
     payment of which has been deferred under paragraph (1) and 
     which has not been assessed on a return of tax for any prior 
     taxable year.
       ``(C) Failure to report.--In the case of any failure to 
     report any amount required to be reported under subparagraph 
     (A) with respect to any taxable year before the due date for 
     the return of tax for such taxable year, there shall be 
     assessed on such return as an addition to tax 5 percent of 
     such amount.
       ``(8) Election.--Any election under paragraph (1)--
       ``(A) shall be made by the shareholder of the S corporation 
     not later than the due date for such shareholder's return of 
     tax for the taxable year which includes the close of the 
     taxable year of such S corporation in which the amount 
     described in subsection (a) is taken into account, and
       ``(B) shall be made in such manner as the Secretary may 
     provide.
       ``(j) Reporting by S Corporation.--Each S corporation which 
     is a United States shareholder of a deferred foreign income 
     corporation shall report in its return of tax under section 
     6037(a) the amount includible in its gross income for such 
     taxable year by reason of this section and the amount of the 
     deduction allowable by subsection (c). Any copy provided to a 
     shareholder under section 6037(b) shall include a statement 
     of such shareholder's pro rata share of such amounts.
       ``(k) Inclusion of Deferred Foreign Income Under This 
     Section Not to Trigger Recapture of Overall Foreign Loss, 
     etc.--For purposes of sections 904(f)(1) and 907(c)(4), in 
     the case of a United States shareholder of a deferred foreign 
     income corporation, such United States shareholder's taxable 
     income from sources without the United States and combined 
     foreign oil and gas income shall be determined without regard 
     to this section.
       ``(l) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     F of part III of subchapter N of chapter 1 is amended by 
     striking the item relating to section 965 and inserting the 
     following:

``Sec. 965. Treatment of deferred foreign income upon transition to 
              participation exemption system of taxation.''.

     Subtitle B--Modifications Related to Foreign Tax Credit System

     SEC. 4101. REPEAL OF SECTION 902 INDIRECT FOREIGN TAX 
                   CREDITS; DETERMINATION OF SECTION 960 CREDIT ON 
                   CURRENT YEAR BASIS.

       (a) Repeal of Section 902 Indirect Foreign Tax Credits.--
     Subpart A of part III of subchapter N of chapter 1 is amended 
     by striking section 902.
       (b) Determination of Section 960 Credit on Current Year 
     Basis.--Section 960 is amended--
       (1) by striking subsection (c), by redesignating subsection 
     (b) as subsection (c), by striking all that precedes 
     subsection (c) (as so redesignated) and inserting the 
     following:

     ``SEC. 960. DEEMED PAID CREDIT FOR SUBPART F INCLUSIONS.

       ``(a) In General.--For purposes of this subpart, if there 
     is included in the gross income of a domestic corporation any 
     item of income under section 951(a)(1) with respect to any 
     controlled foreign corporation with respect to which such 
     domestic corporation is a United States shareholder, such 
     domestic corporation shall be deemed to have paid so much of 
     such foreign corporation's foreign income taxes as are 
     properly attributable to such item of income.
       ``(b) Special Rules for Distributions From Previously Taxed 
     Earnings and Profits.--For purposes of this subpart--
       ``(1) In general.--If any portion of a distribution from a 
     controlled foreign corporation to a domestic corporation 
     which is a United States shareholder with respect to such 
     controlled foreign corporation is excluded from gross income 
     under section 959(a), such domestic corporation shall be 
     deemed to have paid so much of such foreign corporation's 
     foreign income taxes as--
       ``(A) are properly attributable to such portion, and
       ``(B) have not been deemed to have to been paid by such 
     domestic corporation under this section for the taxable year 
     or any prior taxable year.
       ``(2) Tiered controlled foreign corporations.--If section 
     959(b) applies to any portion of a distribution from a 
     controlled foreign corporation to another controlled foreign 
     corporation, such controlled foreign corporation shall be 
     deemed to have paid so much of such other controlled foreign 
     corporation's foreign income taxes as--
       ``(A) are properly attributable to such portion, and
       ``(B) have not been deemed to have been paid by a domestic 
     corporation under this section for the taxable year or any 
     prior taxable year.'',
       (2) and by adding after subsection (c) (as so redesignated) 
     the following new subsections:
       ``(d) Foreign Income Taxes.--The term `foreign income 
     taxes' means any income, war profits, or excess profits taxes 
     paid or accrued to any foreign country or possession of the 
     United States.
       ``(e) Regulations.--The Secretary may prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the provisions of this section.''.
       (c) Conforming Amendments.--
       (1) Section 78 is amended to read as follows:

     ``SEC. 78. GROSS UP FOR DEEMED PAID FOREIGN TAX CREDIT.

       ``If a domestic corporation chooses to have the benefits of 
     subpart A of part III of subchapter N (relating to foreign 
     tax credit) for any taxable year, an amount equal to the 
     taxes deemed to be paid by such corporation under subsections 
     (a) and (b) of section 960 for such taxable year shall be 
     treated for purposes of this title (other than sections 959, 
     960, and 961) as an item of income required to be included in 
     the gross income of such domestic corporation under section 
     951(a) for such taxable year.''.
       (2) Section 245(a)(10)(C) is amended by striking ``sections 
     902, 907, and 960'' and inserting ``sections 907 and 960''.
       (3) Sections 535(b)(1) and 545(b)(1) are each amended by 
     striking ``section 902(a) or 960(a)(1)'' and inserting 
     ``section 960''.
       (4) Section 814(f)(1) is amended--
       (A) by striking subparagraph (B), and
       (B) by striking all that precedes ``No income'' and 
     inserting the following:
       ``(1) Treatment of foreign taxes.--''.
       (5) Section 865(h)(1)(B) is amended by striking ``sections 
     902, 907, and 960'' and inserting ``sections 907 and 960''.
       (6) Section 901(a) is amended by striking ``sections 902 
     and 960'' and inserting ``section 960''.
       (7) Section 901(e)(2) is amended by striking ``but is not 
     limited to--'' and all that follows through ``that portion'' 
     and inserting ``but is not limited to, that portion''.
       (8) Section 901(f) is amended by striking ``sections 902 
     and 960'' and inserting ``section 960''.
       (9) Section 901(j)(1)(A) is amended by striking ``902 or''.

[[Page H9339]]

       (10) Section 901(j)(1)(B) is amended by striking ``sections 
     902 and 960'' and inserting ``section 960''.
       (11) Section 901(k)(2) is amended by striking ``section 
     853, 902, or 960'' and inserting ``section 853 or 960''.
       (12) Section 901(k)(6) is amended by striking ``902 or''.
       (13) Section 901(m)(1) is amended by striking ``relevant 
     foreign assets--'' and all that follows and inserting 
     ``relevant foreign assets shall not be taken into account in 
     determining the credit allowed under subsection (a).''.
       (14) Section 904(d)(1) is amended by striking ``sections 
     902, 907, and 960'' and inserting ``sections 907 and 960''.
       (15) Section 904(d)(6)(A) is amended by striking ``sections 
     902, 907, and 960'' and inserting ``sections 907 and 960''.
       (16) Section 904(h)(10)(A) is amended by striking 
     ``sections 902, 907, and 960'' and inserting ``sections 907 
     and 960''.
       (17) Section 904 is amended by striking subsection (k).
       (18) Section 905(c)(1) is amended by striking the last 
     sentence.
       (19) Section 905(c)(2)(B)(i) is amended to read as follows:
       ``(i) shall be taken into account for the taxable year to 
     which such taxes relate, and''.
       (20) Section 906(a) is amended by striking ``(or deemed, 
     under section 902, paid or accrued during the taxable 
     year)''.
       (21) Section 906(b) is amended by striking paragraphs (4) 
     and (5).
       (22) Section 907(b)(2)(B) is amended by striking ``902 
     or''.
       (23) Section 907(c)(3) is amended--
       (A) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively, and
       (B) by striking ``section 960(a)'' in subparagraph (A) (as 
     so redesignated) and inserting ``section 960''.
       (24) Section 907(c)(5) is amended by striking ``902 or''.
       (25) Section 907(f)(2)(B)(i) is amended by striking ``902 
     or''.
       (26) Section 908(a) is amended by striking ``902 or''.
       (27) Section 909(b) is amended--
       (A) by striking ``section 902 corporation'' in the matter 
     preceding paragraph (1) and inserting ``10/50 corporation'',
       (B) by striking ``902 or'' in paragraph (1),
       (C) by striking ``by such section 902 corporation'' and all 
     that follows in the matter following paragraph (2) and 
     inserting ``by such 10/50 corporation or a domestic 
     corporation which is a United States shareholder with respect 
     to such 10/50 corporation.'', and
       (D) by striking ``Section 902 Corporations'' in the heading 
     thereof and inserting ``10/50 Corporations''.
       (28) Section 909(d)(5) is amended to read as follows:
       ``(5) 10/50 corporation.--The term `10/50 corporation' 
     means any foreign corporation with respect to which one or 
     more domestic corporations is a United States shareholder.''.
       (29) Section 958(a)(1) is amended by striking ``960(a)(1)'' 
     and inserting ``960''.
       (30) Section 959(d) is amended by striking ``Except as 
     provided in section 960(a)(3), any'' and inserting ``Any''.
       (31) Section 959(e) is amended by striking ``section 
     960(b)'' and inserting ``section 960(c)''.
       (32) Section 1291(g)(2)(A) is amended by striking ``any 
     distribution--'' and all that follows through ``but only if'' 
     and inserting ``any distribution, any withholding tax imposed 
     with respect to such distribution, but only if''.
       (33) Section 6038(c)(1)(B) is amended by striking 
     ``sections 902 (relating to foreign tax credit for corporate 
     stockholder in foreign corporation) and 960 (relating to 
     special rules for foreign tax credit)'' and inserting 
     ``section 960''.
       (34) Section 6038(c)(4) is amended by striking subparagraph 
     (C).
       (35) The table of sections for subpart A of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 902.
       (36) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 960 and inserting the following:

``Sec. 960. Deemed paid credit for subpart F inclusions.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 4102. SOURCE OF INCOME FROM SALES OF INVENTORY 
                   DETERMINED SOLELY ON BASIS OF PRODUCTION 
                   ACTIVITIES.

       (a) In General.--Section 863(b) is amended by adding at the 
     end the following: ``Gains, profits, and income from the sale 
     or exchange of inventory property described in paragraph (2) 
     shall be allocated and apportioned between sources within and 
     without the United States solely on the basis of the 
     production activities with respect to the property.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

            Subtitle C--Modification of Subpart F Provisions

     SEC. 4201. REPEAL OF INCLUSION BASED ON WITHDRAWAL OF 
                   PREVIOUSLY EXCLUDED SUBPART F INCOME FROM 
                   QUALIFIED INVESTMENT.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 is amended by striking section 955.
       (b) Conforming Amendments.--
       (1)(A) Section 951(a)(1)(A) is amended to read as follows:
       ``(A) his pro rata share (determined under paragraph (2)) 
     of the corporation's subpart F income for such year, and''.
       (B) Section 851(b)(3) is amended by striking ``section 
     951(a)(1)(A)(i)'' in the flush language at the end and 
     inserting ``section 951(a)(1)(A)''.
       (C) Section 952(c)(1)(B)(i) is amended by striking 
     ``section 951(a)(1)(A)(i)'' and inserting ``section 
     951(a)(1)(A)''.
       (D) Section 953(c)(1)(C) is amended by striking ``section 
     951(a)(1)(A)(i)'' and inserting ``section 951(a)(1)(A)''.
       (2) Section 951(a) is amended by striking paragraph (3).
       (3) Section 953(d)(4)(B)(iv)(II) is amended by striking 
     ``or amounts referred to in clause (ii) or (iii) of section 
     951(a)(1)(A)''.
       (4) Section 964(b) is amended by striking ``, 955,''.
       (5) Section 970 is amended by striking subsection (b).
       (6) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by striking the item 
     relating to section 955.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4202. REPEAL OF TREATMENT OF FOREIGN BASE COMPANY OIL 
                   RELATED INCOME AS SUBPART F INCOME.

       (a) In General.--Section 954(a) is amended by striking 
     paragraph (5), by striking the comma at the end of paragraph 
     (3) and inserting a period, and by inserting ``and'' at the 
     end of paragraph (2).
       (b) Conforming Amendments.--
       (1) Section 952(c)(1)(B)(iii) is amended by striking 
     subclause (I) and by redesignating subclauses (II) through 
     (V) as subclauses (I) through (IV), respectively.
       (2) Section 954(b)(4) is amended by striking the last 
     sentence.
       (3) Section 954(b)(5) is amended by striking ``the foreign 
     base company services income, and the foreign base company 
     oil related income'' and inserting ``and the foreign base 
     company services income''.
       (4) Section 954(b) is amended by striking paragraph (6).
       (5) Section 954 is amended by striking subsection (g).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4203. INFLATION ADJUSTMENT OF DE MINIMIS EXCEPTION FOR 
                   FOREIGN BASE COMPANY INCOME.

       (a) In General.--Section 954(b)(3) is amended by adding at 
     the end the following new subparagraph:
       ``(D) Inflation adjustment.--In the case of any taxable 
     year beginning after 2017, the dollar amount in subparagraph 
     (A)(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(c)(2)(A) for the calendar year in which the taxable 
     year begins.
     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $50,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4204. LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN 
                   CORPORATIONS MADE PERMANENT.

       (a) In General.--Paragraph (6) of section 954(c) is amended 
     by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2019, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4205. MODIFICATION OF STOCK ATTRIBUTION RULES FOR 
                   DETERMINING STATUS AS A CONTROLLED FOREIGN 
                   CORPORATION.

       (a) In General.--Section 958(b) is amended--
       (1) by striking paragraph (4), and
       (2) by striking ``Paragraphs (1) and (4)'' in the last 
     sentence and inserting ``Paragraph (1)''.
       (b) Application of Certain Reporting Requirements.--Section 
     6038(e)(2) is amended by striking ``except that--'' and all 
     that follows through ``in applying subparagraph (C)'' and 
     inserting ``except that in applying subparagraph (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4206. ELIMINATION OF REQUIREMENT THAT CORPORATION MUST 
                   BE CONTROLLED FOR 30 DAYS BEFORE SUBPART F 
                   INCLUSIONS APPLY.

       (a) In General.--Section 951(a)(1) is amended by striking 
     ``for an uninterrupted period of 30 days or more'' and 
     inserting ``at any time''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders with or within which such taxable 
     years of foreign corporations end.

                 Subtitle D--Prevention of Base Erosion

     SEC. 4301. CURRENT YEAR INCLUSION BY UNITED STATES 
                   SHAREHOLDERS WITH FOREIGN HIGH RETURNS.

       (a) In General.--Subpart F of part III of subchapter N of 
     chapter 1 is amended by inserting after section 951 the 
     following new section:

[[Page H9340]]

  


     ``SEC. 951A. FOREIGN HIGH RETURN AMOUNT INCLUDED IN GROSS 
                   INCOME OF UNITED STATES SHAREHOLDERS.

       ``(a) In General.--Each person who is a United States 
     shareholder of any controlled foreign corporation for any 
     taxable year of such United States shareholder shall include 
     in gross income for such taxable year 50 percent of such 
     shareholder's foreign high return amount for such taxable 
     year.
       ``(b) Foreign High Return Amount.--For purposes of this 
     section--
       ``(1) In general.--The term `foreign high return amount' 
     means, with respect to any United States shareholder for any 
     taxable year of such United States shareholder, the excess 
     (if any) of--
       ``(A) such shareholder's net CFC tested income for such 
     taxable year, over
       ``(B) the excess (if any) of--
       ``(i) the applicable percentage of the aggregate of such 
     shareholder's pro rata share of the qualified business asset 
     investment of each controlled foreign corporation with 
     respect to which such shareholder is a United States 
     shareholder for such taxable year (determined for each 
     taxable year of each such controlled foreign corporation 
     which ends in or with such taxable year of such United States 
     shareholder), over
       ``(ii) the amount of interest expense taken into account 
     under subsection (c)(2)(A)(ii) in determining the 
     shareholder's net CFC tested income for the taxable year.
       ``(2) Applicable percentage.--The term `applicable 
     percentage' means, with respect to any taxable year, the 
     Federal short-term rate (determined under section 1274(d) for 
     the month in which or with which such taxable year ends) plus 
     7 percentage points.
       ``(c) Net CFC Tested Income.--For purposes of this 
     section--
       ``(1) In general.--The term `net CFC tested income' means, 
     with respect to any United States shareholder for any taxable 
     year of such United States shareholder, the excess (if any) 
     of--
       ``(A) the aggregate of such shareholder's pro rata share of 
     the tested income of each controlled foreign corporation with 
     respect to which such shareholder is a United States 
     shareholder for such taxable year of such United States 
     shareholder (determined for each taxable year of such 
     controlled foreign corporation which ends in or with such 
     taxable year of such United States shareholder), over
       ``(B) the aggregate of such shareholder's pro rata share of 
     the tested loss of each controlled foreign corporation with 
     respect to which such shareholder is a United States 
     shareholder for such taxable year of such United States 
     shareholder (determined for each taxable year of such 
     controlled foreign corporation which ends in or with such 
     taxable year of such United States shareholder).
       ``(2) Tested income; tested loss.--For purposes of this 
     section--
       ``(A) Tested income.--The term `tested income' means, with 
     respect to any controlled foreign corporation for any taxable 
     year of such controlled foreign corporation, the excess (if 
     any) of--
       ``(i) the gross income of such corporation determined 
     without regard to--

       ``(I) any item of income which is effectively connected 
     with the conduct by such corporation of a trade or business 
     within the United States if subject to tax under this 
     chapter,
       ``(II) any gross income taken into account in determining 
     the subpart F income of such corporation,
       ``(III) except as otherwise provided by the Secretary, any 
     amount excluded from the foreign personal holding company 
     income (as defined in section 954) of such corporation by 
     reason of section 954(c)(6) but only to the extent that any 
     deduction allowable for the payment or accrual of such amount 
     does not result in a reduction in the foreign high return 
     amount of any United States shareholder (determined without 
     regard to this subclause),
       ``(IV) any gross income excluded from the foreign personal 
     holding company income (as defined in section 954) of such 
     corporation by reason of subsection (c)(2)(C), (h), or (i) of 
     section 954,
       ``(V) any gross income excluded from the insurance income 
     (as defined in section 953) of such corporation by reason of 
     section 953(a)(2),
       ``(VI) any gross income excluded from foreign base company 
     income (as defined in section 954) or insurance income (as 
     defined in section 953) of such corporation by reason of 
     section 954(b)(4),
       ``(VII) any dividend received from a related person (as 
     defined in section 954(d)(3)), and
       ``(VIII) any commodities gross income of such corporation, 
     over

       ``(ii) the deductions (including taxes) properly allocable 
     to such gross income under rules similar to the rules of 
     section 954(b)(5) (or which would be so properly allocable if 
     such corporation had such gross income).
       ``(B) Tested loss.--The term `tested loss' means, with 
     respect to any controlled foreign corporation for any taxable 
     year of such controlled foreign corporation, the excess (if 
     any) of the amount described in subparagraph (A)(ii) over the 
     amount described in subparagraph (A)(i).
       ``(d) Qualified Business Asset Investment.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified business asset 
     investment' means, with respect to any controlled foreign 
     corporation for any taxable year of such controlled foreign 
     corporation, the aggregate of the corporation's adjusted 
     bases (determined as of the close of such taxable year and 
     after any adjustments with respect to such taxable year) in 
     specified tangible property--
       ``(A) used in a trade or business of the corporation, and
       ``(B) of a type with respect to which a deduction is 
     allowable under section 168.
       ``(2) Specified tangible property.--The term `specified 
     tangible property' means any tangible property to the extent 
     such property is used in the production of tested income or 
     tested loss.
       ``(3) Partnership property.--For purposes of this 
     subsection, if a controlled foreign corporation holds an 
     interest in a partnership at the close of such taxable year 
     of the controlled foreign corporation, such controlled 
     foreign corporation shall take into account under paragraph 
     (1) the controlled foreign corporation's distributive share 
     of the aggregate of the partnership's adjusted bases 
     (determined as of such date in the hands of the partnership) 
     in tangible property held by such partnership to the extent 
     such property--
       ``(A) is used in the trade or business of the partnership,
       ``(B) is of a type with respect to which a deduction is 
     allowable under section 168, and
       ``(C) is used in the production of tested income or tested 
     loss (determined with respect to such controlled foreign 
     corporation's distributive share of income or loss with 
     respect to such property).
     For purposes of this paragraph, the controlled foreign 
     corporation's distributive share of the adjusted basis of any 
     property shall be the controlled foreign corporation's 
     distributive share of income and loss with respect to such 
     property.
       ``(4) Determination of adjusted basis.--For purposes of 
     this subsection, the adjusted basis in any property shall be 
     determined without regard to any provision of this title (or 
     any other provision of law) which is enacted after the date 
     of the enactment of this section.
       ``(5) Regulations.--The Secretary shall issue such 
     regulations or other guidance as the Secretary determines 
     appropriate to prevent the avoidance of the purposes of this 
     subsection, including regulations or other guidance which 
     provide for the treatment of property if--
       ``(A) such property is transferred, or held, temporarily, 
     or
       ``(B) the avoidance of the purposes of this paragraph is a 
     factor in the transfer or holding of such property.
       ``(e) Commodities Gross Income.--For purposes of this 
     section--
       ``(1) Commodities gross income.--The term `commodities 
     gross income' means, with respect to any corporation--
       ``(A) gross income of such corporation from the disposition 
     of commodities which are produced or extracted by such 
     corporation (or a partnership in which such corporation is a 
     partner), and
       ``(B) gross income of such corporation from the disposition 
     of property which gives rise to income described in 
     subparagraph (A).
       ``(2) Commodity.--The term `commodity' means any commodity 
     described in section 475(e)(2)(A) or section 475(e)(2)(D) 
     (determined without regard to clause (i) thereof and by 
     substituting `a commodity described in subparagraph (A)' for 
     `such a commodity' in clause (ii) thereof).
       ``(f) Taxable Years for Which Persons Are Treated as United 
     States Shareholders of Controlled Foreign Corporations.--For 
     purposes of this section--
       ``(1) In general.--A United States shareholder of a 
     controlled foreign corporation shall be treated as a United 
     States shareholder of such controlled foreign corporation for 
     any taxable year of such United States shareholder if--
       ``(A) a taxable year of such controlled foreign corporation 
     ends in or with such taxable year of such person, and
       ``(B) such person owns (within the meaning of section 
     958(a)) stock in such controlled foreign corporation on the 
     last day, in such taxable year of such foreign corporation, 
     on which the foreign corporation is a controlled foreign 
     corporation.
       ``(2) Treatment as a controlled foreign corporation.--
     Except for purposes of paragraph (1)(B) and the application 
     of section 951(a)(2) to this section pursuant to subsection 
     (g), a foreign corporation shall be treated as a controlled 
     foreign corporation for any taxable year of such foreign 
     corporation if such foreign corporation is a controlled 
     foreign corporation at any time during such taxable year.
       ``(g) Determination of Pro Rata Share.--For purposes of 
     this section, pro rata shares shall be determined under the 
     rules of section 951(a)(2) in the same manner as such section 
     applies to subpart F income.
       ``(h) Coordination With Subpart F.--
       ``(1) Treatment as subpart f income for certain purposes.--
     Except as otherwise provided by the Secretary any foreign 
     high return amount included in gross income under subsection 
     (a) shall be treated in the same manner as an amount included 
     under section 951(a)(1)(A) for purposes of applying sections 
     168(h)(2)(B), 535(b)(10), 851(b), 904(h)(1), 959, 961, 962, 
     993(a)(1)(E), 996(f)(1), 1248(b)(1), 1248(d)(1), 
     6501(e)(1)(C), 6654(d)(2)(D), and 6655(e)(4).
       ``(2) Entire foreign high return amount taken into account 
     for purposes of certain sections.--For purposes of applying 
     paragraph (1) with respect to sections 168(h)(2)(B), 851(b), 
     959, 961, 962, 1248(b)(1), and 1248(d)(1), the foreign high 
     return amount included in gross income under subsection (a) 
     shall be determined by substituting `100 percent' for `50 
     percent' in such subsection.
       ``(3) Allocation of foreign high return amount to 
     controlled foreign corporations.--For purposes of the 
     sections referred to in paragraph (1), with respect to any 
     controlled foreign corporation any pro rata amount from which 
     is taken into account in determining the

[[Page H9341]]

     foreign high return amount included in gross income of a 
     United States shareholder under subsection (a), the portion 
     of such foreign high return amount which is treated as being 
     with respect to such controlled foreign corporation is--
       ``(A) in the case of a controlled foreign corporation with 
     tested loss, zero, and
       ``(B) in the case of a controlled foreign corporation with 
     tested income, the portion of such foreign high return amount 
     which bears the same ratio to such foreign high return amount 
     as--
       ``(i) such United States shareholder's pro rata amount of 
     the tested income of such controlled foreign corporation, 
     bears to
       ``(ii) the aggregate amount determined under subsection 
     (c)(1)(A) with respect to such United States shareholder.
       ``(4) Coordination with subpart f to deny double benefit of 
     losses.--In the case of any United States shareholder of any 
     controlled foreign corporation, the amount included in gross 
     income under section 951(a)(1)(A) shall be determined by 
     increasing the earnings and profits of such controlled 
     foreign corporation (solely for purposes of determining such 
     amount) by an amount that bears the same ratio (not greater 
     than 1) to such shareholder's pro rata share of the tested 
     loss of such controlled foreign corporation as--
       ``(A) the aggregate amount determined under subsection 
     (c)(1)(A) with respect to such shareholder, bears to
       ``(B) the aggregate amount determined under subsection 
     (c)(1)(B) with respect to such shareholder.''.
       (b) Foreign Tax Credit.--
       (1) Application of deemed paid foreign tax credit.--Section 
     960, as amended by the preceding provisions of this Act, is 
     amended by redesignating subsections (d) and (e) as 
     subsections (e) and (f), respectively, and by inserting after 
     subsection (c) the following new subsection:
       ``(d) Deemed Paid Credit for Taxes Properly Attributable to 
     Tested Income.--
       ``(1) In general.--For purposes of this subpart, if any 
     amount is includible in the gross income of a domestic 
     corporation under section 951A, such domestic corporation 
     shall be deemed to have paid foreign income taxes equal to 80 
     percent of--
       ``(A) such domestic corporation's foreign high return 
     percentage, multiplied by
       ``(B) the aggregate tested foreign income taxes paid or 
     accrued by controlled foreign corporations with respect to 
     which such domestic corporation is a United States 
     shareholder.
       ``(2) Foreign high return percentage.--For purposes of 
     paragraph (1), the term `foreign high return percentage' 
     means, with respect to any domestic corporation, the ratio 
     (expressed as a percentage) of--
       ``(A) such corporation's foreign high return amount (as 
     defined in section 951A(b)), divided by
       ``(B) the aggregate amount determined under section 
     951A(c)(1)(A) with respect to such corporation.
       ``(3) Tested foreign income taxes.--For purposes of 
     paragraph (1), the term `tested foreign income taxes' means, 
     with respect to any domestic corporation which is a United 
     States shareholder of a controlled foreign corporation, the 
     foreign income taxes paid or accrued by such foreign 
     corporation which are properly attributable to gross income 
     described in section 951A(c)(2)(A)(i).''.
       (2) Application of foreign tax credit limitation.--
       (A) Separate basket for foreign high return amount.--
     Section 904(d)(1) is amended by redesignating subparagraphs 
     (A) and (B) as subparagraphs (B) and (C), respectively, and 
     by inserting before subparagraph (B) (as so redesignated) the 
     following new subparagraph:
       ``(A) any amount includible in gross income under section 
     951A,''.
       (B) No carryover of excess taxes.--Section 904(c) is 
     amended by adding at the end the following: ``This subsection 
     shall not apply to taxes paid or accrued with respect to 
     amounts described in subsection (d)(1)(A).''
       (3) Gross up for deemed paid foreign tax credit.--Section 
     78, as amended by the preceding provisions of this Act, is 
     amended--
       (A) by striking ``any taxable year, an amount'' and 
     inserting ``any taxable year--
       ``(1) an amount'', and
       (B) by striking the period at the end and inserting ``, and
       ``(2) an amount equal to the taxes deemed to be paid by 
     such corporation under section 960(d) for such taxable year 
     (determined by substituting `100 percent' for `80 percent' in 
     such section) shall be treated for purposes of this title 
     (other than sections 959, 960, and 961) as an increase in the 
     foreign high return amount of such domestic corporation under 
     section 951A for such taxable year.''.
       (c) Conforming Amendments.--
       (1) Section 170(b)(2)(D) is amended by striking ``computed 
     without regard to'' and all that follows and inserting 
     ``computed--
       ``(i) without regard to--

       ``(I) this section,
       ``(II) part VIII (except section 248),
       ``(III) any net operating loss carryback to the taxable 
     year under section 172,
       ``(IV) any capital loss carryback to the taxable year under 
     section 1212(a)(1), and

       ``(ii) by substituting `100 percent' for `50 percent' in 
     section 951A(a).''.
       (2) Section 246(b)(1) is amended by--
       (A) striking ``and without regard to'' and inserting 
     ``without regard to'', and
       (B) by striking the period at the end and inserting ``, and 
     by substituting `100 percent' for `50 percent' in section 
     951A(a).''.
       (3) Section 469(i)(3)(F) is amended by striking 
     ``determined without regard to'' and all that follows and 
     inserting ``determined--
       ``(i) without regard to--

       ``(I) any amount includible in gross income under section 
     86,
       ``(II) the amounts allowable as a deduction under section 
     219, and
       ``(III) any passive activity loss or any loss allowable by 
     reason of subsection (c)(7), and

       ``(ii) by substituting `100 percent' for `50 percent' in 
     section 951A(a).''.
       (4) Section 856(c)(2) is amended by striking ``and'' at the 
     end of subparagraph (H), by adding ``and'' at the end of 
     subparagraph (I), and by inserting after subparagraph (I) the 
     following new subparagraph:
       ``(J) amounts includible in gross income under section 
     951A(a);''.
       (5) Section 856(c)(3)(D) is amended by striking ``dividends 
     or other distributions on, and gain'' and inserting 
     ``dividends, other distributions on, amounts includible in 
     gross income under section 951A(a) with respect to, and 
     gain''.
       (6) The table of sections for subpart F of part III of 
     subchapter N of chapter 1 is amended by inserting after the 
     item relating to section 951 the following new item:

``Sec. 951A. Foreign high return amount included in gross income of 
              United States shareholders.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2017, and to taxable years of 
     United States shareholders in which or with which such 
     taxable years of foreign corporations end.

     SEC. 4302. LIMITATION ON DEDUCTION OF INTEREST BY DOMESTIC 
                   CORPORATIONS WHICH ARE MEMBERS OF AN 
                   INTERNATIONAL FINANCIAL REPORTING GROUP.

       (a) In General.--Section 163 is amended by redesignating 
     subsection (n) as subsection (p) and by inserting after 
     subsection (m) the following new subsection:
       ``(n) Limitation on Deduction of Interest by Domestic 
     Corporations in International Financial Reporting Groups.--
       ``(1) In general.--In the case of any domestic corporation 
     which is a member of any international financial reporting 
     group, the deduction under this chapter for interest paid or 
     accrued during the taxable year shall not exceed the sum of--
       ``(A) the allowable percentage of 110 percent of the excess 
     (if any) of --
       ``(i) the amount of such interest so paid or accrued, over
       ``(ii) the amount described in subparagraph (B), plus
       ``(B) the amount of interest includible in gross income of 
     such corporation for such taxable year.
       ``(2) International financial reporting group.--
       ``(A) For purposes of this subsection, the term 
     `international financial reporting group' means, with respect 
     to any reporting year, any group of entities which--
       ``(i) includes--

       ``(I) at least one foreign corporation engaged in a trade 
     or business within the United States, or
       ``(II) at least one domestic corporation and one foreign 
     corporation,

       ``(ii) prepares consolidated financial statements with 
     respect to such year, and
       ``(iii) reports in such statements average annual gross 
     receipts (determined in the aggregate with respect to all 
     entities which are part of such group) for the 3-reporting-
     year period ending with such reporting year in excess of 
     $100,000,000.
       ``(B) Rules relating to determination of average gross 
     receipts.--For purposes of subparagraph (A)(iii), rules 
     similar to the rules of section 448(c)(3) shall apply.
       ``(3) Allowable percentage.--For purposes of this 
     subsection--
       ``(A) In general.--The term `allowable percentage' means, 
     with respect to any domestic corporation for any taxable 
     year, the ratio (expressed as a percentage and not greater 
     than 100 percent) of--
       ``(i) such corporation's allocable share of the 
     international financial reporting group's reported net 
     interest expense for the reporting year of such group which 
     ends in or with such taxable year of such corporation, over
       ``(ii) such corporation's reported net interest expense for 
     such reporting year of such group.
       ``(B) Reported net interest expense.--The term `reported 
     net interest expense' means--
       ``(i) with respect to any international financial reporting 
     group for any reporting year, the excess of--

       ``(I) the aggregate amount of interest expense reported in 
     such group's consolidated financial statements for such 
     taxable year, over
       ``(II) the aggregate amount of interest income reported in 
     such group's consolidated financial statements for such 
     taxable year, and

       ``(ii) with respect to any domestic corporation for any 
     reporting year, the excess of--

       ``(I) the amount of interest expense of such corporation 
     reported in the books and records of the international 
     financial reporting group which are used in preparing such 
     group's consolidated financial statements for such taxable 
     year, over
       ``(II) the amount of interest income of such corporation 
     reported in such books and records.

       ``(C) Allocable share of reported net interest expense.--
     With respect to any domestic corporation which is a member of 
     any international financial reporting group, such 
     corporation's allocable share of such group's reported net 
     interest expense for any reporting year is the portion of 
     such expense which bears the same ratio to such expense as--
       ``(i) the EBITDA of such corporation for such reporting 
     year, bears to
       ``(ii) the EBITDA of such group for such reporting year.
       ``(D) EBITDA.--

[[Page H9342]]

       ``(i) In general.--The term `EBITDA' means, with respect to 
     any reporting year, earnings before interest, taxes, 
     depreciation, and amortization--

       ``(I) as determined in the international financial 
     reporting group's consolidated financial statements for such 
     year, or
       ``(II) for purposes of subparagraph (A)(i), as determined 
     in the books and records of the international financial 
     reporting group which are used in preparing such statements 
     if not determined in such statements.

       ``(ii) Treatment of disregarded entities.--The EBITDA of 
     any domestic corporation shall not fail to include the EBITDA 
     of any entity which is disregarded for purposes of this 
     chapter.
       ``(iii) Treatment of intra-group distributions.--The EBITDA 
     of any domestic corporation shall be determined without 
     regard to any distribution received by such corporation from 
     any other member of the international financial reporting 
     group.
       ``(E) Special rules for non-positive ebitda.--
       ``(i) Non-positive group ebitda.--In the case of any 
     international financial reporting group the EBITDA of which 
     is zero or less, paragraph (1) shall not apply to any member 
     of such group the EBITDA of which is above zero.
       ``(ii) Non-positive entity ebitda.--In the case of any 
     group member the EBITDA of which is zero or less, paragraph 
     (1) shall be applied without regard to subparagraph (A) 
     thereof.
       ``(4) Consolidated financial statement.--For purposes of 
     this subsection, the term `consolidated financial statement' 
     means any consolidated financial statement described in 
     paragraph (2)(A)(ii) if such statement is--
       ``(A) a financial statement which is certified as being 
     prepared in accordance with generally accepted accounting 
     principles, international financial reporting standards, or 
     any other comparable method of accounting identified by the 
     Secretary, and which is--
       ``(i) a 10-K (or successor form), or annual statement to 
     shareholders, required to be filed with the United States 
     Securities and Exchange Commission,
       ``(ii) an audited financial statement which is used for--

       ``(I) credit purposes,
       ``(II) reporting to shareholders, partners, or other 
     proprietors, or to beneficiaries, or
       ``(III) any other substantial nontax purpose,

     but only if there is no statement described in clause (i), or
       ``(iii) filed with any other Federal or State agency for 
     nontax purposes, but only if there is no statement described 
     in clause (i) or (ii), or
       ``(B) a financial statement which--
       ``(i) is used for a purpose described in subclause (I), 
     (II), or (III) of subparagraph (A)(ii), or
       ``(ii) filed with any regulatory or governmental body 
     (whether domestic or foreign) specified by the Secretary,
     but only if there is no statement described in subparagraph 
     (A).
       ``(5) Reporting year.--For purposes of this subsection, the 
     term `reporting year' means, with respect to any 
     international financial reporting group, the year with 
     respect to which the consolidated financial statements are 
     prepared.
       ``(6) Application to certain entities.--
       ``(A) Partnerships.--Except as otherwise provided by the 
     Secretary in paragraph (7), this subsection shall apply to 
     any partnership which is a member of any international 
     financial reporting group under rules similar to the rules of 
     section 163(j)(3).
       ``(B) Foreign corporations engaged in trade or business 
     within the united states.--Except as otherwise provided by 
     the Secretary in paragraph (8), any deduction for interest 
     paid or accrued by a foreign corporation engaged in a trade 
     or business within the United States shall be limited in a 
     manner consistent with the principles of this subsection.
       ``(C) Consolidated groups.--For purposes of this 
     subsection, the members of any group that file (or are 
     required to file) a consolidated return with respect to the 
     tax imposed by chapter 1 for a taxable year shall be treated 
     as a single corporation.
       ``(7) Regulations.--The Secretary may issue such 
     regulations or other guidance as are necessary or appropriate 
     to carry out the purposes of this subsection.''.
       (b) Carryforward of Disallowed Interest.--
       (1) In general.--Section 163(o) is amended to read as 
     follows:
       ``(o) Carryforward of Certain Disallowed Interest.--The 
     amount of any interest not allowed as a deduction for any 
     taxable year by reason of subsection (j)(1) or (n)(1) 
     (whichever imposes the lower limitation with respect to such 
     taxable year) shall be treated as interest (and as business 
     interest for purposes of subsection (j)(1)) paid or accrued 
     in the succeeding taxable year. Interest paid or accrued in 
     any taxable year (determined without regard to the preceding 
     sentence) shall not be carried past the 5th taxable year 
     following such taxable year, determined by treating interest 
     as allowed as a deduction on a first-in, first-out basis.''.
       (2) Treatment of carryforward of disallowed interest in 
     certain corporate acquisitions.--For rules related to the 
     carryforward of disallowed interest in certain corporate 
     acquisitions, see the amendments made by section 3301(c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 4303. EXCISE TAX ON CERTAIN PAYMENTS FROM DOMESTIC 
                   CORPORATIONS TO RELATED FOREIGN CORPORATIONS; 
                   ELECTION TO TREAT SUCH PAYMENTS AS EFFECTIVELY 
                   CONNECTED INCOME.

       (a) Excise Tax on Certain Amounts From Domestic 
     Corporations to Foreign Affiliates.--
       (1) In general.--Chapter 36 is amended by adding at the end 
     the following new subchapter:

      ``Subchapter E--Tax on Certain Amounts to Foreign Affiliates

``Sec. 4491. Imposition of tax on certain amounts from domestic 
              corporations to foreign affiliates.

     ``SEC. 4491. IMPOSITION OF TAX ON CERTAIN AMOUNTS FROM 
                   DOMESTIC CORPORATIONS TO FOREIGN AFFILIATES.

       ``(a) In General.--There is hereby imposed on each 
     specified amount paid or incurred by a domestic corporation 
     to a foreign corporation which is a member of the same 
     international financial reporting group as such domestic 
     corporation a tax equal to the highest rate of tax in effect 
     under section 11 multiplied by such amount.
       ``(b) By Whom Paid.--The tax imposed by subsection (a) 
     shall be paid by the domestic corporation described in such 
     subsection.
       ``(c) Exception for Effectively Connected Income.--
     Subsection (a) shall not apply to so much of any specified 
     amount as is effectively connected with the conduct of a 
     trade or business within the United States if such amount is 
     subject to tax under chapter 1. In the case of any amount 
     which is treated as effectively connected with the conduct of 
     a trade or business within the United States by reason of 
     section 882(g), the preceding sentence shall apply to such 
     amount only if the domestic corporation provides to the 
     Secretary (at such time and in such form and manner as the 
     Secretary may provide) a copy of the election made under 
     section 882(g) by the foreign corporation referred to in 
     subsection (a).
       ``(d) Definitions and Special Rules.--Terms used in this 
     section that are also used in section 882(g) shall have the 
     same meaning as when used in such section and rules similar 
     to the rules of paragraphs (5) and (6) of such section shall 
     apply for purposes of this section.''.
       (2) Denial of deduction for tax imposed.--Section 275(a) is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Taxes imposed by section 4491.''.
       (3) Clerical amendment.--The table of subchapters for 
     chapter 36 is amended by adding at the end the following new 
     item:

    ``subchapter e. tax on certain amounts to foreign affiliates.''.

       (b) Election to Treat Certain Payments From Domestic 
     Corporations to Related Foreign Corporations as Effectively 
     Connected Income.--Section 882 is amended by adding at the 
     end the following new subsection:
       ``(g) Election to Treat Certain Payments From Domestic 
     Corporations to Related Foreign Corporations as Effectively 
     Connected Income.--
       ``(1) In general.--In the case of any specified amount paid 
     or incurred by a domestic corporation to a foreign 
     corporation which is a member of the same international 
     financial reporting group as such domestic corporation and 
     which has elected to be subject to the provisions of this 
     subsection--
       ``(A) such amount shall be taken into account (other than 
     for purposes of sections 245, 245A, and 881) in the taxable 
     year of such foreign corporation during which such amount is 
     paid or incurred as if--
       ``(i) such foreign corporation were engaged in a trade or 
     business within the United States,
       ``(ii) such foreign corporation had a permanent 
     establishment in the United States during the taxable year, 
     and
       ``(iii) such payment were effectively connected with the 
     conduct of a trade or business within the United States and 
     were attributable to such permanent establishment,
       ``(B) for purposes of subsection (c)(1)(A), no deduction 
     shall be allowed with respect to such amount and such 
     subsection shall be applied without regard to such amount, 
     and
       ``(C) the foreign corporation shall be allowed a deduction 
     (for the taxable year referred to in subparagraph (A)) equal 
     to the deemed expenses with respect to such amount.
       ``(2) Specified amount.--For purposes of this subsection--
       ``(A) In general.--The term `specified amount' means any 
     amount which is, with respect to the payor, allowable as a 
     deduction or includible in costs of goods sold, inventory, or 
     the basis of a depreciable or amortizable asset.
       ``(B) Exceptions.--The term `specified amount' shall not 
     include--
       ``(i) interest,
       ``(ii) any amount paid or incurred for the acquisition of 
     any security described in section 475(c)(2) (determined 
     without regard to the last sentence thereof) or any commodity 
     described in section 475(e)(2),
       ``(iii) except as provided in subparagraph (C), any amount 
     with respect to which tax is imposed under section 881(a), 
     and
       ``(iv) in the case of a payor which has elected to use a 
     services cost method for purposes of section 482, any amount 
     paid or incurred for services if such amount is the total 
     services cost with no markup.
       ``(C) Amounts not treated as effectively connected to 
     extent of gross-basis tax.--Subparagraph (B)(iii) shall only 
     apply to so much of any specified amount as bears the 
     proportion to such amount as--
       ``(i) the rate of tax imposed under section 881(a) with 
     respect to such amount, bears to
       ``(ii) 30 percent.
       ``(3) Deemed expenses.--
       ``(A) In general.--The deemed expenses with respect to any 
     specified amount received by a foreign corporation during any 
     reporting year is the amount of expenses such that the net 
     income

[[Page H9343]]

     ratio of such foreign corporation with respect to such amount 
     (taking into account only such specified amount and such 
     deemed expenses) is equal to the net income ratio of the 
     international financial reporting group determined for such 
     reporting year with respect to the product line to which the 
     specified amount relates.
       ``(B) Net income ratio.--For purposes of this paragraph, 
     the term `net income ratio' means the ratio of--
       ``(i) net income determined without regard to interest 
     income, interest expense, and income taxes, divided by
       ``(ii) revenues.
       ``(C) Method of determination.--Amounts described in 
     subparagraph (B) shall be determined with respect to the 
     international financial reporting group on the basis of the 
     consolidated financial statements referred to in paragraph 
     (4)(A)(i) and the books and records of the members of the 
     international financial reporting group which are used in 
     preparing such statements, taking into account only revenues 
     and expenses of the members of such group (other than the 
     members of such group which are (or are treated as) a 
     domestic corporation for purposes of this subsection) derived 
     from, or incurred with respect to--
       ``(i) persons who are not members of such group, and
       ``(ii) members of such group which are (or are treated as) 
     a domestic corporation for purposes of this subsection.
       ``(4) International financial reporting group.--For 
     purposes of this subsection--
       ``(A) In general.--The term `international financial 
     reporting group' means any group of entities, with respect to 
     any specified amount, if such amount is paid or incurred 
     during a reporting year of such group with respect to which--
       ``(i) such group prepares consolidated financial statements 
     (within the meaning of section 163(n)(4)) with respect to 
     such year, and
       ``(ii) the average annual aggregate payment amount of such 
     group for the 3-reporting-year period ending with such 
     reporting year exceeds $100,000,000.
       ``(B) Annual aggregate payment amount.--The term `annual 
     aggregate payment amount' means, with respect to any 
     reporting year of the group referred to in subparagraph 
     (A)(i), the aggregate specified amounts to which paragraph 
     (1) applies (or would apply if such group were an 
     international financial reporting group).
       ``(C) Application of certain rules.--Rules similar to the 
     rules of subparagraphs (A), (B), and (D) of section 448(c)(3) 
     shall apply for purposes of this paragraph.
       ``(5) Treatment of partnerships.--Any specified amount 
     paid, incurred, or received by a partnership which is a 
     member of any international financial reporting group (and 
     any amount treated as paid, incurred, or received by a 
     partnership under this paragraph) shall be treated for 
     purposes of this subsection as amounts paid, incurred, or 
     received, respectively, by each partner of such partnership 
     in an amount equal to such partner's distributive share of 
     the items of income, gain, deduction, or loss to which such 
     amounts relate.
       ``(6) Treatment of amounts in connection with united states 
     trade or business.--Any specified amount paid, incurred, or 
     received by a foreign corporation in connection with the 
     conduct of a trade or business within the United States 
     (other than a trade or business it is deemed to conduct 
     pursuant to this subsection) shall be treated for purposes of 
     this subsection as an amount paid, incurred, or received, 
     respectively, by a domestic corporation. For purposes of the 
     preceding sentence, a foreign corporation shall be deemed to 
     pay, incur, and receive amounts with respect to a trade or 
     business it conducts within the United States (other than a 
     trade or business it is deemed to conduct pursuant to this 
     subsection) to the extent such foreign corporation would be 
     treated as paying, incurring, or receiving such amounts from 
     such trade or business if such trade or business were a 
     domestic corporation.
       ``(7) Joint and several liability of members of internal 
     financial reporting group.--In the case of any underpayment 
     with respect to any taxable year of a foreign corporation 
     which is a member of an international financial accounting 
     group, each domestic corporation which is a member of such 
     group at any time during such taxable year shall be jointly 
     and severally liable for--
       ``(A) so much of such underpayment as does not exceed the 
     excess (if any) of such underpayment over the amount of such 
     underpayment determined without regard to this subsection, 
     and
       ``(B) any penalty, addition to tax, or additional amount 
     attributable to the amount described in subparagraph (A).
       ``(8) Foreign tax credit allowed.--The credit allowed under 
     section 906(a) with respect to amounts taken into account in 
     income under paragraph (1)(A) shall be limited to 80 percent 
     of the amount of taxes paid or accrued and determined without 
     regard to section 906(b)(1).
       ``(9) Election.--Any election under paragraph (1)--
       ``(A) shall be made at such time and in such form and 
     manner as the Secretary may provide, and
       ``(B) shall apply for the taxable year for which made and 
     all subsequent taxable years unless revoked with the consent 
     of the Secretary.
       ``(10) Regulations.--The Secretary may issue such 
     regulations or other guidance as are necessary or appropriate 
     to carry out the purposes of this subsection, including 
     regulations or other guidance--
       ``(A) to provide for the proper determination of product 
     lines, and
       ``(B) to prevent the avoidance of the purposes of this 
     subsection through the use of conduit transactions or by 
     other means.''.
       (c) Reporting Requirements.--
       (1) Reporting by foreign corporation.--Section 6038C(b) is 
     amended to read as follows:
       ``(b) Required Information.--
       ``(1) In general.--The information described in this 
     subsection is--
       ``(A) the information described in section 6038A(b), and
       ``(B) such other information as the Secretary may prescribe 
     by regulations relating to any item not directly connected 
     with a transaction for which information is required under 
     subparagraph (A).
       ``(2) Certain payments from related domestic 
     corporations.--
       ``(A) In general.--In the case of any reporting corporation 
     that receives during the taxable year any amount to which 
     section 882(g)(1) applies, the information described in this 
     subsection shall include, with respect to each member of the 
     international financial reporting group from which any such 
     amount is received--
       ``(i) the name and taxpayer identification number of such 
     member,
       ``(ii) the aggregate amounts received from such member,
       ``(iii) the product lines to which such amounts relate, the 
     aggregate amounts relating to each such product line, and the 
     net income ratio for each such product line (determined under 
     section 882(g)(3)(B) with respect to the international 
     financial reporting group), and
       ``(iv) a summary of any changes in financial accounting 
     methods that affect the computation of any net income ratio 
     described in clause (iii).
       ``(B) Definitions and special rules.--Terms used in this 
     paragraph that are also used in section 882(g) shall have the 
     same meaning as when used in such section and rules similar 
     to the rules of paragraphs (5) and (6) of such section shall 
     apply for purposes of this paragraph.''.
       (2) Reporting by domestic group members.--
       (A) In general .--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6038D the 
     following new section:

     ``SEC. 6038E. INFORMATION WITH RESPECT TO CERTAIN PAYMENTS 
                   FROM DOMESTIC CORPORATIONS TO RELATED FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--In the case of any domestic corporation 
     which pays or incurs any amount to which section 882(g)(1) 
     applies, such person shall--
       ``(1) make a return according to the forms and regulations 
     prescribed the Secretary, setting forth the information 
     described in subsection (b), and
       ``(2) maintain (at the location, in the manner, and to the 
     extent prescribed in regulations) such records as may be 
     appropriate to determine liability for tax pursuant to 
     paragraphs (1) and (7) of section 882(g).
       ``(b) Required Information.--The information described in 
     this subsection is--
       ``(1) the name and taxpayer identification number of the 
     common parent of the international financial reporting group 
     in which such domestic corporation is a member, and
       ``(2) with respect to any person who receives an amount 
     described in subsection (a) from such domestic corporation--
       ``(A) the name and taxpayer identification number of such 
     person,
       ``(B) the aggregate amounts received by such person,
       ``(C) the product lines to which such amounts relate, the 
     aggregate amounts relating to each such product line, and the 
     net income ratio for each such product line (determined under 
     section 882(g)(3)(B) with respect to the international 
     financial reporting group), and
       ``(D) a summary of any changes in financial accounting 
     methods that affect the computation of any net income ratios 
     described in subparagraph (C).
       ``(c) Definitions and Special Rules.--Terms used in this 
     paragraph that are also used in section 882(g) shall have the 
     same meaning as when used in such section and rules similar 
     to the rules of paragraphs (5) and (6) of such section shall 
     apply for purposes of this paragraph.''.
       (B) Clerical amendment.--The table of sections for subpart 
     A of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6038D the 
     following new item:

``Sec. 6038E. Information with respect to certain payments from 
              domestic corporations to related foreign corporations.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2018.

   Subtitle E--Provisions Related to Possessions of the United States

     SEC. 4401. EXTENSION OF DEDUCTION ALLOWABLE WITH RESPECT TO 
                   INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION 
                   ACTIVITIES IN PUERTO RICO.

       (a) In General.--Section 199(d)(8)(C), prior to its repeal 
     by this Act, is amended--
       (1) by striking ``first 11 taxable years'' and inserting 
     ``first 12 taxable years'', and
       (2) by striking ``January 1, 2017'' and inserting ``January 
     1, 2018''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2016.

     SEC. 4402. EXTENSION OF TEMPORARY INCREASE IN LIMIT ON COVER 
                   OVER OF RUM EXCISE TAXES TO PUERTO RICO AND THE 
                   VIRGIN ISLANDS.

       (a) In General.--Section 7652(f)(1) is amended by striking 
     ``January 1, 2017'' and inserting ``January 1, 2023''.

[[Page H9344]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to distilled spirits brought into the United 
     States after December 31, 2016.

     SEC. 4403. EXTENSION OF AMERICAN SAMOA ECONOMIC DEVELOPMENT 
                   CREDIT.

       (a) In General.--Section 119(d) of division A of the Tax 
     Relief and Health Care Act of 2006 is amended--
       (1) by striking ``January 1, 2017'' each place it appears 
     and inserting ``January 1, 2023'',
       (2) by striking ``first 11 taxable years'' in paragraph (1) 
     and inserting ``first 17 taxable years'', and
       (3) by striking ``first 5 taxable years'' in paragraph (2) 
     and inserting ``first 11 taxable years''.
       (b) Treatment of Certain References.--Section 119(e) of 
     division A of the Tax Relief and Health Care Act of 2006 is 
     amended by adding at the end the following: ``References in 
     this subsection to section 199 of the Internal Revenue Code 
     of 1986 shall be treated as references to such section as in 
     effect before its repeal by the Tax Cuts and Jobs Act.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2016.

                Subtitle F--Other International Reforms

     SEC. 4501. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO 
                   PASSIVE FOREIGN INVESTMENT COMPANY RULES.

       (a) In General.--Section 1297(b)(2)(B) is amended to read 
     as follows:
       ``(B) derived in the active conduct of an insurance 
     business by a qualifying insurance corporation (as defined in 
     subsection (f)),''.
       (b) Qualifying Insurance Corporation Defined.--Section 1297 
     is amended by adding at the end the following new subsection:
       ``(f) Qualifying Insurance Corporation.--For purposes of 
     subsection (b)(2)(B)--
       ``(1) In general.--The term `qualifying insurance 
     corporation' means, with respect to any taxable year, a 
     foreign corporation--
       ``(A) which would be subject to tax under subchapter L if 
     such corporation were a domestic corporation, and
       ``(B) the applicable insurance liabilities of which 
     constitute more than 25 percent of its total assets, 
     determined on the basis of such liabilities and assets as 
     reported on the corporation's applicable financial statement 
     for the last year ending with or within the taxable year.
       ``(2) Alternative facts and circumstances test for certain 
     corporations.--If a corporation fails to qualify as a 
     qualified insurance corporation under paragraph (1) solely 
     because the percentage determined under paragraph (1)(B) is 
     25 percent or less, a United States person that owns stock in 
     such corporation may elect to treat such stock as stock of a 
     qualifying insurance corporation if--
       ``(A) the percentage so determined for the corporation is 
     at least 10 percent, and
       ``(B) under regulations provided by the Secretary, based on 
     the applicable facts and circumstances--
       ``(i) the corporation is predominantly engaged in an 
     insurance business, and
       ``(ii) such failure is due solely to runoff-related or 
     rating-related circumstances involving such insurance 
     business.
       ``(3) Applicable insurance liabilities.--For purposes of 
     this subsection--
       ``(A) In general.--The term `applicable insurance 
     liabilities' means, with respect to any life or property and 
     casualty insurance business--
       ``(i) loss and loss adjustment expenses, and
       ``(ii) reserves (other than deficiency, contingency, or 
     unearned premium reserves) for life and health insurance 
     risks and life and health insurance claims with respect to 
     contracts providing coverage for mortality or morbidity 
     risks.
       ``(B) Limitations on amount of liabilities.--Any amount 
     determined under clause (i) or (ii) of subparagraph (A) shall 
     not exceed the lesser of such amount--
       ``(i) as reported to the applicable insurance regulatory 
     body in the applicable financial statement described in 
     paragraph (4)(A) (or, if less, the amount required by 
     applicable law or regulation), or
       ``(ii) as determined under regulations prescribed by the 
     Secretary.
       ``(4) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable financial statement.--The term `applicable 
     financial statement' means a statement for financial 
     reporting purposes which--
       ``(i) is made on the basis of generally accepted accounting 
     principles,
       ``(ii) is made on the basis of international financial 
     reporting standards, but only if there is no statement that 
     meets the requirement of clause (i), or
       ``(iii) except as otherwise provided by the Secretary in 
     regulations, is the annual statement which is required to be 
     filed with the applicable insurance regulatory body, but only 
     if there is no statement which meets the requirements of 
     clause (i) or (ii).
       ``(B) Applicable insurance regulatory body.--The term 
     `applicable insurance regulatory body' means, with respect to 
     any insurance business, the entity established by law to 
     license, authorize, or regulate such business and to which 
     the statement described in subparagraph (A) is provided.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                     TITLE V--EXEMPT ORGANIZATIONS

               Subtitle A--Unrelated Business Income Tax

     SEC. 5001. CLARIFICATION OF UNRELATED BUSINESS INCOME TAX 
                   TREATMENT OF ENTITIES TREATED AS EXEMPT FROM 
                   TAXATION UNDER SECTION 501(A).

       (a) In General.--Section 511 is amended by adding at the 
     end the following new subsection:
       ``(d) Organizations and Trusts Exempt From Taxation Not 
     Solely by Reason of Section 501(a).--For purposes of 
     subsections (a)(2) and (b)(2), an organization or trust shall 
     not fail to be treated as exempt from taxation under this 
     subtitle by reason of section 501(a) solely because such 
     organization is also so exempt, or excludes amounts from 
     gross income, by reason of any other provision of this 
     title.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 5002. EXCLUSION OF RESEARCH INCOME LIMITED TO PUBLICLY 
                   AVAILABLE RESEARCH.

       (a) In General.--Section 512(b)(9) is amended by striking 
     ``from research'' and inserting ``from such research''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

                        Subtitle B--Excise Taxes

     SEC. 5101. SIMPLIFICATION OF EXCISE TAX ON PRIVATE FOUNDATION 
                   INVESTMENT INCOME.

       (a) Rate Reduction.--Section 4940(a) is amended by striking 
     ``2 percent'' and inserting ``1.4 percent''.
       (b) Repeal of Special Rules for Certain Private 
     Foundations.--Section 4940 is amended by striking subsection 
     (e).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 5102. PRIVATE OPERATING FOUNDATION REQUIREMENTS RELATING 
                   TO OPERATION OF ART MUSEUM.

       (a) In General.--Section 4942(j) is amended by adding at 
     the end the following new paragraph:
       ``(6) Organization operating art museum.--For purposes of 
     this section, the term `operating foundation' shall not 
     include an organization which operates an art museum as a 
     substantial activity unless such museum is open during normal 
     business hours to the public for at least 1,000 hours during 
     the taxable year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 5103. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
                   COLLEGES AND UNIVERSITIES.

       (a) In General.--Chapter 42 is amended by adding at the end 
     the following new subchapter:

   ``Subchapter H--Excise Tax Based on Investment Income of Private 
                       Colleges and Universities

``Sec. 4969. Excise tax based on investment income of private colleges 
              and universities.

     ``SEC. 4969. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE 
                   COLLEGES AND UNIVERSITIES.

       ``(a) Tax Imposed.--There is hereby imposed on each 
     applicable educational institution for the taxable year a tax 
     equal to 1.4 percent of the net investment income of such 
     institution for the taxable year.
       ``(b) Applicable Educational Institution.--For purposes of 
     this subchapter--
       ``(1) In general.--The term `applicable educational 
     institution' means an eligible educational institution (as 
     defined in section 25A(e)(3))--
       ``(A) which has at least 500 students during the preceding 
     taxable year,
       ``(B) which is not described in the first sentence of 
     section 511(a)(2)(B), and
       ``(C) the aggregate fair market value of the assets of 
     which at the end of the preceding taxable year (other than 
     those assets which are used directly in carrying out the 
     institution's exempt purpose) is at least $250,000 per 
     student of the institution.
       ``(2) Students.--For purposes of paragraph (1), the number 
     of students of an institution shall be based on the daily 
     average number of full-time students attending such 
     institution (with part-time students taken into account on a 
     full-time student equivalent basis).
       ``(c) Net Investment Income.--For purposes of this section, 
     net investment income shall be determined under rules similar 
     to the rules of section 4940(c).
       ``(d) Assets and Net Investment Income of Related 
     Organizations.--
       ``(1) In general.--For purposes of subsections (b)(1)(C) 
     and (c), the assets and net investment income of any related 
     organization shall be treated as the assets and net 
     investment income of the eligible educational institution.
       ``(2) Related organization.--For purposes of this 
     subsection, the term `related organization' means, with 
     respect to an eligible educational institution, any 
     organization which--
       ``(A) controls, or is controlled by, such institution,
       ``(B) is controlled by one or more persons that control 
     such institution, or
       ``(C) is a supported organization (as defined in section 
     509(f)(3)), or an organization described in section 
     509(a)(3), during the taxable year with respect to such 
     institution.''.
       (b) Clerical Amendment.--The table of subchapters for 
     chapter 42 is amended by adding at the end the following new 
     item:

   ``subchapter h--excise tax based on investment income of private 
                      colleges and universities''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

     SEC. 5104. EXCEPTION FROM PRIVATE FOUNDATION EXCESS BUSINESS 
                   HOLDING TAX FOR INDEPENDENTLY-OPERATED 
                   PHILANTHROPIC BUSINESS HOLDINGS.

       (a) In General.--Section 4943 is amended by adding at the 
     end the following new subsection:

[[Page H9345]]

       ``(g) Exception for Certain Holdings Limited to 
     Independently-operated Philanthropic Business.--
       ``(1) In general.--Subsection (a) shall not apply with 
     respect to the holdings of a private foundation in any 
     business enterprise which for the taxable year meets--
       ``(A) the ownership requirements of paragraph (2),
       ``(B) the all profits to charity distribution requirement 
     of paragraph (3), and
       ``(C) the independent operation requirements of paragraph 
     (4).
       ``(2) Ownership.--The ownership requirements of this 
     paragraph are met if--
       ``(A) 100 percent of the voting stock in the business 
     enterprise is held by the private foundation at all times 
     during the taxable year, and
       ``(B) all the private foundation's ownership interests in 
     the business enterprise were acquired not by purchase.
       ``(3) All profits to charity.--
       ``(A) In general.--The all profits to charity distribution 
     requirement of this paragraph is met if the business 
     enterprise, not later than 120 days after the close of the 
     taxable year, distributes an amount equal to its net 
     operating income for such taxable year to the private 
     foundation.
       ``(B) Net operating income.--For purposes of this 
     paragraph, the net operating income of any business 
     enterprise for any taxable year is an amount equal to the 
     gross income of the business enterprise for the taxable year, 
     reduced by the sum of--
       ``(i) the deductions allowed by chapter 1 for the taxable 
     year which are directly connected with the production of such 
     income,
       ``(ii) the tax imposed by chapter 1 on the business 
     enterprise for the taxable year, and
       ``(iii) an amount for a reasonable reserve for working 
     capital and other business needs of the business enterprise.
       ``(4) Independent operation.--The independent operation 
     requirements of this paragraph are met if, at all times 
     during the taxable year--
       ``(A) no substantial contributor (as defined in section 
     4958(c)(3)(C)) to the private foundation, or family member of 
     such a contributor (determined under section 4958(f)(4)) is a 
     director, officer, trustee, manager, employee, or contractor 
     of the business enterprise (or an individual having powers or 
     responsibilities similar to any of the foregoing),
       ``(B) at least a majority of the board of directors of the 
     private foundation are not--
       ``(i) also directors or officers of the business 
     enterprise, or
       ``(ii) members of the family (determined under section 
     4958(f)(4)) of a substantial contributor (as defined in 
     section 4958(c)(3)(C)) to the private foundation, and
       ``(C) there is no loan outstanding from the business 
     enterprise to a substantial contributor (as so defined) to 
     the private foundation or a family member of such contributor 
     (as so determined).
       ``(5) Certain deemed private foundations excluded.--This 
     subsection shall not apply to--
       ``(A) any fund or organization treated as a private 
     foundation for purposes of this section by reason of 
     subsection (e) or (f),
       ``(B) any trust described in section 4947(a)(1) (relating 
     to charitable trusts), and
       ``(C) any trust described in section 4947(a)(2) (relating 
     to split-interest trusts).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2017.

       Subtitle C--Requirements for Organizations Exempt From Tax

     SEC. 5201. 501(C)(3) ORGANIZATIONS PERMITTED TO MAKE 
                   STATEMENTS RELATING TO POLITICAL CAMPAIGN IN 
                   ORDINARY COURSE OF ACTIVITIES.

       (a) In General.--Section 501 is amended by adding at the 
     end the following new subsection:
       ``(s) Special Rule Relating to Political Campaign 
     Statements of Organizations Described in Subsection (c)(3).--
       ``(1) In general.--For purposes of subsection (c)(3) and 
     sections 170(c)(2), 2055, 2106, 2522, and 4955, an 
     organization shall not fail to be treated as organized and 
     operated exclusively for a purpose described in subsection 
     (c)(3), nor shall it be deemed to have participated in, or 
     intervened in any political campaign on behalf of (or in 
     opposition to) any candidate for public office, solely 
     because of the content of any statement which--
       ``(A) is made in the ordinary course of the organization's 
     regular and customary activities in carrying out its exempt 
     purpose, and
       ``(B) results in the organization incurring not more than 
     de minimis incremental expenses.
       ``(2) Termination.--Paragraph (1) shall not apply to 
     taxable years beginning after December 31, 2023.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2018.

     SEC. 5202. ADDITIONAL REPORTING REQUIREMENTS FOR DONOR 
                   ADVISED FUND SPONSORING ORGANIZATIONS.

       (a) In General.--Section 6033(k) is amended by striking 
     ``and'' at the end of paragraph (2), by striking the period 
     at the end of paragraph (3), and by adding at the end the 
     following new paragraphs:
       ``(4) indicate the average amount of grants made from such 
     funds during such taxable year (expressed as a percentage of 
     the value of assets held in such funds at the beginning of 
     such taxable year), and
       ``(5) indicate whether the organization has a policy with 
     respect to donor advised funds (as so defined) for frequency 
     and minimum level of distributions.
     Such organization shall include with such return a copy of 
     any policy described in paragraph (5).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply for returns filed for taxable years beginning 
     after December 31, 2017.

  The SPEAKER pro tempore. The bill shall be debatable for 4 hours, 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Ways and Means.
  The gentleman from Texas (Mr. Brady) and the gentleman from 
Massachusetts (Mr. Neal) each will control 2 hours.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. BRADY of Texas. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and to include extraneous material on H.R. 1, the bill 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. BRADY of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, today the full House begins consideration of H.R. 1, the 
Tax Cuts and Jobs Act, historic tax reform legislation that will 
revitalize our economy and provide lasting tax relief to Americans of 
all walks of life.
  Over 30 years have gone by since the last overhaul of our Nation's 
tax system. In that time, our Tax Code has become one of the most 
complicated, unfair, and uncompetitive in the world. Today it is 
impacting nearly every aspect of Americans' lives, and not for the 
better.
  The overwhelming complexity of today's system forces American 
taxpayers to spend billions of hours and billions of dollars every year 
just filing their taxes. Trillions of dollars in carve-outs and 
loopholes give favoritism to Washington special interests while 
hardworking Americans get nothing but frustration.
  With some of the highest tax rates in the world for our businesses, 
we are seeing good-paying American jobs and manufacturing plants move 
overseas one after the other.
  Today, with the Tax Cuts and Jobs Act, we change all of this. With 
this bill, we have an opportunity to deliver the most transformational 
tax overhaul in a generation. But make no mistake, this bill is not 
about us. It is not about Congress. This bill is about--for the first 
time in decades--providing the American people with a simple and fair 
tax system, so much so that nine out of ten Americans will be able to 
file using a simple postcard-style system. It is about finally 
rewarding hard work, growing jobs and paychecks, and allowing Americans 
to keep more of their hard-earned money to use on whatever is important 
to them.
  So if you are one of the millions of Americans who is sick of today's 
Tax Code, you are going to see a remarkable difference. You will see 
the standard deduction doubled, increasing to protect more of every 
paycheck from taxes. You will have a larger child tax credit, providing 
more support as you raise a family and care for your loved ones. More 
Americans will get help raising their kids.
  You will have peace of mind when it comes to life's most important 
investments because this bill preserves tax benefits to help you afford 
your home, to pay your property taxes, and put your kids through 
college.
  So if you are a typical middle-income family of four making $59,000 a 
year, you are going to get a tax cut of nearly $1,200. More than that, 
you are going to enjoy the benefits of a strong, healthy, and growing 
American economy. You are going to see more jobs on Main Street.
  With this bill, our small businesses will finally have low tax rates 
and a fair Tax Code that works with them as they grow and create jobs. 
You are going to see our larger businesses--our iconic American brands 
and our major manufacturers--win throughout the world and create new, 
good-paying jobs right here at home because, with this bill, we are 
going to have one of the most modern and one of the most competitive 
Tax Codes on the planet. That includes lowering our corporate rate from 
35 to 20 percent, which beats many of our international competitors.
  Not only are you going to see jobs stop leaving the United States, 
you are going to see our Nation become a 21st

[[Page H9346]]

century magnet for job creation and business investment.
  With the Tax Cuts and Jobs Act, the American people will see and help 
lead the way in launching a new era of Made in America innovation. In 
the end, the Tax Cuts and Jobs Act is a striking alternative to the 
broken Tax Code we have today. It represents a bold path forward that 
will allow us as a country to break out of the slow-growth status quo 
once and for all.
  Mr. Speaker, the American people have waited years--decades--for a 
fair, simple, and competitive Tax Code. Right now, in this moment, we 
stand on the doorstep of delivering the most sweeping tax overhaul 
since President Reagan's reforms in 1986. Like President Reagan back 
then, President Trump is now putting his full support behind this 
effort.
  Let's pass this historic bill and take another step forward in 
delivering bold, pro-growth, pro-family tax reform for Americans 
throughout this Nation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am delighted the chairman mentioned President Reagan. 
But he made it sound as though President Reagan did tax reform on his 
own. Tax reform in 1986 was done in a bipartisan manner. I guess we 
just leave out Speaker O'Neill and we just leave out Chairman 
Rostenkowski and we just leave out Senator Bradley or Congressman 
Gephardt. The reason that they are left out is because even though it 
was accomplished in 1986, it started in 1982 when Mr. Gephardt and Mr. 
Bradley introduced the first tax reform act.

                              {time}  1700

  What happened in those intervening years?
  The Ways and Means Committee took testimony from 50 witnesses. They 
held 30 markups and an untold number of hearings.
  Contrast that with what we did in the Ways and Means Committee: not 
one witness, not one hearing, not one opportunity to hear from renowned 
economists, labor leaders, or individuals who would have great 
knowledge not just of what happened in 1986, but what could happen in 
this Chamber. Instead, we are going forward with this ill-considered 
effort.
  This is a missed opportunity. This is a bad deal for millions of 
Americans in the middle class. The legislation puts the wealthy, the 
well-connected, and the strong, once again, at the top. Thirty-six 
million Americans are going to receive a tax increase.
  When they talk about tax simplification, take a look at the phase-ins 
and phase-outs of this measure. That is hardly simplification. It is 
greater complexity.
  Oh, by the way, the corporate rate is made permanent. The individual 
issues phase out after 5 years.
  Consider this: 13 million people will lose their health insurance 
based on what Republicans are doing in the United States Senate. They 
are going to lose their healthcare to pay for a tax cut for people at 
the very top.
  Let me just walk you through some of these provisions because I think 
that they deserve our attention and the magnifying glass of critical 
analysis.
  We are being asked tonight to borrow $2.3 trillion to pay for this 
tax cut. This is from people who regularly lecture the American 
electorate on the need for fiscal austerity and balanced budgets.
  When Barack Obama was President, the budget should be balanced. When 
Bill Clinton was President, the budget should be balanced. But in the 
intervening period of time, apparently, we don't have to balance the 
budget.
  Also, $2.3 trillion is being added to the debt and deficits. We are 
witnessing what they are attempting to do because they are going to 
scale back the tax benefit for buying a new home by lowering the cap on 
mortgage interest deduction to $500,000. That is going to lower home 
values.
  H.R. 1 repeals the new markets tax credit. The historic tax credit 
that has transformed American cities is being eliminated. They beat up 
on the municipal bond market.
  As a former mayor, I have some knowledge of the municipal bond 
market.
  They are getting rid of the private activity bonds. Years ago, I 
raised the cap so that we might do more intervention and innovation in 
terms of rebuilding our airports across the country. Private activity 
bonds are a key for financing affordable housing. It is going to go by 
the wayside if they have their way. It is going to have a profound 
impact on the housing market.
  They eliminate several deductions and exclusions that help pay for 
college education, including a deduction for interest on student loans.
  Pay attention to this number. Student debt in America is at $1.3 
trillion, and they are taking away the ability of students to deduct 
that interest on those loans.
  They also impose a new tax on universities and colleges.
  They repeal the above-the-line deduction for teachers' out-of-pocket 
expenses. You know, those teachers who, in September, might be short 
some school supplies and they are good enough to pack the car up and 
bring it to school? We give them a $250 deduction. They are going to 
take it away.
  They create a health tax, an Alzheimer's tax, by repealing the 
medical expense deduction. This change basically scraps a family's 
ability to receive financial relief when dealing with serious medical 
conditions.
  Think of it this way: We celebrate annually the increases in life 
expectancy in America--80 for a male, 81 for a female. But if we are 
going to celebrate that, we also have to acknowledge something else: 
more dementia and more Alzheimer's as people grow older in America. So 
their decision is: Let's take away the ability of individuals to deduct 
those expenses.
  They also want to write off a very important consideration for the 
middle class in their ability to deduct real property tax costs up to 
$10,000.
  Contrast this with what these tax cuts do for the wealthy.
  H.R. 1 repeals the estate tax, which is paid by a small number of 
families in America. They are going to repeal it. I guess the slogan 
becomes: We are rich, and we are not going to take it anymore. That is 
not a tax on Conrad Hilton; it is a tax on Paris Hilton. That is what 
we should be considering with the greater efforts on their side to 
further concentrate wealth.
  By the way, there is an issue I have worked on for decades here, 
successfully, because 27 million middle class families no longer pay 
the alternative minimum tax. But guess what they are going to do? They 
are going to eliminate it for 4.5 million of the richest families in 
America. They are going to take away that payment.
  This is a missed opportunity, Mr. Speaker. This could have been done 
the way Chairman Brady indicated in 1986: hearings, markups, a genuine 
effort to find common ground on this.
  On our side, I have waited all these years to do this. Tonight and 
tomorrow, what you are witnessing is that they need a victory. That is 
what this is about. It is a victory in search of a policy.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BRADY of Texas. Mr. Speaker, I yield myself 10 seconds.
  Mr. Speaker, I will note that, in the district of my good friend from 
Massachusetts, the average family of four making $87,000 will see a tax 
cut of $2,032.
  Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. 
Roskam), chairman of the Tax Policy Subcommittee and a leader in the 
tax reform effort.
  Mr. ROSKAM. Mr. Speaker, my friend from Massachusetts said this is a 
missed opportunity. This is no missed opportunity. What we are 
witnessing is the seizing of an opportunity.

  During the debate, our friends on the other side of the aisle, in 25 
hours of markup last week, offered amendment after amendment after 
amendment. I think it was about 25 amendments.
  Do you know what every one of the amendments did, Mr. Speaker? It 
restored the status quo. It put something back in, put another thing 
back in, defended something else, and so forth. There was no 
comprehensive offer of an amendment in the nature of a substitute that 
would have been transformational.
  There is no exclusion here. We debated. We are now here, and for the 
first time since 1986, we are on the cusp of seizing an opportunity and 
having a transformational moment.
  Here is the transformation:

[[Page H9347]]

  When the Tax Code was last amended 30 years ago--think about it--the 
internet didn't exist as a commercial enterprise. Yes, it has fully 
developed, and we have got a Tax Code that was built for yesterday.
  The global nature of supply chains were nowhere nearly as intricately 
interlinked, yet we have got a Tax Code that was built for yesterday.
  The shared economy--Airbnb, Uber, Lyft, all of those things--didn't 
exist, yet we have got a Tax Code that was built for yesterday.
  Who does the status quo benefit, Mr. Speaker? It benefits the few. It 
benefits the privileged. It benefits the folks at the top of the 
economic scale of things.
  So what this is doing is proposing a very different approach. It says 
we are going to make the United States the most competitive 
jurisdiction in the world by giving business tax relief and welcoming 
back commercial enterprise and growth and prosperity and ingenuity and 
investment--that does what? It creates paychecks and it expands 
opportunities.
  Kids graduated from college shouldn't have to grub around piecing 
together two jobs and living in their parents' basement. How absurd. We 
can do much better. We are the biggest, best economy in the world, and 
it is time we acted like it.
  This is transformational. To lean back and away from this and say, 
oh, this Tax Code is a natural disaster; it is too big and too 
overwhelming and we can't deal with it is nonsense. We fundamentally 
reject that.
  We are going to be measured in the future, Mr. Speaker, by this 
moment. I thank Chairman Brady for his leadership in creating this 
crescendo, because now is the time to act. Let's not defend the status 
quo. Let's move forward, and let's transform this economy.
  Mr. NEAL. Mr. Speaker, I am for maintaining the status quo by 
allowing students to deduct their student interest loans.
  Mr. Speaker, I yield 2 minutes to the gentlewoman from Illinois (Ms. 
Schakowsky).
  Ms. SCHAKOWSKY. Mr. Speaker, everyone knows that the Republican tax 
scam gives massive tax cuts to millionaires and billionaires and 
corporations, and they do it, in part, by increasing healthcare costs 
for millions of Americans. Over 36 million middle class households will 
see a tax hike under this bill.
  Families with big medical bills will take the hardest hit. That is 
because Americans will no longer be able to deduct major medical 
expenses such as cancer treatment or Alzheimer's from their Federal 
income taxes.
  This is a middle class tax hike. Seven in ten households using the 
medical expense deduction make under $75,000 a year. Repealing the 
deduction would especially hurt seniors who use it for long-term care 
expenses.
  The bill takes a second swipe at American seniors and people with 
disabilities. According to the Congressional Budget Office, by not 
paying for tax cuts for the wealthy, Republicans would trigger 
automatic cuts to Medicare, slashing $25 billion from Medicare in 2018 
alone.
  But the $25 billion cut to Medicare is just the beginning. The same 
Republican budget that cleared the way for $1.5 trillion in tax cuts 
for the superwealthy proposed cutting Medicare and Medicaid by, no 
coincidence, $1.5 trillion.
  Now, Senate Republicans want to pay for additional tax cuts by 
repealing a key part of the Affordable Care Act. This change would 
increase the number of uninsured Americans by 13 million and increase 
premiums by 10 percent.
  Middle class families, people with disabilities, and seniors 
struggling to afford healthcare should not foot the bill for 
billionaires to get a tax cut. I urge my colleagues to make the healthy 
choice for Americans and vote against the Republican tax scam.
  Mr. BRADY of Texas. Mr. Speaker, I yield 3 minutes to the gentleman 
from Washington (Mr. Reichert), chairman of the Trade Subcommittee and 
a champion for working families.

  Mr. REICHERT. Mr. Speaker, I thank the chairman for yielding and for 
his leadership in bringing this tough piece of legislation. I mean 
tough in the sense that it has taken years to put this together and at 
least 40 hearings on the legislation that is presented today.
  Mr. Speaker, when I travel my district from the suburbs of Auburn, 
Washington, to the orchards of Chelan, I hear the same thing from 
middle-income, hardworking families, from the apple grower in 
Wenatchee, the tech entrepreneur in Issaquah, and the growing family in 
Maple Valley, Washington: They want to keep more of their hard-earned 
money, plan for the future, and they want to have some certainty in 
their future. They want to care for those they love.
  They deserve a plan that gives them the opportunity at their first 
job or a better job. They deserve a chance to decide how they want to 
spend their money.
  It is their money. Why wouldn't they deserve that chance?
  They want a Tax Code that is simpler, fairer, and that works for 
them. They want the same bright future for their children.
  This is a bill that is not just a tax bill, but it is a bill that 
reignites, in my opinion, the belief in the American Dream.
  In the Eighth District of Washington State, the median income family 
of four will receive a tax cut of $3,654. In Washington State, 21,875 
new jobs will be created.
  This plan will change lives. It will energize our economy and get our 
economy booming again.
  As we went through this process, I asked myself several questions 
over the last few years, to be honest with you. Here are the questions:
  Will this plan make the American economy boom again?
  Will this plan create jobs in America?
  Will this plan increase paychecks?
  Will this plan put more money in the pockets of hardworking 
Americans?
  Will this plan make the Tax Code fairer and simpler?
  The answer I came to and I think that Americans will come to, Mr. 
Speaker, is a resounding ``yes.''

                              {time}  1715

  Mr. NEAL. Mr. Speaker, this bill phases out the deductions that 
benefit middle-income families.
  Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. 
Schneider).
  Mr. SCHNEIDER. Mr. Speaker, we absolutely must reform our outdated 
and overly complex Tax Code, but the current bill this House is 
considering is not the way to do it. I have heard from constituents and 
local elected officials about how this plan will hurt them and their 
communities.
  Rather than lifting our economy and making our local communities 
stronger, this bill before us is an unfair and fiscally reckless step 
backwards. My constituents are deeply concerned with the restrictions 
placed on the State and local tax, or SALT, deduction. This puts a real 
burden on the residents of States like Illinois.
  One in three Illinois taxpayers uses the SALT deduction. Let's be 
clear. The SALT deduction is not a tax break for the very wealthy. It 
is used by the hardworking families we need to be helping with tax 
reform, not hurting.
  I am also profoundly concerned about what this reform means for our 
growing debt. An additional $2.3 trillion in debt is irresponsible in 
the extreme, burdening our children and our grandchildren with the 
consequences.
  Now, with the most recent Senate version, the GOP is taking aim at 
the Affordable Care Act, repealing the individual mandate without a 
workable replacement to further reduce enrollment in the individual 
health insurance markets, making coverage more expensive for millions 
of Americans and their families.
  There are things we can do to improve the ACA. For example, delaying 
the looming taxes on medical devices and health insurance premiums has 
broad bipartisan support. We should be focused on solutions like these 
that improve, not dismantle, the ACA.
  Despite our willingness to work across the aisle, there was virtually 
no bipartisan engagement on the plan this House is rushing to vote on. 
It is not too late to change course.
  I urge my colleagues to take the time for full deliberation in a 
complete and bipartisan process. Together, we can produce real tax 
reform that is fiscally responsible, prioritizes the middle class, and 
grows our economy for the next generation.
  Mr. BRADY of Texas. Mr. Speaker, I yield 3 minutes to the gentleman 
from

[[Page H9348]]

Nebraska (Mr. Smith), chairman of the Human Resources Subcommittee and 
a champion for agriculture.
  Mr. SMITH of Nebraska. Mr. Speaker, I thank Chairman Brady for the 
time and for his leadership as we continue our efforts to pass this 
historic legislation.
  Mr. Speaker, after nearly 7 years of work in the Ways and Means 
Committee and more than 31 years since our last true tax reform, many 
hearings along the way, it is time to pass historic comprehensive tax 
reform. Our current Tax Code is antiquated, as we know. It is complex, 
and it ignores many of the improvements and competitiveness, which have 
been adopted by every other major economy worldwide.
  The time for tax reform is now. Others have already outlined many of 
the highlights of this bill, but I think they warrant mentioning again.
  Simplified compliance and rates for individuals and families means 
more than 95 percent of Americans will be able to file their returns on 
a postcard. Lower rates for small businesses recognize the important 
role they play as job creators in our economy. A 20 percent top 
corporate tax rate and transitioning to a territorial system will 
ensure our businesses remain competitive with the rest of the world.
  In addition to lower rates, expanded expensing will further encourage 
entrepreneurs to invest in capital to grow their businesses, and full 
repeal of the death tax, including the continuation of step-up in 
basis, will ensure our Nation's farmers, ranchers, and small 
manufacturers can continue creating opportunity for generations to come 
without the threat of double taxation.
  Our Tax Code shouldn't reward businesses and investors because they 
hired accountants and lawyers to help them avoid taxes, and the estate 
tax does exactly that right now. I think it is equally important to 
praise what the bill leaves alone in the Tax Code. With our impending 
entitlement crisis, we want Americans to save everything they can for 
retirement. This bill leaves those incentives intact.
  It also excludes a proposal, which had initially been included in the 
bill, to apply self-employment taxes to rental income. This could have 
had serious repercussions for ag land rental, and I am glad it was 
dropped. And I particularly appreciate how this bill continues the 
deductibility of State and local taxes for businesses, including 
farmers and ranchers.
  U.S. producers have made great strides in increasing production on a 
per-acre basis, but land remains a primary input as they work to feed 
the world. Ensuring the property tax on land and production remains 
deductible as business cost is vital to their continued success.
  This is the moment to finally provide the tax relief Americans have 
been asking for and to make our country competitive again. I urge the 
passage of this progrowth bill.
  Mr. NEAL. Mr. Speaker, more than 100,000 Nebraska households making 
under $137,000 a year will see a tax increase under this bill.
  Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Capuano), my good friend from Somerville, Massachusetts.
  Mr. CAPUANO. Mr. Speaker, I thank the gentleman for yielding. I am a 
former tax lawyer. My wife is a practicing CPA. We have heard this 
before: simplification is going to help. It has never put a single 
accountant out of business, and it won't do it now. It is another part 
of the big scam going on.
  Why? Sure, I will probably get a tax break out of this; some of my 
constituents will. But what do we get in return? We don't get 
healthcare. We don't get better roads. We don't get better education. 
But we do provide a $5,000 to $10,000 debt for our children. We do tell 
our seniors: Too bad if you have a heart attack or cancer; no more 
medical deductions for you. We tell our current graduate students: Too 
bad, no deductions for you. And on and on and on.

  And by the way, we have a new provision in here that I like to call 
the ``Dynasty Protection Act.'' Why? Because if you have a dynasty, if 
you are worth $30-, $40-, $50-, $100 million, your children get to keep 
it all. Not because they have done anything, but because they won the 
genetic lottery. Good for them.
  And then if they do get up off their butt and get a job, maybe start 
a hedge fund with all the money they inherited, they get another tax 
credit by not touching the special tax deals--you have the hedge fund 
managers. And if they earn a little extra money, they get to keep more 
of it because there is no alternative minimum tax left.
  I know that President Trump will particularly appreciate that 
provision because we all know--the only tax return we have seen--the 
AMT cost him $31 million. So thank you from the rich.
  Now, I don't have any problem with people being wealthy. I represent 
many of them. They don't want this tax cut because they know it is bad 
for America.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Mr. Speaker, I yield an additional 15 seconds to the 
gentleman from Massachusetts.
  Mr. CAPUANO. Mr. Speaker, as a final insult, the corporate tax you 
have encourages businesses to send jobs offshore by not taxing profits 
made offshore when they expand jobs, if they do. They will do it 
offshore, not here in America.
  Mr. BRADY of Texas. Mr. Speaker, Massachusetts will gain 24,000 jobs; 
families will see a $3,000 increase in their paychecks.
  Mr. Speaker, I yield 3 minutes to the gentleman from Minnesota (Mr. 
Paulsen), a key member of our committee and a leader in technology and 
employee stock options.
  Mr. PAULSEN. Mr. Speaker, for the first time in a generation, middle-
income and hardworking Americans are closer to a Tax Code that works 
for them rather than against them.
  It has been 31 long years since we last reformed our broken tax 
system, and, in that time, our Tax Code has become one of the most 
complicated, unfair, and uncompetitive in the world. It has led to a 
stagnant economy and sluggish growth. American businesses of all sizes 
have some of the highest tax rates in the world, sending our jobs, our 
manufacturing, our research, and our headquarters overseas.
  And you know, the economic recovery hasn't been all that great since 
the Great Recession--not that great for a lot of Americans. Half the 
population is living paycheck to paycheck. Many either have or are at 
risk of having a lower standard of living than their parents. Young 
people, like my daughter's generation, will go backwards if this 
country is not fundamentally more competitive. And then seniors and 
those baby boomers preparing for retirement, who have a lifetime of 
savings, are now at risk without a growing economy.
  The reforms in this bill today will help real people with tax cuts 
aimed to help middle-income families that want to save for the future 
and improve their own standard of living. The bill focuses on helping 
small businesses, Main Street Minnesota businesses with a simpler, 
clearer, and fairer Tax Code that is critical for job creation. It 
lowers small business rates to 25 percent and even provides a 9 percent 
rate for the smallest Main Street startups.
  Modernizing the Tax Code is essential to allowing American businesses 
of all sizes to compete around the world and bring those jobs home. We 
need to be able to sell where the customers are, and 95 percent of the 
world's customers are outside the United States. The international 
reforms in this bill will incentivize businesses to bring their money 
home to invest in our communities.
  And importantly, this bill includes bipartisan legislation that I 
authored, the Empowering Employees through Stock Ownership Act, which 
helps those entrepreneurs and startups attract and retain talent. 
Hardworking taxpayers, Mr. Speaker, deserve a Tax Code that is simpler, 
flatter, and fairer so that every American family and employer can file 
their taxes without having to hire an Army of lawyers and accountants.
  Mr. Speaker, we have a choice. The choice is Americans. We can either 
truly grow the economy and put ourselves back on the path to real 
prosperity, or we can continue the actual trend we have right now of 
weak economic growth, which only benefits the few and the privileged 
and will do nothing for regular folks when the next economic downturn 
hits.
  Tax reform for me is about one thing and one thing only. It is about 
restoring hope for a prosperous future for

[[Page H9349]]

ourselves, our parents, and, most importantly, our children. I want to 
thank the chairman for his guiding leadership through this effort.
  Mr. NEAL. Mr. Speaker, 40 percent of Mr. Paulsen's constituents claim 
the SALT deduction, a benefit of over $15,000. They are lucky to break 
even after this tax bill.
  Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. 
Kind), a valued member of the Ways and Means Committee.
  Mr. KIND. Mr. Speaker, there are certain phrases that we have learned 
to grow to accept with great suspicion: The check is in the mail. It is 
not you; it is me. Don't worry, I will respect you in the morning. I 
have had just a few drinks; I am fine with driving.
  And now we have to add to that: Don't worry. Large tax cuts for the 
most wealthy will pay for themselves, and I am a fiscally conservative 
Republican who cares about debt and deficits.
  The Joint Committee on Taxation has determined that, with interest 
payments, this bill will add over $2.3 trillion, with a T, to our 
national debt over th next 10 years. That is why last week, in 
committee, I was offering an amendment that would expand the endangered 
species list to include fiscally conservative Republicans because your 
vote on this bill will make you extinct.

  And what is unfortunate is, unlike past tax cuts that weren't paid 
for, we have run out of time. We no longer have the luxury of time to 
recover from a huge fiscal mistake, not with 70 million baby boomers 
beginning their massive retirement--10,000 a day joining Social 
Security and Medicare. Those programs and the solvency of Social 
Security and Medicare will be in jeopardy with another $2.3 trillion of 
debt over the next 10 years.
  And what is unfortunate, it didn't have to be this way. There was 
bipartisan interest in simplifying the Code, making it more 
competitive, broadening the base, making it fair for working families 
and small businesses and family farmers, but doing it in a fiscally 
responsible way.
  Asking 34 million Americans to accept a tax increase to pay for a 43 
percent marginal rate reduction to the largest companies is hardly 
responsible, and it is hardly fair. I encourage my colleagues to let us 
take a different approach and reject this bill.
  Mr. BRADY of Texas. Mr. Speaker, I yield 2 minutes to the gentlewoman 
from Tennessee (Mrs. Black), the chair of the Budget Committee who 
cleared the path for this progrowth tax reform.
  Mrs. BLACK. Mr. Speaker, I thank the chairman for his endless hours 
of work listening to everyday people, listening to small businesses, 
listening to large businesses, listening to how what we put in this 
bill was going to affect the American people who, at the end of the 
day, are going to be the winners.
  So it has been more than three decades since Congress has worked with 
the White House to modernize our Nation's very confusing and 
complicated tax system. Just ask anybody who has filed their taxes on 
their own.
  But we are closer to changing that day with H.R. 1, the Tax Cuts and 
Jobs Act. And with this budget, with the budget passed in both Chambers 
and following last week's productive markup in our House Ways and Means 
Committee, tax relief is on the horizon.
  With this legislation, Republicans clearly recognize the need to do 
something about our heavy tax burden weighing down the hardworking 
Americans and holding back job creators.
  We also recognize the need to bring simplicity to the Tax Code. In 
our tax reform plan, we will help low- and middle-income Americans see 
more of their hard-earned paychecks by lowering the tax rates and 
nearly doubling the standard deduction for individuals and married 
couples.

                              {time}  1730

  For instance, for an average middle class family of four, that 
translates to a $1,200 tax cut. Now, I will tell you, that is real 
money.
  We also establish a new family credit that raises the child tax 
credit and introduces new credits for family members and other 
dependents.
  The Tax Code will also become less confusing, making it possible for 
most Americans to file their taxes on a single postcard.
  Our plan, rightly, provides tax relief for job creators, empowering 
entrepreneurs and small businesses to continue opening, operating, and 
expanding on Main Street.
  For my home State of Tennessee, H.R. 1 will allow families to see an 
estimated $2,200 increase in wages. Again, that is real money.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. BRADY of Texas. Mr. Speaker, I yield an additional 15 seconds to 
the gentlewoman.
  Mrs. BLACK. According to the nonpartisan Tax Foundation, this bill 
would also mean 20,000 new jobs for my State. This will provide a 
welcome jolt to our economy, which is badly needed following eight 
lackluster years under the Obama administration.
  Without question, enacting tax reform is a challenge, but the 
benefits of seeing it through will be felt for generations to come.
  Mr. Speaker, I am proud to support this legislation, and I urge my 
colleagues to do the same. We cannot miss this historic opportunity.
  Mr. NEAL. Mr. Speaker, over 350,000 Tennessee households making under 
$132,000 will see a tax increase with this bill.
  Mr. Speaker, I yield 2 minutes to the gentleman from Connecticut (Mr. 
Courtney), a leader on the Higher Education Subcommittee and well known 
nationally as a spokesperson on education issues.
  Mr. COURTNEY. Mr. Speaker, I rise in strong opposition to H.R. 1.
  Mr. Speaker, I thank Mr. Neal for his tireless leadership pointing 
out the trail of broken promises that are in this bill for middle class 
families, who will pay dearly with higher costs for healthcare, home 
ownership, and, in many cases, Federal taxes.
  I would like to zero in for a minute during National Apprenticeship 
Week on the broken promise that the bill represents to growing the U.S. 
economy, which has a shortage of skilled workers. The obliteration of 
the student loan interest deduction, which will add $24 billion to the 
cost of higher education; the taxation of graduate students' tuition 
waivers, 60 percent of which are concentrated in STEM curricula; and 
the elimination of tax-free employer-funded tuition assistance, to 
enhance workplace skills, often using apprenticeship programs, moves 
this country in exactly the wrong direction to close the skills gap in 
our workforce, which we all know every Member in this body has heard 
about from employers back home.
  Indeed, America's CEOs told the President last February at a White 
House manufacturing summit: Jobs exist, skills don't.
  In fact, the Trump's Labor Department reported 6.1 million job 
openings in the month of September, a near record high.
  Sadly, this antigrowth tax bill robs American job seekers and 
employers of the tools to fill those jobs, ironically, during National 
Apprenticeship Week.
  Mr. Speaker, I urge the Members of this body to vote ``no.''
  Mr. BRADY of Texas. Mr. Speaker, I yield 3 minutes to the gentleman 
from Pennsylvania (Mr. Meehan), one of the key members of our Tax 
Policy Subcommittee and a champion for working men and women.
  Mr. MEEHAN. Mr. Speaker, I rise today to urge my colleagues to take 
advantage of this historic opportunity that we have before us.
  As I travel across my district, I hear from families that are 
struggling to get ahead. I hear from families that can't make ends meet 
most months. They don't have a whole lot left over. In fact, 63 percent 
of American families don't have $500 to handle an emergency. I hear 
from businesses that say they would love to be able to hire, expand, or 
buy that new piece of equipment, but they just don't have the cash to 
do it.
  Our Tax Code is taking too many dollars from Pennsylvania and sending 
it to Washington. It is sending good-paying, middle class jobs overseas 
and it is holding our economy back, making it harder for so many to get 
ahead.
  This is our chance to change the status quo. We have an opportunity 
to jump-start our economy and let more hardworking families keep what 
they earn.
  We rewrite the Tax Code for American job creators, taking away the 
incentives to send jobs overseas and dollars offshore. Putting those 
dollars to

[[Page H9350]]

work will put more Americans to work as businesses expand and invest 
here at home--American tax cuts for American workers with American 
jobs.
  We give these small businesses a break--the mom-and-pop shops that 
employ Pennsylvanians. We give entrepreneurs, who have so much 
innovation and creativity, a wider cushion to take a risk. We are 
putting more money in the pockets of hardworking families. We are 
doubling the standard deduction, which means that 94 percent of 
taxpayers won't need to itemize at all. Let me say that again: 94 
percent of taxpayers won't even need to itemize at all.
  By expanding the child tax credit and creating a new $300 credit for 
parents and nondependent children, we put an additional $1,800 back in 
the pockets of every family of four. That is money that they can use as 
they see fit. We have streamlined the maze of education tax credits, 
and included in my bipartisan bill are apprenticeship programs that can 
now be made affordable.
  The taxpayers I hear from say they want to pay less in taxes, not 
more. If limiting some deductions and lowering your rates means your 
tax bill is lower at the end of the year, that is a good deal for 
taxpayers.
  We owe it to the hardworking, taxpaying families we represent to 
deliver that.
  I urge my colleagues to support the Tax Cuts and Jobs Act.
  Mr. NEAL. Mr. Speaker, all of those projects in Philadelphia are 
about to come to an end with the abolition of the historic tax credit.
  Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. 
Sherman), who, incidentally, is a CPA and a tax attorney
  Mr. SHERMAN. Mr. Speaker, by 2027, roughly one-third of middle class 
families will be paying more in taxes, and that average family will be 
paying $1,300 more.
  The personal exemption, worth $4,150 per person in a family, that is 
$21,000 for a family of five, and they take it away.
  The moving expense deduction, if you have to move to keep your job, 
you don't get to deduct that. But if you move a factory to China, you 
get to deduct all of the moving expenses.
  The student loan debt, they won't let you deduct it.
  As for the effect on simplicity, my CPA and tax law homeboys are 
going to be rolling in big dollars. Just from the provisions that 
define the difference between personal service income, passive income, 
active business income, the litigation and planning opportunities--talk 
about complexity--it is all there, and my homeboys love it.
  We currently deduct extraordinary medical expenses. That is important 
to those with disabilities and families with children with special 
needs. They wipe it out.
  The extraordinary casualty loss deduction, they wipe out. That is 
very important to people who face floods and fires.
  They change the rules so that we don't have adequate indexing for 
inflation, so everybody is pushed into a higher tax bracket by 
inflation, except those at the very top; they are protected.
  But look at the effect on our Nation's economy. This is a job-
killing, deficit-exploding, growth-reducing disaster. Look at what 
happened to Kansas. These policies have already devastated one of our 
States.
  You are going to be taking $1.5 trillion out of the money available 
for business investment. The Federal Government will come in and borrow 
all of that money, leaving less money for factories, farms, and homes.
  As Ron Kind pointed out, there is an extra $800 billion of interest 
on top of that just in the next 10 years. Keep in mind, this increase 
in our debt is forever. Your grandchildren will be paying taxes on this 
debt.
  Look at the chart. We had the policies of Ronald Reagan from 1988--
when his 1986 law became effective--through 1993, and we had 2.67 
percent growth. In 1994, we got Clinton tax policies and we exploded to 
over 4 percent annual growth. Then with George W. Bush, we dropped to 
1.7 percent growth. Then when we adopted Obama tax policies, which are 
in force today, we are back up to 2.2 percent economic growth.
  Which policies give you economic growth?
  Let's look internationally. You can manufacture and pay zero percent 
on the profits you earn by a factory, but only if it is a foreign 
factory.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Mr. Speaker, I yield an additional 15 seconds to the 
gentleman.
  Mr. SHERMAN. Finally, Mr. Zandi, one of the top economists in the 
country, testified before our Financial Services Committee that this 
bill means double-digit declines in the value of homes in American 
metropolitan areas.
  What effect does that have on the economy? Who is going to go out and 
spend in the middle class when they are told that the equity in their 
home has been virtually wiped out?
  So you can vote against this bill because it is unfair, or you can 
vote against this bill because it will be a crushing weight on our 
economy, but don't engage in the fantasy that you can cut taxes and 
make it up through ``economic growth.''
  Mr. BRADY of Texas. Mr. Speaker, under tax reform, California will 
grow 111,000 new jobs, and paychecks will increase by nearly $3,000.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from South Dakota 
(Mrs. Noem), a champion of family-owned farms and businesses.
  Mrs. NOEM. Mr. Speaker, I thank the chairman for yielding.
  Mr. Speaker, today I rise in support of H.R. 1, the Tax Cuts and Jobs 
Act of 2017.
  We have worked hours--literally hundreds of hours--on this 
legislation, and I commend Chairman Brady and the staff of the Ways and 
Means Committee for all of their hard work.
  Mr. Speaker, we have gone through this bill line by line. I have 
personally fought for policies and ideas in this bill to make sure that 
it works for families, to make sure that it increases wages, and 
creates more opportunity for folks all across America.
  My goal in this was two-fold. Number one, I wanted to strengthen 
families. Number two, I wanted to create a stronger future for America. 
This tax reform package puts us well on our way to achieving these 
goals and achieving some remarkable wins for the American people.
  I say this because this plan simplifies the Tax Code. It simplifies 
it to the point that most people can file their taxes on a form the 
size of a postcard. It also gives significantly lower rates. It 
dramatically expands the child tax credit. It keeps the child care 
credit. It protects flexible spending benefits.
  These provisions for working families are important to me. My home 
State of South Dakota has the highest rate of working families in the 
Nation. The moms and dads in my State aren't working just for fun. They 
are working to pay the bills to provide for their families. They need 
money to put food on the table and to put a roof over their kids' 
heads. These provisions are going to help them pay their bills, take 
care of their kids, go to work, and maybe, just maybe, get a little 
extra money that they can take their kids off for a weekend and do 
something fun together. That is important.
  When these kids grow up, I want them to be able to find good, high-
paying jobs. So I fought hard to make sure that our farmers, our 
ranchers, and our small businesses could thrive under this new Tax 
Code. We got some pretty big wins for those folks.
  In this bill, we fully and permanently repeal the death tax--that un-
American, unfair double tax. W give people better expensing tools and 
we drive down the rate for small businesses. If we are going to make 
sure that our kids can thrive, we need to create opportunities for them 
to make sure that they can do it right here in America, and this tax 
reform package lets hardworking job creators do that better.

  Mr. Speaker, I understand that no tax reform plan is going to be 
perfect in everybody's eyes, but this proposal is a strong step 
forward. It reflects real, sustainable policy changes that are going to 
let people keep more money in their pockets.
  I have heard from many throughout this debate, who have spoken up 
against these tax cuts and these reforms--people who trust the 
government with this money more than they trust the American people.
  Mr. Speaker, I fundamentally disagree. The American people deserve 
more control over their paychecks.

[[Page H9351]]

They have worked hard to earn that money. They have taken time away 
from their families to earn that money. They ought to be the ones 
deciding how, where, and when to spend it.
  So for the purposes of strengthening families and offering folks a 
stronger future here in America, I urge my colleagues to support H.R. 
1.
  Mr. NEAL. Mr. Speaker, 38,000 South Dakota households making less 
than $113,000 a year will see a tax increase under this legislation.
  Mr. Speaker, I yield 2 minutes to the highly regarded gentleman from 
Virginia (Mr. Connolly), the son of Massachusetts and my friend.
  Mr. CONNOLLY. Mr. Speaker, I thank my good friend, the gentleman from 
Massachusetts (Mr. Neal) for yielding me this time.
  Mr. Speaker, you can put all the lipstick you want on this pig, and 
it is still a pig.
  Let's be honest, this isn't tax reform. This is a cut on taxes for 
corporate America, the corporate friends and my friends on the other 
side of the aisle, and they had to squeeze all kinds of things in to 
justify it and pay for it. That is why the middle class is going to 
suffer. That is why their kids in college are going to start losing 
their ability to deduct interest on student loans, and they are going 
to pay taxes on waived tuition when they get a teaching assistant 
position or a benefit from the university.

                              {time}  1745

  That is why your local municipalities are going to lose tax exemption 
for private activity bonds that fund tens of billions of dollars of 
public improvements all over the United States.
  That is why 8.8 million Americans are going to lose the ability to 
deduct medical costs. Good luck to families who have to put people in 
nursing homes for long-term care, patients suffering dementia. How will 
they work that financing out when they lose this deduction, and how 
will they feel when they know the reason they are losing this deduction 
is to finance a corporate tax rate?
  What about homeowners losing the ability to deduct mortgage interest 
or to have it capped artificially so corporate America can get the 
biggest tax cut in history?
  And, by the way, they get to continue to deduct State and local taxes 
and other kinds of financial interest-related expenses, but not you, 
not you the middle class.
  It adds $1.5 trillion, and that is with dynamic scoring. Dynamic 
scoring is another way of saying: We kind of fudged the real number. It 
is more than that, at least $200 billion more than that.
  I thought my friends on the other side of the aisle were fiscal hawks 
dedicated to making sure we didn't have deficits.
  This is an inconsistent bill. This is going to harm middle class 
America.
  Mr. Speaker, I urge my colleagues to defeat this bill, and let's 
start over in a bipartisan way.
  Mr. BRADY of Texas. Mr. Speaker, the gentleman's constituents in 
Virginia's District 11, with average household earnings of $136,000, 
with two kids, will see a tax cut of $5,008.
  Mr. Speaker, I yield 2 minutes to the gentleman from Kentucky (Mr. 
Barr).
  Mr. BARR. Mr. Speaker, I rise today to engage in a colloquy.
  Mr. Speaker, I want to first commend Chairman Brady and the Ways and 
Means Committee for their outstanding work on the Tax Cuts and Jobs 
Act, which will provide tax relief to millions of hardworking families 
and businesses.
  I would like to address a small provision in the bill that 
inadvertently impacts Berea College, a small private college in Berea, 
Kentucky, that is a member of the federally recognized Work Colleges 
Consortium.
  Work colleges, by definition, do not charge their students tuition, 
and they also require their students to hold jobs. For over 125 years, 
Berea College has fulfilled its mission of providing a tuition-free 
education to students with limited economic resources, primarily from 
Appalachia, and who are often first-generation college students. Berea 
pairs its strong academics with a student labor program, honoring the 
dignity and utility of all work.
  Berea could not fulfill its unique and special mission of providing 
free tuition to all students without a healthy endowment. The Tax Cuts 
and Jobs Act includes a 1.4 percent excise tax on private college 
endowments over $500,000 per student. There are two federally 
recognized work colleges with endowments above this level, including 
Berea College in my district.
  I was pleased to learn that the Senate version of the bill exempts 
schools with fewer than 500 tuition-paying students from the excise 
tax. This provision would effectively exempt work colleges from the 
tax, because they do not charge tuition.
  I understand it was never the committee's intent for this legislation 
to negatively impact work colleges that use their endowments to provide 
tuition-free education. In fact, I understand the intended purpose of 
the excise tax is to encourage colleges to use their endowments to keep 
college costs down. In this case, Berea College uses its endowments to 
defray 100 percent of the cost of tuition.
  Mr. Speaker, I thank the chairman for his willingness to work with me 
on a solution in conference, either acceding to the Senate position or 
another mutually accepted solution that exempts work colleges and 
allows them to continue their unique mission.
  Mr. BRADY of Texas. Will the gentleman yield?
  Mr. BARR. I yield to the gentleman from Texas.
  Mr. BRADY of Texas. Mr. Speaker, I wish to thank the gentleman from 
Kentucky for his leadership here.
  Mr. Speaker, we will work together for a mutually accepted solution 
to make sure we exempt work colleges to use their endowments to provide 
tuition-free education.
  Mr. BARR. Mr. Speaker, I thank the gentleman.
  Mr. NEAL. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
California (Ms. Lee), a well-regarded champion of middle-income people.
  Ms. LEE. Mr. Speaker, I thank the gentleman for yielding and also for 
his tremendous leadership on the Ways and Means Committee and for 
really telling the truth.
  Mr. Speaker, I rise in strong opposition to this bill, H.R. 1, which 
really is a tax scam. Republicans are really trying to pull a fast one 
on the American people.
  This bill would steal from the hard-earned paychecks of millions of 
middle-income families to line the pockets of billionaires and 
corporations. In fact, 80 percent of the tax breaks would go to the top 
1 percent. It also eliminates student loan deductions and eradicates 
medical expense deductions.
  If this isn't cruel enough, this bill makes it easier for 
corporations to ship jobs overseas, so people will actually lose their 
jobs. This tax plan does nothing to create better jobs or better wages 
or a better future for the middle class. It does just the opposite.
  In my home State of California, one in five middle-income families 
will see a tax hike next year. The State and local tax deduction would 
be particularly hard on my State, where 6.1 million households will see 
a tax increase.
  Public sector jobs, like firefighters, will lose their jobs, not to 
mention the vital services our most vulnerable will need. These will be 
cut.
  This bill really is a disgrace. Stealing from families who need help 
the most to give more to donors--millionaires and billionaires and 
corporations--this is really a new low.
  Thirty-six million middle-income households, working families, will 
pay more in taxes.
  We can't forget, also, that this tax scam sets the stage, really, for 
a heartless $1.5 trillion cut to Medicare and Medicaid, as we saw in 
the Republican budget.
  We need to reject this mean-spirited tax scam and vote ``no'' and 
then come back and look at how we can support middle-income families, 
working families, so everyone has a chance and an opportunity at the 
American Dream.
  Mr. BRADY of Texas. Mr. Speaker, I would note that the constituents 
in California's 13th District, a median family of four earning $107,000 
will see a tax cut of $2,589.
  Mr. Speaker, I yield 2 minutes to the gentleman from West Virginia 
(Mr. McKinley).
  Mr. McKINLEY. Mr. Speaker, I thank the gentleman for this opportunity 
to discuss the historic preservation tax credits that historically have 
stimulated nearly $150 billion in private sector investment.

[[Page H9352]]

  As we have discussed over the last month, the tax credit is 
critically important for economic development and revitalization, 
especially in small, rural areas of this country. Without the credit, 
projects that transform communities in all 50 States, from West 
Virginia to Texas, to Wisconsin, simply will not happen.
  Mr. Speaker, the chairman's word means something to me, so I am 
asking for his commitment to continue working with me to ensure that 
the Federal historic preservation tax credit is preserved in the final 
tax reform package.
  Mr. BRADY of Texas. Will the gentleman yield?
  Mr. McKINLEY. I yield to the gentleman from Texas.
  Mr. BRADY of Texas. Mr. Speaker, I thank Mr. McKinley for his passion 
about making sure our smaller communities can revitalize and grow and 
about the role of the historic preservation tax credit in doing that. I 
commit to working with him and continuing to work with him on this 
issue because I know the importance of it.
  Mr. McKINLEY. Mr. Speaker, I thank the chairman and I look forward to 
working with him as well. We have had a good working relationship over 
the years. I want to continue this process because I understand this 
process. I will be voting to continue the process in anticipation that 
it will be in the final bill.
  Mr. NEAL. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Massachusetts (Ms. Clark), a valued member of our delegation.
  Ms. CLARK of Massachusetts. Mr. Speaker, I thank our ranking member 
for yielding and for all of his incredible work on this bill.
  Mr. Speaker, we were promised tax reform, but that is not what we are 
seeing in this bill. In fact, you don't have to dig far into this 429-
page bill to see that it is a con, a cynical bait and switch for 
families at home.
  When this bill was released just 2 weeks ago, I started getting calls 
from families at home wanting to know how it would affect them. We dug 
into it, and I want to share just a few of those examples, but it 
didn't take long to see why it was developed in secret and why it is 
being rushed to a vote.
  On page 254, Republicans propose getting rid of a program that helps 
veterans find work when they come home. 300,000 veterans have been 
helped by the work opportunity tax credit. The repeal of this provision 
to reduce taxes for the very wealthiest is a coldhearted way to say 
thank you for your service.
  On page 113, this tax scam sends a bill to 9 million households who 
have extremely high medical costs. Tax breaks for billionaires are 
expensive; we get that. Under this plan, Americans who live in nursing 
homes, have a sick child, high medical costs will foot the bill.
  On pages 95 and 97, students get added to the list of Americans who 
will be forced to pay for the GOP's tax breaks for corporations. They 
will see increased debt and taxes.
  This bill says: Good luck, students. Building an economy that will 
not allow you to pay off the $1.3 trillion of existing student debt 
but, instead, will add $2.3 trillion in deficit, this bill was created 
for you.
  Just yesterday, the President's chief economic strategist was 
surprised when the CEOs gathered admitted they would not be investing 
their tax cuts in jobs and wages.
  The SPEAKER pro tempore (Mr. Garrett). The time of the gentlewoman 
has expired.
  Mr. NEAL. Mr. Speaker, I yield an additional 30 seconds to the 
gentlewoman.
  Ms. CLARK of Massachusetts. Mr. Speaker, he should not have been 
surprised. Corporations are already sitting on record amounts of cash 
while generations of hardworking Americans have had to pay for tax 
experiments like this based on disproven economic theories.
  Let's not repeat the mistakes of the past. Let's reject this bill and 
work together to create bipartisan tax reform that is fair and benefits 
all families.
  Mr. BRADY of Texas. Mr. Speaker, because of the Tax Cuts and Jobs 
Act, in the Fifth District of Massachusetts, a median household of four 
earning $143,000 will see a tax cut of $5,208.
  Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr. 
Reed), one of our key leaders on tax reform on the Ways and Means 
Committee.
  Mr. REED. Mr. Speaker, I thank the chairman for all of his hard work 
in putting this bill together.
  Mr. Speaker, this bill has been in the process for over 7 years in 
regards to the time I spent on the committee. There have been multiple 
hearings on the issue of tax reform, well over 40-plus. There have been 
hours upon hours of debate.
  There were efforts done by our former chairman, Dave Camp. I know my 
colleagues on the other side of the aisle have recognized, during our 
committee markup process, the hard work that Chairman Camp did with 
rewriting the entire Code from the bottom up.

  These issues have been out there for the American people and for the 
people from across the country to look at, to digest. Now is the time 
to rise in support of this legislation, Mr. Speaker, because what we 
have before you is a new Tax Code for the 21st century.
  Mr. Speaker, we have a Tax Code that is going to, for once in 31 
years, put our corporations on the multinational level across the world 
in a competitive position by lowering the rates and getting to a 21st 
century taxing program on a territorial basis.
  Most importantly, Mr. Speaker, we deliver tax relief. I know the 
folks on the other side aren't going to agree with this because they 
are going to say this is a Tax Code for the rich, this is a Tax Code, 
tax reform for the rich and the almighty 1 percent.
  But, Mr. Speaker, I have done the math. I have looked at this bill 
inside and out, and it delivers a simplified Code where $1,600 is left 
in the pockets of my constituents in western New York. That is $1,600 
that they earned that the government won't have to take from them 
anymore; $1,600, Mr. Speaker, that will allow them, as senior citizens, 
to go visit their grandkids in the South because New York State has 
driven them out of New York State with its high tax policies at the 
State capital. That is $1,600 that maybe they can go on a trip with 
their family and experience a little relaxation because of the hard 
work that generated those moneys and those dollars in their pockets.
  Mr. Speaker, these are the people whom we represent, the Perrys. Mr. 
and Mrs. Perry are hardworking people of western New York, and those 
are their two beautiful children. What this is going to allow them to 
do is get a little bit more of their money kept in their pocket so they 
can spend a little bit more time with their kids and enjoy the fruits 
of their labor.

                              {time}  1800

  Mr. Speaker, I know my colleagues on the other side advocate because 
there is another issue with tax reform that I want to highlight real 
quick.
  The easy approach of government is to spend more money, develop more 
programs, and maybe give a little bit in regards to a government 
welfare check. But what this Tax Code and reform does is deliver a job 
opportunity for these people, and I don't know a better program in 
America that serves more people than an honest day's work and an honest 
paycheck and an honest job, and that is what this Tax Code will do.
  Mr. NEAL. Madam Speaker, correction. Not one hearing was held on this 
tax bill. Thirty-eight thousand people in Mr. Reed's district will lose 
the student loan interest deduction.
  Madam Speaker, I yield 1 minute to the gentlewoman from Ohio (Ms. 
Kaptur), a real champion of the working class in America.
  Ms. KAPTUR. Madam Speaker, I want to thank the gentleman from 
Massachusetts, Ranking Member Richard Neal, for his exceptional 
leadership in trying to fix this horrendous bill.
  Madam Speaker, the GOP-led tax and deficit disaster rewards the big 
corporations and billionaires. It will accelerate job outsourcing. 
Indeed, 50 percent of the tax benefits go to the top 1 percent.
  This tax scam locks in--get this--a $621,500 tax bonus to each 
billionaire in the billionaire class, the top one-tenth of 1 percent. 
Do you really think they need it?
  Meanwhile, this tax scam raids money from the pockets of 38 million 
middle class taxpayers, likely those caring for their sick relatives or 
trying to help their kids in college. Do you

[[Page H9353]]

really think the one-tenth of 1 percent need more?
  Money-trading Wall Street megabanks like Goldman Sachs and J.P. 
Morgan, already making billions, will get more tax bonuses courtesy of 
the middle class.
  The SPEAKER pro tempore (Ms. Cheney). The time of the gentlewoman has 
expired.
  Mr. NEAL. I yield the gentlewoman an additional 30 seconds.
  Ms. KAPTUR. This job outsourcing tax bill of the rich, by the rich, 
and for the rich, well, if it walks like a duck and quacks like a duck, 
it must be a duck, and this duck belongs in a swamp, which voters may 
have thought they were draining in the last election.
  Well, folks, this bill makes the swamp wider and deeper, and the fat 
ducks will be even fatter and happier in it.
  I urge my colleagues to vote for the middle class, not the 
billionaire donor class. Vote ``no.'' Drain the swamp.
  Mr. BRADY of Texas. Madam Speaker, I am proud the Tax Cuts and Jobs 
Act for that family of four in Ohio, in the Ninth District, a $64,000 
household, will see a tax cut of $1,284.
  Madam Speaker, I yield 1 minute to the gentleman from Ohio (Mr. 
Turner).
  Mr. TURNER. Madam Speaker, I thank the chairman for working 
diligently to create the Tax Cuts and Jobs Act that will give a tax 
break to the middle class.
  After speaking to both Speaker Paul Ryan and Ways and Means Committee 
member Tom Reed, I believe that an unintended consequence of this bill 
would hinder middle class Americans pursuing a higher education degree 
in an attempt to better their lives. These consequences will affect the 
education of employees of universities, graduate students, and 
employees receiving employer-provided education benefits.
  Madam Speaker, under current law, higher education institutions can 
provide tax-free tuition waivers or reimbursement to employees, 
spouses, and dependents.
  Secondly, many universities provide graduate students, including 
Ph.D. candidates, with tuition relief and stipends, which they can 
utilize while pursuing their degree. Several of my constituents, 
including my niece, Sarah Schiavone, who is a Ph.D. student, would be 
impacted by this.
  Thirdly, employer-provided education incentives are currently not 
taxed. I offered two amendments, amendments 20 and 21, to H.R. 1 that 
would have kept these qualified tuition reduction benefits and 
currently would have provided for them to continue.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. BRADY of Texas. Madam Speaker, I inadvertently cut the gentleman 
short. I yield the gentleman an additional 2 minutes.
  Mr. TURNER. I know the Senate is working on their version of the tax 
reform package, and, as of today, the Senate bill does not include the 
repeal of these vital education permits.
  Mr. Chairman, I would like your assurances that the current status of 
these education benefits will be protected during conference debate. I 
am requesting you continue to work with my office as we, together, 
address this issue.
  Mr. RODNEY DAVIS of Illinois. Will the gentleman yield?
  Mr. TURNER. I yield to the gentleman from Illinois.
  Mr. RODNEY DAVIS of Illinois. It is a privilege to be able to work 
with the gentleman on this issue, and, Mr. Chairman, it is a privilege 
to work with you.
  With eight colleges and universities in my district, I cannot ignore 
the impact that eliminating this section that Mr. Turner eloquently 
explained--the impact it may have on the students and the employees in 
my district at all of those institutions.
  The University of Illinois, the largest university in my district, 
provided $184 million in tuition waivers to 1,387 faculty and staff 
last year alone; 1,100 of those employees made less than $75,000.
  I am worried, too, that that is going to have a tremendous impact on 
graduate students. I am worried it is going to have an impact on the 
custodians and the assistants in the Registrar's Office who are just 
working at these institutions to be able to send their son or daughter 
to college. So I look forward to working with Mr. Turner and Mr. 
Chairman and working toward a solution.

  Mr. BRADY of Texas. Will the gentleman yield?
  Mr. TURNER. I yield to the gentleman.
  Mr. BRADY of Texas. Madam Speaker, I would like to thank Mr. Turner 
and Mr. Davis for raising this important issue. On the committee, 
Representatives Meehan and Lynn Jenkins led the discussion and share 
your sentiments.
  I have a keen interest in this issue. I will work with you toward a 
positive solution on tuition assistance in conference with the Senate.
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentleman from 
Vermont (Mr. Welch), who is a son of Springfield, Massachusetts, and a 
very distinguished gentleman.
  Mr. WELCH. Madam Speaker, I have a few questions for the authors of 
this bill.
  What do you have against students? You are imposing an opportunity 
tax. A young Vermonter who wants to get a certificate in welding, or 
get a degree from our community college, and gets tuition assistance 
from an employer, they have to pay taxes on that. If they borrow money 
from the Vermont Student Assistance Corporation, they have to pay more 
because they can't deduct that interest.
  By the way, the Vermont Student Assistance Corporation has to charge 
higher interest because we are eliminating private activity bonds, and 
they don't get the benefit of their municipal bonds rate.
  I have another question. What do you have against teachers? They 
reach in their pocket at the beginning of school to help out with 
school supplies. They lose the deduction.
  I have another question. What do you have against people who have a 
loved one with Alzheimer's? They can't deduct the cost of that medical 
care.
  The SPEAKER pro tempore. The gentleman will suspend.
  Members are reminded to address their remarks to the Chair.
  Mr. WELCH. Well, I have another question for the Chair, and I ask it 
of the leadership.
  What happened to democracy? We were promised an open process. And 
there was a model for this. It was President Reagan and Dan 
Rostenkowski, 4 months of actual hearings, witnesses testifying about 
the bill.
  This was written in secret. Oh, by the way, no amendments.
  Now, we could ask 435 Members of Congress whether we should stick it 
to the students like we are doing in this bill, and 435 of us would all 
stand up for the students. But you know what? Not a single one of us is 
given the opportunity to ask the question: Do we want to stick it to 
our students who want to get a welding degree or a college degree?
  That is disgraceful, it is inexcusable, it is within the control of 
the majority, and they are denying us the opportunity.
  Here is the big deal that we know. This bill was written by and for 
the donor class that has flooded and contaminated this political 
process with billions of dollars in our campaigns.
  Madam Speaker, I say defeat this bill.
  Mr. BRADY of Texas. Madam Speaker, the Tax Cuts and Jobs Act for 
families of four in Vermont, making $89,000, will see a tax cut of 
$2,030.
  Madam Speaker, I yield 3 minutes to the gentlewoman from Indiana 
(Mrs. Walorski), one of our key leaders championing for small business.
  Madam Speaker, I also ask unanimous consent that the gentleman from 
Illinois (Mr. Roskam) be permitted to control the balance of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mrs. WALORSKI. Madam Speaker, I thank the chairman for all of his 
work.
  Madam Speaker, I can't tell you how grateful I am to cast a vote to 
move our Tax Code one step closer to its first overhaul in 31 years.
  We know the Tax Code is broken. The American people know the Tax Code 
is broken. They are reminded every time they look at their paycheck. 
The Tax Cuts and Jobs Act will deliver progrowth tax reform to the 
families, farmers, manufacturers, and workers in my district.

[[Page H9354]]

  For families, we are delivering tax cuts so that hardworking Hoosiers 
can keep more of their hard-earned money. We are enhancing the child 
tax credit, preserving the Adoption tax credit, encouraging retirement 
savings, and streamlining 15 different education tax incentives.
  We are delivering a Tax Code so simple that most Americans can file 
taxes on a postcard. In my district, 80 percent of filers already take 
the standard deduction. They will be able to keep even more of their 
money, because the standard deduction is doubled, and most itemizers 
will now be able to save time, money, and stress by taking the double 
standard deduction instead.
  No one is ever excited to file their taxes, but I am all for a 
simpler, quicker process that makes it much more pain-free.
  H.R. 1 helps job creators grow. Small businesses get a lower rate and 
more simplicity. Family businesses passed down for generations won't 
have to worry about the estate tax anymore, and America will be a more 
attractive place to do business.
  Our antiquated Tax Code keeps investment in jobs out. This bill 
incentivizes companies to bring profits back, to locate facilities 
here, and to grow American jobs and raise wages.
  Madam Speaker, I was so proud to vote for this bill in the Ways and 
Means Committee, and I am proud to be a part of this House that is 
delivering yet another crucial step toward tax cuts, simplicity, and 
fairness.
  Madam Speaker, I urge all of my colleagues to support this bill.
  Mr. NEAL. Madam Speaker, the University of Notre Dame is about to get 
slugged with a new tax, and the clock is running out.
  Madam Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. 
David Scott), who has been a champion of the working class.

  Mr. DAVID SCOTT of Georgia. Madam Speaker, I thank Ranking Member 
Neal. I appreciate this time.
  Madam Speaker, my heart is heavy tonight, and it is heavy because we 
are faced with the absolute, most dangerous, destructive, and deceitful 
tax reform bill in the history of this Congress. Now, let me tell you 
why.
  On the other side, you have heard Member after Member on the other 
side get up and tell you: This is going to get a tax cut, we are going 
to give the wealthy a tax cut, we are going to give the corporations a 
tax cut. But none of them have told you, or the American people, how 
they are going to pay for it.
  And the great tragedy is, the most deceitful thing about what my 
colleagues on the other side are doing to the American people is they 
are doing these tax cuts for the wealthy, the tax cuts for the 
corporations, on the backs of the poor, the middle class. Let me tell 
you why.
  They won't tell you that they are paying for this tax cut because 
on--$1.5 trillion that they will cut from Medicaid, from Medicare.
  Madam Speaker, Medicaid is for the children. There are literally 
millions of children on there.
  You heard one of my colleagues go down. We are losing 20 veterans to 
suicide every single day. No mention of that. Yet they will cut the 
veterans program designed to help them to pay for this tax cut.
  Not to mention the student loan interest rate. Young people across 
this country, you need to rise up. Seniors, we need to rise up.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. I yield the gentleman an additional 15 seconds.
  Mr. DAVID SCOTT of Georgia. We need to rise up and stand and fight 
for this country. Let our minds go back to 1770, in Boston, at the 
harbor, when they threw the tea over that founded the foundation of our 
great democracy.
  I ask the American people to stand up and help us Democrats defeat 
this dangerous bill.
  The SPEAKER pro tempore. Members are reminded to address their 
remarks to the Chair.

                              {time}  1815

  Mr. ROSKAM. Madam Speaker, the good news is that the good people of 
Georgia's 13th District median household income, family of four, at 
$80,000 would receive a $1,700 tax break.
  Madam Speaker, I yield 3 minutes to the gentleman from Arizona (Mr. 
Schweikert), former treasurer of one of the largest counties in our 
country.
  Mr. SCHWEIKERT. Madam Speaker, this is one of those moments where--
and forgive me, but I sometimes feel like I live and work in a math-
free zone, because you can't intellectually have it both ways, where 
you are talking about the great difficulties coming, and then when you 
bring in the actual data and you actually start to look at the charts 
that we all see, it isn't in the future, it is right on the cusp of us, 
and that is the debt and entitlement crisis.
  If we do not start to get some economic growth, we are in so much 
trouble. If you really care about Medicare, Medicaid, the children, 
this education program, this health research, where is the money coming 
from?
  It is on the cusp. This is less than a decade away. In just a few 
years, we cross 100 percent of GDP, and that is publicly held, and then 
the ability to sell the bonds if we do not get economic growth.
  But if you look at the last 30 years in the charts and the data--and 
I am sorry, I know this is small and I know it is math, so it is 
uncomfortable for a lot of people in this body. If you actually look 
across here and you see, this is entitlements to GDP, when we have been 
in times of economic expansion, all of a sudden our ability to finance, 
to maintain the promises we have made as a society, if the math works. 
And this is a commonality we both understand, economic growth is our 
only path. Because if it is not, are you on your side ready to do 
fairly draconian cuts?
  If we actually look at some of the data that has come from the Tax 
Foundation, the Tax Foundation's modeling says $1 trillion of 
additional taxes, but almost $300 billion in additional payroll taxes 
over the 10 years.
  I have already heard a couple people get behind the microphone here 
and use the term that the trillion and a half is dynamically scored. 
No. That is a static score. All dynamic scoring is--so we all have a 
commonality--you calculate back in the size of the economy. You loop 
back in the size of the economy, and you can't have it both ways. You 
either support dynamic scoring or you oppose it for global warming. You 
oppose it for immigration. You oppose it for the stimulus, because we 
actually, as a body, every March, when CBO brings us the numbers, they 
give us a number that has been dynamically scored.
  I know we all want what is best for this Nation, but as I dig through 
the math, if we get the economic growth that I believe this tax model, 
so many of the very difficult decisions we as a body have to make over 
the next decade get much easier. Let's hope we get there.
  Mr. NEAL. Madam Speaker, I appreciate the gentleman's sincerity as we 
proceed to watch them borrow $2.3 trillion on the deficit.
  Madam Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. 
Kildee), from a well-known family.
  Mr. KILDEE. Madam Speaker, I thank the gentleman for yielding me time 
and for his incredible leadership on this subject.
  You can't have it both ways. I just heard it said. You can't have it 
both ways. So what I suspect will happen after I get done, as has been 
the case with every one of the speakers on this side, the gentleman on 
the other side will say that residents in my hometown will get a tax 
break of X, $1,000.
  I would ask the gentleman if he would add to that the amount of the 
debt that is being borne by each one of those families. Because the way 
I have got it calculated, it costs a family of four about $20,000 for 
your debt that you are willing to levy against our children and 
grandchildren in order to give the richest 1 percent of Americans a 
massive tax break.
  You can't deny the math that almost all the benefit goes to the 
people at the top. The top 1 percent are huge beneficiaries. You can't 
deny the math that 5,400 families will get a massive tax break. You 
can't deny the math that says that every single American will take on 
additional debt; a family of four, $20,000 in debt.
  I also was intrigued by the colloquy where Members came to ask the 
leadership if they will work with them to take out egregious elements 
of this tax

[[Page H9355]]

proposal. We get this sort of ``Yes, I will work with the gentleman'' 
answer.
  I have a question: Why did you put it in in the first place? Why are 
you cutting brownfield tax credits? Why are you cutting new market tax 
credits? Why are you cutting historic tax credits in the first place? 
Why did you put it in in the first place?
  You just wrote the bill. You just wrote it. It makes no sense. It 
makes no sense.
  We can't pass debts to our children in order to finance tax breaks 
for the people at the very top.
  The SPEAKER pro tempore. The Chair would like to remind all Members 
that they should address their remarks to the Chair and not to others 
in the Chamber.
  Mr. ROSKAM. Madam Speaker, I yield myself 30 seconds.
  Madam Speaker, the good news is it is not just $1,000 for the 
gentleman's district, it is $1,200.
  Let's go right to this student issue. It was the Obama administration 
that proposed in the 2017 budget for the elimination of the student 
deduction. I think the sanctimonious need to just walk out of the 
Chamber.
  The other thing is, at a tax rate of 15 percent, an annual $2,500 
above-the-line deduction is a $375 tax break. We are proposing 
something far greater than that with doubling the standard deduction, 
lowering the rates and so forth.
  Madam Speaker, let's just take the student deduction and chuck it in 
the garbage.
  Madam Speaker, I yield 1 minute to the gentlewoman from Missouri 
(Mrs. Wagner).
  Mrs. WAGNER. Madam Speaker, it is about time we ge something real 
done for the American people. The people of Missouri's Second District 
sent me to Washington to secure their jobs and to keep a little more of 
their hard-earned money, and at long last we are finally doing just 
that.

  I vote ``yes'' to fix our broken tax system. I vote ``yes'' to help 
reignite the American economy. I vote ``yes'' to make it a little bit 
easier for that single mother of two, that firefighter, that teacher, 
that shopowner, that family of four, that veteran. I vote ``yes'' for 
bigger paychecks, better savings, and a more secure future.
  I ran for Congress to fight for the people of Missouri and to ensure 
that every hardworking American can realize their own American Dream.
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Michael F. Doyle), a conscience of the House and a 
champion of all things Pittsburgh.
  Mr. MICHAEL F. DOYLE of Pennsylvania. Madam Speaker, I rise today in 
opposition to this terrible bill. Many of my colleagues have called it 
a scam, and they are absolutely right.
  Supporters of this bill have said that everyone gets a tax cut. That 
is not true. Millions of Americans get a tax increase; more and more 
each year, in fact.
  Supporters of this bill have called it a middle class tax cut. That 
is not true. The lion's share of the money goes to corporations and 
households making $1 million or more, not to the family struggling 
paycheck to paycheck.
  What this bill gives to the middle class in one hand, it takes it 
away with the other with devastating consequences for households with 
high medical costs, student loans, or high State and local taxes.
  Supporters of this bill have claimed that it will keep companies from 
moving jobs overseas, create new jobs here at home, raise wages for 
American workers. That is not true. While this bill cuts corporate tax 
rates, it creates new incentives for shipping our jobs abroad.
  Finally, does anyone really believe that tax cuts for corporations 
and the rich will trickle down to the rest of us?
  It didn't work in the Reagan administration. It didn't work in the 
Bush administration. It didn't work in Kansas, and it is not going to 
work today.
  Make no mistake, this massive tax cut for corporations and the rich 
will increase deficits and the national debt by trillions of dollars, 
sticking the rest of us, especially our kids, with the bill.
  Madam Speaker, this massive tax cut for corporations and the wealthy 
is not a middle class tax cut. It won't create jobs or raise wages. It 
isn't simple, it isn't reform, and it certainly won't pay for itself.
  If we want to increase economic growth, let's give a real break to 
the middle class and the small businesses. They will put that money 
right back into the economy. That is the way to create jobs and boost 
wages.
  Madam Speaker, I urge my colleagues to reject this giveaway to the 
rich and to start over with a bipartisan bill that truly benefits the 
middle class.
  Mr. ROSKAM. Madam Speaker, my friends on the other side of the aisle 
need to make a decision: Do they want to lionize Ronald Reagan or 
criticize Ronald Reagan?
  I will leave it to them to decide which.
  Madam Speaker, I yield 2 minutes to the gentleman from Kentucky (Mr. 
Barr).
  Mr. BARR. Madam Speaker, I rise today to adamantly dispute this false 
narrative that the Tax Cuts and Jobs Act is only intended to benefit 
the wealthiest Americans and does not benefit the middle class.
  When you hear this fiction from the other side of the aisle, remember 
these facts: this bill lowers tax rates on low- and middle-income 
Americans. It takes the lowest 10 percent bracket to zero. It doubles 
the standard deduction, meaning hardworking Americans can immediately 
take home more of their paychecks. Specifically, the first $24,000 of 
family income will be completely tax free under this plan.
  By slashing our noncompetitive corporate tax rate, this bill will 
result in more jobs and, according to the nonpartisan Tax Foundation, 
it will deliver average American households a pay raise of at least 
2\1/2\ percent.
  With this legislation, a typical family of four earning $59,000, the 
median household income, will receive a $1,182 tax cut.
  Madam Speaker, that is not a tax cut for the rich. That is a tax cut 
for low- and middle-income hardworking Americans, and that is a fact.
  This will benefit people like Jared from Frankfort, Kentucky, who 
told me: ``The extra income from the tax cut will enable us to have 
some breathing room.''
  It will also help constituents who are living paycheck to paycheck, 
who have told me they would use these tax cuts to save for a rainy day, 
make car repairs, occasionally go to a restaurant, and invest in higher 
education for their kids.
  I heard from my constituent in Lexington named Gary, who told me: 
``It doesn't matter how I plan to use my money. By definition, it is my 
money to begin with. Trust me to spend it in the way that applies for 
me.''
  Gary, you are absolutely right, it is your money.
  Tax relief is not about handouts. It is simply about allowing the 
American people to keep more of the hard-earned income that they made.
  On behalf of all of the hardworking people of central Kentucky, I 
urge my colleagues to vote for Gary and to vote for all other taxpayers 
who deserve to keep more of what they earned. Vote ``yes.''
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentleman from Ohio 
(Mr. Ryan), who is well known and well regarded as he addresses 
national economic issues.
  Mr. RYAN of Ohio. Madam Speaker, I thank the gentleman for his 
leadership on this.
  The last time there was tax reform was 31 years ago. Since then, 96 
percent of income growth went to the top 10 percent of the people in 
the country. Ninety-six percent went to the top 10 percent. The top 1 
percent control 90 percent of the wealth in this country.
  Sixty-three percent of average families in the United States of 
America could not withstand a $500 emergency.
  We have pensions collapsing, we have communities that have eroded, 
wiped out, and the Republican plan to fix all of this is to go to the 
Chinese Government, borrow $2.3 trillion and bring it back to the 
United States and give it to the wealthiest people in this country.
  That is not going to fix a damn thing in the United States. It is not 
going to help Flint, or Springfield, or Youngstown, or Pittsburgh, or 
Gary. I am talking about Gary, Indiana, will get hammered from this 
thing.

                              {time}  1830

  We have tried this before, and many of you were here. President Bush 
did

[[Page H9356]]

this. He said: We are going to cut taxes for the wealthy. It is going 
to lead to growth. Wages are going to go up.
  We had the most stagnant decade of growth since the Great Depression, 
and it ended in a complete economic collapse. This is a canard. This 
economic philosophy stinks. It doesn't work, and it hammers working 
class people.
  To put a little salt in the wound, Madam Speaker, you keep the 
deduction that allows a corporation to outsource jobs from our 
communities to other countries.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Madam Speaker, I yield an additional 30 seconds to the 
gentleman.
  Mr. RYAN of Ohio. Madam Speaker, the only place this is going to 
create a job is in Beijing, China.
  Mr. ROSKAM. Madam Speaker, as you know, the good news is, according 
to the Joint Committee on Taxation, 70 percent of the individual tax 
relief goes to families earning under $200,000, according to their 
publication on November 13.
  Madam Speaker, I yield 1 minute to the gentleman from Florida (Mr. 
Rutherford).
  Mr. RUTHERFORD. Madam Speaker, I thank the gentleman for yielding.
  Madam Speaker, I think no one in this Chamber can dispute when I say 
that America's Tax Code is broken. I rise today to stand with my 
colleagues in support of progrowth tax reform because our Tax Cuts and 
Jobs Act works for the middle class.
  For too long, a complex Tax Code, high rates, and burdensome 
regulations have held back opportunities for hardworking families. The 
Tax Cuts and Jobs Act offers much-needed tax relief for low-income and 
middle-income Americans.
  It focuses on middle class tax cuts that allow hardworking Floridians 
to keep more of their paychecks so that they can save for their 
children's college fund, so that they can invest in their retirement, 
so that they can enjoy vacations with their family.
  Florida families know how to spend their money better than the 
government, and this plan allows them to keep more of the money that 
they earn instead of waiting for tax returns and deductions to give 
them their money back.
  This bill is profamily. It is probusiness, and it will give our 
economy a boost. Nothing will address our debt more than growth.
  Madam Speaker, I urge my colleagues to support this bill.
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentleman from 
California (Mr. McNerney), well-known as a champion of America's middle 
class.
  Mr. McNERNEY. Madam Speaker, I want to thank the ranking member of 
the committee for his hard work on this. He has been a great voice.
  Madam Speaker, this is a harmful and deceitful bill. It is strictly 
partisan. We have learned over the years, if you do something strictly 
on a partisan basis, it isn't going to work. It is going to fall apart. 
It will come back to you. I am telling you, learn from our mistakes. 
Work with us.
  There hasn't been a single hearing on this bill.
  Is the public out there confused? They should be because they haven't 
been informed about what this bill does.
  It was rushed through in 1 week. It takes more than a week to name a 
post office around here.
  What is the deal? What is going on here? No one really understands 
the consequences of this bill, but I can tell you what it does.
  It will greatly reduce taxes for corporate America. It will reduce 
taxes for the wealthy.
  So where do you think the money is going to come from to pay for 
Social Security? to pay for our roads and highways? to pay for our 
education? to pay for Medicare? If you haven't guessed, it is going to 
come from the middle class. There is no other way we can pay for this.
  So I will be kind and say maybe they are being overoptimistic. Maybe 
they don't really understand what is going on there, but don't believe 
it. You are going to pay more taxes. It is going to come out of your 
hide.
  And when I sit down, the Member from Nebraska is going to say that, 
in my district, you are going to get $1,200 more or $1,700 more. No. 
You are going to pay more. You are not going to get more money back.
  In California, 6 million people will lose their tax deductions, the 
State income tax deduction. What does that mean? That means you are 
going to pay taxes twice on your earned income. In California, 
homeowners are going to get hit hard. I don't see how anyone from 
California can vote for this bill.
  Education will be more expensive; student loans will not be 
deductible. This bill will hurt our Nation's ability to compete.
  What does that mean? It means lower pay. It means layoffs.
  This tax overhaul is a big lie. We should oppose this bill and start 
over and do it right.
  Mr. ROSKAM. Madam Speaker, the good news is it is not $1,200. It is 
not $1,700. It is $1,900 for the median household in California's Ninth 
District.
  Madam Speaker, I yield 4 minutes to the gentleman from Missouri (Mr. 
Smith), a great friend of agriculture and a great friend of small 
business.
  Mr. SMITH of Missouri. Madam Speaker, a lot has been said today on 
the floor about the Tax Cuts and Jobs Act from my friends on the other 
side of the aisle. They think that this bill before us will make losers 
of the American workers or of the American economy. The truth is the 
status quo--our current broken Tax Code--is causing our workers and our 
economy to lose.
  Back in southeast Missouri--I will give you an example under the 
current Tax Code--a machinist in Poplar Bluff, Missouri, working 40 
hours a week is fearful to work harder because the more money that they 
make, the less that they will have percentagewise unde our current Tax 
Code. That is simply not right, Madam Speaker.

  Back in southeast Missouri, a cotton farmer in Hayti has worked for 
decades to build his family farm hoping to pass it on to his daughter. 
Yet, under the current system, his daughter would have to sell portions 
of the farm or take out a massive loan to continue the family 
operation.
  The status quo in our Tax Code is rigged against the American 
taxpayer. They can't afford an army of lawyers, accountants, and 
lobbyists to find all of the loopholes and the bailouts available only 
to a select few.
  The status quo are tax rates for businesses that are so high that the 
American companies are not able to grow, hire new workers, or be 
competitive with other countries around the world.
  The other side of the aisle was arguing to keep a broken Tax Code 
that is punishing hardworking taxpayers. All of the grandstanding 
leaves us with one question that needs to be answered for the American 
people: What do these tax cuts mean for you? It means that the 
hardworking family in southeast Missouri will keep more of their 
paycheck.
  Instead of being penalized for success, this bill is about employees. 
It is about wages. It is about getting to keep more of what you earn. 
For families and couples, the first $24,000 you earn under this bill 
will be tax free. You get to keep it. You get to decide how to spend 
your own money, not the government.
  It means that the small businesses and family farms won't feel the 
sting of the IRS and the death tax when tragedy strikes their family.
  It means that lobbyists and special interests become the losers. We 
close loopholes in handouts that the hardworking taxpayer can't get.
  We are ending a Tax Code that isn't built for the everyday American. 
We are making it simple and fair. It means that America can now compete 
and win again.
  With this bill, we lower the business rate to historic levels. We are 
making our economy healthy again. We know from history that a healthy 
economy takes care of itself. It is more stable and sustainable. It 
provides for full employment, better jobs, and higher wages.
  Former President John F. Kennedy knew this when he said: ``Our true 
choice is not between tax reduction, on the one hand, and the avoidance 
of large Federal deficits on the other. It is increasingly clear that 
no matter what party is in power, so long as our national security 
needs keep rising, an economy hampered by restrictive tax rates will 
never produce enough revenue to balance our budget just as it will 
never produce enough jobs or enough profits.''

[[Page H9357]]

  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. ROSKAM. Madam Speaker, I yield an additional 30 seconds to the 
gentleman.
  Mr. SMITH of Missouri. Madam Speaker, surely, the lesson of the last 
decade is that budget deficits are not caused by wild-eyed spenders but 
by slow economic growth and periodic recessions. Any new recession 
would break all deficit records.
  This bill makes the American worker, the American family, the 
American farmer, the American small businesses, and the American 
economy winners once again.
  Madam Speaker, I urge all of my colleagues to vote ``yes'' on the Tax 
Cuts and Jobs Act.
  Mr. NEAL. Madam Speaker, 28,000 people will use the student loan 
interest deduction in Missouri's Eighth District, claiming nearly $33 
million in deductions.
  Madam Speaker, I yield 2 minutes to the gentleman from California 
(Mr. Ruiz), a medical man and Congressman.
  Mr. RUIZ. Madam Speaker, I thank Ranking Member Neal for the 
opportunity to speak on this bill.
  The fact is I do want to simplify our Tax Code and I do want tax 
reform, a tax reform that relieves the burden on our middle class, our 
seniors, our veterans, and our students. But let's just see how this 
bill fares with the middle class, seniors, veterans, and students.
  My middle class constituents in California will be double-taxed on 
their income, but big corporations will get tax relief.
  Veterans in my district will find it harder to find work or a home 
because this bill eliminates tax credits for hiring veterans and harms 
efforts to end veterans' homelessness.
  Middle class homeowners across California will see the value of their 
homes decrease by as much as 10 percent.
  Students will get hit with the largest relative tax increase in this 
bill.
  Seniors will see a Medicare cut by $25 billion a year. That is over 
$100 billion of Medicare cuts over the next 4 years.
  And 38 million middle class families will see their taxes increase. 
They always point to this family of four earning $59,000 getting a 
certain amount of tax cuts, but 38 million middle class families will 
see their taxes increase, all this while giving tax breaks to 
millionaires, billionaires, and corporations who ship jobs overseas and 
raise the deficit by $1.44 trillion within 10 years. In fact, nearly 80 
percent of the tax cuts in this bill go to millionaires, billionaires, 
and multinational corporations that ship jobs overseas.

  The bottom line is this bill raises taxes on the middle class and 
gives tax breaks to billionaires. This is irresponsible and 
unacceptable.
  Madam Speaker, I urge my colleagues to oppose this bill and protect 
Medicare, protect the middle class, protect seniors, protect veterans, 
and protect students.
  Mr. ROSKAM. Madam Speaker, if you are in California's 36th District 
and your median household income is $58,000, it looks like a tax cut of 
$1,090.
  I am informed that our friends on the other side have more time, and 
my suggestion is that our friends use some of their time to get back in 
balance.
  I reserve the balance of my time.
  Mr. NEAL. Madam Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Massachusetts has 1 hour 
16\1/4\ minutes remaining.
  Mr. NEAL. Madam Speaker, I just happen to have the nephew of former 
President Kennedy here who is going to set the record straight on that 
quote that was attributed to President Kennedy just a few moments ago.
  Madam Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Kennedy), a very good member of the Massachusetts congressional 
delegation and my friend.
  Mr. KENNEDY. Madam Speaker, I thank my friend and mentor in the 
House, the dean of our delegation from Massachusetts (Mr. Neal), for 
his leadership on this issue and so many others.
  Madam Speaker, I am always heartened by the quotes of President 
Kennedy offered by any Member of this body. I would like to think that 
they would seek to emulate him not just on the marginal tax cuts that 
were put forth some 50 years ago, but also on his stance on 
immigration, on civil rights, and on Russia.

                              {time}  1845

  But those are issues for another day, Madam Speaker.
  The issue today is a vote that we will take on this floor tomorrow to 
rewrite an American Tax Code that will touch every single American 
life.
  True tax reform is complicated, it is cumbersome, and, above all 
else, it is deeply personal. But this bill is none of those things. It 
is a massive, permanent handout to corporations passed off on American 
families. It is a terrifyingly precise attack on patients with chronic 
illness, a heartless roadblock for low-income students, and a choice to 
value inherited wealth more than hard-earned income.
  It is a gift to corporations paid to the richest among us, and it is 
paid for by long nights, by double shifts, by vacations not taken, and 
of hardworking American families sacrificing for their hope for a 
better tomorrow.
  You are asking them to fortify your tax cuts and stock options with 
their classrooms, your corporate profits with their roads and bridges, 
your balance sheets with their hard-earned retirement and healthcare 
benefits.
  For all the talk about the boost to corporate profits, 80 percent of 
the stocks in this country are owned by 10 percent of Americans. Ask 
yourself who is going to actually be the beneficiary of all that money. 
That is what this bill does.
  You have heard from my Republican friends over the course of the past 
couple days about how much this will save the average American family, 
but not about the 36 million people and families who will experience a 
tax hike.
  What they aren't telling you is what is going to happen the moment 
this bill is passed. Luckily for the American public, one of the chief 
economic advisers to the President has said so. He said that after this 
bill is done, they are turning directly toward welfare cuts, Social 
Security, Medicare, and Medicaid. So when you hear questions about how 
much this bill is going to save you, ask how about your retirement. 
These cuts go right to Social Security.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Madam Speaker, I yield the gentleman from Massachusetts an 
additional 30 seconds.
  Mr. KENNEDY. Madam Speaker, ask them how much more money that $1,000 
is going to save you when your healthcare benefits are taken away. By 
the way, that clause just got added over in the Senate.
  Ask them how much more some savings might go for one family when you 
gut and shred a social safety net that has powered the greatest 
expansion of economic growth that this country has ever seen.
  That is what your bill does. That is what this bill means. That is 
what this bill is about. It is about the values envisioned of an 
America, about a tax structure that should reflect the values of the 
American family, not the values of corporate balance sheets.
  The SPEAKER pro tempore. Members are reminded to address their 
remarks to the Chair.
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentleman from 
Maryland (Mr. Raskin). Congressman Raskin is a well-known champion of 
civil liberties and a scholar of the law.
  Mr. RASKIN. Madam Speaker, as my friends across the aisle prepare 
their statistics about my congressional district where 500 people 
rallied against the tax plan this last weekend, I want to invite them 
to come to my district and to debate me and several other members of 
our caucus. I am happy to come to the gentleman's district and debate 
it, too, because the American people should be able to be part of this 
decision.
  When the majority voted to throw 30 million Americans off of their 
health insurance plans, they went over to the White House where they 
celebrated like it was Mardi Gras, the Super Bowl, and Herbert Hoover's 
birthday all put together. When millions of middle class Americans 
rebelled and defeated that monstrosity of a bill, Donald Trump pointed 
at them and said that they had all voted for a mean bill; and he was 
right.
  Now like lambs to the slaughter, they are about to vote for another 
mean bill, a tax scam written by corporate lobbyists in the dark of 
night

[[Page H9358]]

now moving through Congress at the speed of light.
  While our poor colleagues grimly walk the plank for the billionaires, 
Wall Street tycoons, and the Trump Cabinet, who are getting ready to 
laugh all the way to the bank when middle class Americans rebel again 
this week, next week, and the week after that, and this tax scam bites 
the dust, President Trump can turn around again and call this 
monstrosity not only mean, but greedy.
  This mean and greedy tax scam puts $1.5 trillion on America's credit 
card so the sons and daughters of the middle class can pay the rest of 
their lives for a gigantic corporate tax cut in a period of record 
corporate profits.
  One-third of the windfall raining down on corporate investors will go 
abroad because more than one-third of corporate wealth is owned by 
foreign investors. That is more than $500 billion that goes not even to 
our own rich people but to Saudi Arabia, China, and other foreign 
investor havens, and it will not go to Medicare or Medicaid or other 
public purposes at home.
  Then they move to the so-called territorial tax system so that 
corporate profits moved abroad will escape our normal system, giving 
incentive to record job flight. Somebody tell Donald Trump about this 
because this tax scam puts foreign jobs first.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL. Madam Speaker, I yield the gentleman from Maryland an 
additional 1 minute.
  Mr. RASKIN. In the meantime, Madam Speaker, 34 million middle class 
Americans get hit with a tax increase. Good-bye to the healthcare 
deduction. Good-bye to the college loan interest deduction. Farewell to 
a meaningful State and local tax deduction--oh, and farewell to the 
estate tax which applies only to billionaires and the richest 
millionaires in the country, 2 out of 1,000 families. Where is the 
democracy? Where is the legislative process?

  When we had a bipartisan bill in 1986, we took more than 2 years. It 
passed with overwhelming support. Now this tax scam has had no 
hearings, no experts, and no citizen testimony. What a scandal it is. 
We do need tax reform, but we don't need a corporate tax scam imposed 
against the middle class.
  Mr. NEAL. Madam Speaker, I yield 2 minutes to the gentlewoman from 
California (Ms. Maxine Waters), who is the ranking member of the 
Financial Services Committee.
  Ms. MAXINE WATERS of California. Madam Speaker, I rise today in 
opposition to H.R. 1, which is just a continuation of Republicans' 
relentless attack on working families. This is not a tax plan; it is a 
tax scam.
  This President won't disclose how he is going to benefit from this 
tax scam. He has disrespected us all. This tax scam will eliminate the 
student loan interest deduction. It will eliminate State and local tax 
deductions on income. It will restrict the mortgage interest deduction.
  It is estimated that 47 million taxpayers face a tax hike. Almost 
half of any tax cuts will go to the richest 1 percent. Residents of my 
State of California will face the largest net tax increase totaling 
$12.1 billion in 2027 alone.
  Madam Speaker, I call on the President of the United States of 
America to show his tax income and to show his tax plan. He needs to 
let us know what he is all about and what his taxes are. From the very 
beginning, he said he couldn't show them at the time that he was asked 
when he was first inaugurated into this Presidency, but time has 
passed. It is time for the President to show us his tax returns, rather 
than coming up with a tax scam asking everybody else to pay up, to pay 
more, and saying that this is a middle class tax cut when it is not.
  We want to know more about him and his plan. So with my 1 minute, my 
2 minutes, whatever it is, this evening is all about saying a message 
to the President.
  Even though I will be cautioned that I am not to talk to the 
President, I am calling on the President: Show your tax returns.
  The SPEAKER pro tempore. Members are reminded to address their 
remarks to the Chair.
  Mr. ROSKAM. Madam Speaker, there is a message for California's 43rd 
District, and that is a benefit of $1,395 if H.R. 1 is passed into law.
  Madam Speaker, I yield 1\1/2\ minutes to the gentleman from Illinois 
(Mr. LaHood).
  Mr. LaHOOD. Madam Speaker, I want to thank my colleague from Illinois 
for his commitment and dedication to this terrific bill that we have 
before the House tonight.
  Madam Speaker, the people of Illinois are unfortunately all too 
familiar with high taxes and the burden they put on families and our 
local businesses. At the Federal level, things have become just as bad 
with a Tax Code that is over 74,000 pages long and riddled with 
loopholes.
  Over 30 years have passed since the last time Congress passed 
comprehensive tax reform, and you can see the effects of our outdated 
Tax Code everywhere. We have stagnant hiring, stagnant wages, and a 
stagnant economy that is holding back our middle class instead of 
helping them get ahead.
  H.R. 1, the Tax Cuts and Jobs Act, is our chance to change all of 
this. By simplifying our Tax Code and bringing real relief to everyday 
families, we can, once again, jump-start the American economy and get 
it back to working for the middle class.
  The choice before us is a simple one: Do we support this bill and 
support the middle class, or do we embrace the status quo? That is why 
I urge my colleagues on both sides of the aisle to come together and 
vote for this bill. Let's send a signal that we don't stand for the 
status quo. We stand for growth and economic opportunity for the 
American people. Let us bring relief to the middle class. Support this 
bill.
  Mr. NEAL. Madam Speaker, I yield 3 minutes to the gentlewoman from 
Alabama (Ms. Sewell). Congresswoman Sewell is an attorney and a 
Marshall Scholar.
  Ms. SEWELL of Alabama. Madam Speaker, our Tax Code is a statement of 
our values, and I can tell you that this tax bill doesn't reflect my 
values nor those of the American people. This bill favors the wealthy 
over the middle class, it favors corporations over the working 
families, and it favors special interests over everyday Americans.
  Madam Speaker, this tax bill raises taxes for 36 million middle class 
Americans, and it cashes a check for $2.3 trillion worth of debt that 
will be left for our children and grandchildren to pay.
  This tax bill gives permanent tax cuts for corporations and 
multinationals while making the tax cuts for regular taxpayers 
temporary.
  This tax bill preserves tax deductions for certain industries but 
does away with tax cuts in the Code that help everyday Americans. It 
eliminates the deduction for State and local taxes. It also limits 
mortgage interest deductions and limits the medical expense deduction 
affecting 9 million households.
  The independent group, the Tax Policy Center, estimates that almost 
half of the tax cuts, 47 percent of the tax cuts, will go to the top 1 
percent.
  Madam Speaker, this bill devastates education. Education is truly the 
investment in our human capital, our workforce. It eliminates 
deductions for interest on student loans. It eliminates deductions for 
teachers who buy supplies. It eliminates lifetime learning credits, and 
it eliminates employer tuition assistance.
  This bill adds a special tax on the endowments of colleges and 
universities which will reduce scholarships and increase the cost of 
college for average, everyday Americans.
  Cities and towns will be decimated by this bill. This bill eliminates 
tax incentives such as private activity bonds, new markets tax credits, 
and historic tax credits which dramatically affect the ability to 
build libraries and hospitals, and to fund roads, bridges, and 
broadband infrastructure. These are critical investments, Madam 
Speaker, in the public service that spur economic growth.

  Madam Speaker, this tax bill has it backwards. This Congress should 
value its constituents first, not Wall Street, and not special 
interests--its constituents first.
  Madam Speaker, I urge my colleagues to vote against this tax bill 
because it doesn't represent the values that our constituents sent us 
here to this hallowed place, Congress, to represent. We should be 
representing them and not the special interests.

[[Page H9359]]

  

  Mr. ROSKAM. Madam Speaker, I yield myself 30 seconds to just do a 
quick, little cleanup.
  There was a discussion a minute ago by the gentlewoman from Alabama 
where she was talking about teachers, for example. Let's get right to 
that. Teachers won't be harmed by shifting the status quo because what 
they are getting right now is a $250 deduction which is worth about $37 
at the 15 percent tax rate, receipts that they have to keep all year 
long in an envelope and apply it at the end in terms of doing their 
taxes.
  We say: Dump that. Let's get away from that. Let's double their 
standard deduction, lower their rates, and give them some real money.
  Madam Speaker, I yield 4 minutes to the gentlewoman from California 
(Mrs. Mimi Walters).
  Madam Speaker, I ask unanimous consent that the gentleman from Texas 
(Mr. Brady) control the balance of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mrs. MIMI WALTERS of California. Madam Speaker, I rise to engage the 
gentleman from Texas (Mr. Brady) in a colloquy.
  Madam Speaker, tax reform will result in economic growth across the 
country, especially in my home State of California. I thank the 
gentleman for his dedication to this important effort.
  Madam Speaker, my home State is uniquely positioned in this tax 
debate. Due to the liberal tax-and-spend policies enacted by the 
California State Legislature, my district in Orange County is one of 
the most expensive places to live in this country. California has the 
highest personal income tax rate in the country, reaching a crushing 
12.3 percent. The median home price in my district is almost $800,000. 
California also has the highest gas tax in the country.
  While this bill makes important reforms that will grow our economy, I 
have serious concerns that some of my constituents may be worse off. As 
Sacramento continues to confiscate more and more of California's hard-
earned paychecks, we must ensure that Washington does not put similar 
tax burdens on our constituents.
  I ask the chairman of the Ways and Means Committee to assure me that 
we will ensure that individuals and families in my district are 
protected from such unintended outcomes.
  Mr. KNIGHT. Will the gentlewoman yield?
  Mrs. MIMI WALTERS of California. I yield to the gentleman from 
California.

                              {time}  1900

  Mr. KNIGHT. Madam Speaker, if you want to demonize or scare people, 
you come down and yell and scream and raise your hand and you say 
things that they haven't looked into.
  What I did was talk to people in my district and looked at their 
rates and said: Let's look at your taxes and kind of work them through.
  I found that people in the lower-income rate in my district got 
relief. People in the middle-income rate got relief. This happened 
right across the board to everyone we kept talking to.
  So I would say that, before you come down and yell and scream and try 
and scare people on something you might have heard from a talking head, 
actually work with your people. It works.
  Madam Speaker, if this bill is enacted, it will result in economic 
growth across the country, especially in my home State of California. 
The lower rates for individuals, families, businesses, and the tax 
simplicity and certainty offered by this bill will provide net tax 
relief to the middle class and our country's job creators.
  We expect this bill to create nearly 1 million jobs nationwide, and 
nearly 10 percent of those in California.
  While the bill makes commendable strides toward a fair, simpler Tax 
Code, I am concerned about how the bill could impact some of my 
constituents as a result of the high level of income taxes imposed on 
them by our State government.
  I would ask the Chairman of the Ways and Means Committee if he can 
assure me that we continue our work and ensure the families in my 
district are protected from such unintended consequences and that they 
will be able to fully enjoy the benefits of this bill.
  Mr. BRADY of Texas. Will the gentlewoman yield?
  Mrs. MIMI WALTERS of California. I yield to the gentleman.
  Mr. BRADY of Texas. Madam Speaker, I thank both the gentlewoman and 
the gentleman for stepping forward and being such strong advocates for 
taxpayers in a State that taxes its families and businesses, I think, 
almost beyond belief.
  Our goal in tax reform is to achieve tax relief for families and 
individuals across the country, regardless of where you live, and 
across all incomes, while, at the same time, unleashing the economic 
engine for American economic growth.
  California, by the way, under tax reform, is the number one job 
creator under the new Tax Code.
  So I agree with the gentleman and the gentlewoman. There are still 
some areas where we want to make and will make improvements in this 
bill. If they will work with us to continue to move this process 
forward, I am happy to commit to working with both of them to ensure we 
reach a positive outcome for their constituents and families as we 
reconcile our differences with the Senate.
  Madam Speaker, I reserve the balance of my time.
  Mr. NEAL. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, 33 percent of Mr. Knight's constituents derive a 
$16,000 annual benefit from the State and local tax deduction.
  In the case of the gentlewoman from California, 37 percent of her 
constituents enjoy an $18,200 State and local tax deduction benefit.
  Madam Speaker, in closing, more than anything else, this is, as I 
opened with, a missed opportunity.
  We all know what is wrong with this Tax Code. We could have found 
areas of compromise emphasizing the middle class and middle-income 
earners. We understand that the Tax Code that American corporations use 
is not competitive now internationally, but we wanted some relief for 
middle-income people.
  So here is where the investment could have taken place. We could have 
begun an investment in human capital. You have heard it tonight. We 
should all be alarmed by labor participation rates in America. We all 
should be alarmed by what has happened in the post-war period where, at 
one time, it was 63 percent, and now it is 63.8 percent.
  It is about technology; it is about globalization, for sure; but it 
is also about skill set. Eighteen thousand precision manufacturing jobs 
in New England go unanswered, the smallest geographic region of the 
country. The Department of Labor reported this week that 6 million jobs 
in America go unanswered. It is part of a skill set issue.
  You know what else we need to be concerned about?
  Two million people in America are addicted to opioids. That is what 
we should be concerned about as well as getting them back into the 
workplace through the trampoline effect, where they hit it and bounce 
back up into the mainstream. But that is not what we did.
  Without any hearings, without any chance for the minority to 
participate, in terms of substance, we moved forward.
  I want to say to the last two speakers, they are sincere enough. We 
have heard now four different people come to the well of this House on 
the other side and say to the chairperson of our committee and a 
friend: Are you going to fix this after the bill leaves here?
  Four different people asked for a fix. I want to tell you, based on 
long experience in this House, the path gets more narrow as it leaves 
this House. It doesn't grow more expansive. It will be harder to fix 
these things because of the budget score that was embraced.
  In 2001, we were promised widespread economic growth when President 
Bush took the Clinton surplus and offered $1.3 trillion worth of tax 
cuts. When you look at the distribution tables, they were right about 
one thing: everybody did get a tax cut. But then you look at those 
tables and you say: Let me examine who got what.
  In 2003, we came back and the President proposed $1 trillion worth of 
tax cuts based on the premise of economic growth, which didn't happen.

[[Page H9360]]

  By the way, in 2004, there was repatriation, which may be the 
granddaddy of them all. Well, we are going to repatriate those holdings 
offshore at 5\1/4\ percent o the premise of job growth. And there was 
none.

  We had this opportunity to do this together, as I described with 
worker participation rates, understanding that most families now are 
not having large numbers of children any longer. This should have been 
about immigration reform attached to it as well. We all know skilled 
workers from overseas are going to be an important part of the American 
economy, and we should be embracing that, along with sensible tax 
policies based upon some relief for the middle class.
  Instead, we are taking away the ability of American students to 
deduct interest on their loans to pay for a tax cut for people at the 
top?
  We are taking away a medical expense deduction for people who have 
Alzheimer's disease to pay for the tax cut for people at the top?
  We are assessing universities and colleges a new, special tax to pay 
for tax cuts for people at the top?
  We could have had this conversation. We acknowledge what President 
Reagan and Speaker O'Neill did because it was based upon good will and 
commonality and not needing just a political victory. Day after day 
they plowed through with 450 witnesses in front of the Ways and Means 
Committee.
  How many witnesses did we have in front of the Ways and Means 
Committee?
  Zero.
  How many hearings did we have on this tax bill?
  Zero.
  We saw the manager's amendment and were given 20 minutes to review 
it. I don't mean 25 minutes. I mean 20 minutes. Back to regular order. 
We should scrap this bill.
  To those who are vulnerable on the other side, I would not be 
trusting of the idea that these issues are going to be fixed after you 
cast this vote tomorrow morning. There will be an opportunity to go 
back and redo this if the other side would say: Let's find a meaningful 
path to cooperation between the two parties.
  That is all we are asking for on this side: include us in this 
discussion so we might invest in community colleges, vocational 
education, internship programs, skill set training, and answer the call 
of globalization.
  We still have innovation and creativity that far surpasses the rest 
of the world. There is nothing we can't answer in America without those 
healthy investments that we need.
  Instead, when you look at these distribution tables that are proposed 
as to who is going to get what; taking away the alternative minimum tax 
for the 4.5 million families that pay it; asking students to give up 
their student interest deduction; the estate tax, which we are 
repealing; and we are asking that loved ones who have Alzheimer's and 
being cared for at home to give up that medical deduction to pay for 
all of that, it makes no sense whatsoever. But there is an opportunity, 
Madam Speaker, to reverse course.
  In my years here, I can tell you this: Anybody who thinks that the 
United States Senate is going to accommodate their wishes, when they 
see the goalpost and the goal line of a handful of Members of this 
House, they are making a miscalculation.
  We have heard tonight they are going to do something about state and 
local tax deduction, they are going to do something about the historic 
tax credit, and they are going to revisit these issues.
  Do you know how difficult that is going to be, Madam Speaker?
  That is going to be nearly impossible.
  On top of that, they are going to go back and try to appeal the 
Affordable Care Act again and take 13 million people away from their 
insurance so that we can have a tax cut that further concentrates 
wealth for a handful of people in America?
  This is the House of Representatives, Madam Speaker, not the House of 
Lords. We don't serve here by peerage. We are not entitled to anything 
here. Most of us come from pretty modest backgrounds. That is the 
principle we should be honoring in this tax debate as we discuss who is 
about to pay what and what the rewards ought to be for the hardworking 
men and women.
  This is last note I am going to express before I yield back my time. 
What about those 1 million veterans who have served us honorably in 
Iraq and Afghanistan?
  New veterans, what about them?
  Are we going to eventually cut their benefits with Social Security 
and Medicare and Medicaid and put it all on the chopping block as we 
attempt to further concentrate wealth in America, particularly for 
unearned income, by the way?
  That is where we are heading.
  We should honor the skills of those men and women who get up every 
day and strive and work hard in this country with a sense of purpose 
and great patriotism. That is what we should be acknowledging in this 
debate.
  I am looking forward to tomorrow morning, when we conclude this 
debate and spend the 2 hours discussing more of what we have witnessed 
here tonight. There will be more than enough enthusiasm on our side. 
They will be lined up to RFK Stadium to participate tomorrow morning in 
this debate. That is how important this is to the future of the 
American people.
  Madam Speaker, I reserve the balance of my time.
  Mr. BRADY of Texas. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, Washington is just hilarious.
  Lawmakers back home tell everyone they are for tax reform, until it 
comes actually time to do it. Everyone says they want a fairer, 
flatter, simpler Tax Code, as long as you keep every special interest 
provision in this big, fat, messed-up Tax Code.
  Everyone says they want to give people back more of what they earned 
and get Main Street businesses going, as long as you don't change 
anything in the Tax Code. As long as the lobbyists win and the American 
people lose, they are willing to talk about it.
  House Republicans are actually acting on tax reform for the first 
time in 31 years.
  In Washington, they sneer at that family of four back home making 
$59,000 a year. That is the average household. Under our tax reform, 
they pay $1,182 less that they keep in their pocket. Washington makes 
fun of that. That is real money for families.

  A firefighter making $48,000 a year keeps over $1,300. That single 
mom working hard every day making $30,000 a year has a $700 larger 
refund than she gets today.
  That Main Street startup business working I don't know how many 
hours, making $62,000 a year--that was my Chamber of Commerce member 
right there--in that startup business, they keep $3,007 more than they 
do today. Washington just laughs at that. But it is real money for real 
people.
  In my district, a family of four making $90,000--two teachers--keeps 
$2,176 more every year of their life from this.
  My friends on the Democrat side now worry about the debt. I remember 
the first year Democrats took control of the House, they doubled the 
deficit. The second year, they tripled it. The third year, it went to 
$1 trillion. It stayed that way until the American people gave the 
House back to Republicans.
  They love spending money and raising the deficit when they let 
Washington grow, but when it is time to grow jobs and paychecks, all of 
a sudden they are worried about the debt.
  The truth of the matter is we want to keep this debt and deficits 
going. Don't change anything. Keep this slow-growth economy, keep 
spending, and I guarantee you debts and deficits will grow.
  We are talking about growing jobs, growing paychecks, and getting 
back to a balanced budget by getting this economy moving in a big way.
  At the end of the day, it is time to end the status quo in 
Washington, D.C. Americans deserve a fair, flatter Tax Code, one that 
closes loopholes and ends special interest deductions so that Americans 
can keep more of what they earn, so their paychecks can raise and our 
businesses can compete and win anywhere in the world, especially here 
at home America.
  It is time our jobs start coming back to America, rather than 
watching them go: our jobs, research, manufacturing patents, our 
headquarters. That era is over, and it starts with H.R. 1, the Tax Cuts 
and Jobs Act.

[[Page H9361]]

  We will continue this debate tomorrow, Madam Speaker, so we will 
continue to deliver tax reform and tax cuts for the American people.
  Madam Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further 
consideration of H.R. 1 is postponed.

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