S. 2681 — Introduced in Senate

II 113th CONGRESS 2d Session S. 2681 IN THE SENATE OF THE UNITED STATES July 29, 2014 Mr. Pryor (for himself and Mr. Walsh) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide incentives for businesses to keep jobs in the United States. 1. Short title This Act may be cited as the Keeping Jobs in America Act. 2. Inbound investment program to recruit jobs to the United States (a) Definitions In this section: (1) Distressed The term distressed, with respect to an area, means an area in the United States that, on the date on which the program is established under subsection (b)— (A) is included in the most recent classification of labor surplus areas by the Secretary of Labor; and (B) has an unemployment rate equal to or greater than 110 percent of the unemployment rate of the United States. (2) Eligible entity The term eligible entity means an entity that employs not fewer than 50 full-time equivalent employees in high-value jobs. (3) Eligible facility The term eligible facility means a facility at which— (A) an eligible entity employs not fewer than 50 full-time equivalent employees in high-value jobs; (B) with respect to a rural or distressed area, the mean of the wages provided by the eligible entity to individuals employed at such facility is greater than the mean wage for the county in which the rural or distressed area is located; and (C) derives at least the majority of its revenues from— (i) goods production; or (ii) providing product design, engineering, marketing, or information technology services. (4) High-value job defined The term high-value job means a job that— (A) exists within an eligible facility; and (B) has a North American Industrial Classification that corresponds with manufacturing, software publishers, computer systems design, or related codes, and is higher than the mean hourly wage in the country. (5) Rural The term rural, with respect to an area, means any area in the United States which, as confirmed by the latest decennial census, is not located within— (A) a city or town that has a population of greater than 50,000 inhabitants; or (B) an urbanized area contiguous and adjacent to a city or town described in subparagraph (A). (b) Program required Not later than 180 days after the date of the enactment of this Act, the Secretary of Commerce shall establish a program to award grants to States that are recruiting high-value jobs. Grants awarded under this section may be used to issue forgivable loans to eligible entities that are deciding whether to locate eligible facilities in the United States to assist such entities in locating such facilities in rural or distressed areas. (c) Federal grants to States (1) In general The Secretary shall carry out the program through the award of grants to States to provide loans and loan guarantees described in subsection (d). (2) Application (A) In general A State seeking a grant under the program shall submit an application to the Secretary in such manner and containing such information as the Secretary may require. Once the program is operational, any State may apply for a grant on an ongoing basis, until funds are exhausted. The Secretary may also establish a process for pre-clearing applications from States. The Secretary shall notify all States of this grant opportunity once the program is operational. All information about the program and the State application process must be online and must be in a format that is easily understood and is widely accessible. (B) Elements Each application submitted by a State under subparagraph (A) shall include— (i) a description of the eligible entity the State proposes to assist in locating an eligible facility in a rural or distressed area of the State; (ii) a description of such facility, including the number of high-value jobs relating to such facility; (iii) a description of such rural or distressed area; (iv) a description of the resources of the State that the State has committed to assisting such corporation in locating such facility, including tax incentives provided, bonding authority exercised, and land granted; and (v) such other elements as the Secretary considers appropriate. (C) Notice As soon as practicable after establishing the program under subsection (b), the Secretary shall notify all States of the grants available under the program and the process for applying for such grants. (D) Online submission of applications The Secretary shall establish a mechanism for the electronic submission of applications under subparagraph (A). Such mechanism shall utilize an Internet website and all information on such website shall be in a format that is easily understood and widely accessible. (E) Confidentiality The Secretary may not make public any information submitted by a State to the Secretary under this paragraph regarding the efforts of such State to assist an eligible entity in locating an eligible facility in such State without the express consent of the State. (3) Selection The Secretary shall award grants under the program on a competitive basis to States that— (A) the Secretary determines are most likely to succeed with a grant under the program in assisting an eligible entity in locating an eligible facility in a rural or distressed area; (B) if successful in assisting an eligible entity as described in subparagraph (A), will create the greatest number of high-value jobs in rural or distressed areas; (C) have committed significant resources, to the extent of their ability as determined by the Secretary, to assisting eligible entities in locating eligible facilities in a rural or distressed areas; or (D) meet such other criteria as the Secretary considers appropriate, including criteria relating to marketing plans, benefits to ongoing regional or State strategies for economic development, and job growth. (4) Limitation on competition between states The Secretary may not award a grant to a State under the program to assist an eligible entity— (A) in locating an eligible facility in such State if another State is already seeking to assist such eligible entity in locating such eligible facility in such other State; or (B) from relocating an eligible facility from one State to another State. (5) Availability of grant amounts For each grant awarded to a State under the program, the Secretary shall make available to such State the amount of such grant not later than 30 days after the date on which the Secretary awarded the grant. The total amount of grants awarded under this program may not exceed $100,000,000. (d) Loans and loan guarantees from States to corporations (1) In general Amounts received by a State under the program shall be used to provide assistance to an eligible entity to locate an eligible facility in a rural or distressed area of the State. (2) Loans and loan guarantees A State receiving a grant under the program may provide assistance under paragraph (1) in the form of— (A) a single loan to a single eligible entity as described in paragraph (1) to cover the costs incurred by the eligible entity in locating the eligible facility as described in such paragraph; or (B) a single loan guarantee to a financial institution making a single loan to a single eligible entity as described in paragraph (1) to cover the costs incurred by the eligible entity in locating the eligible facility as described in such paragraph. (3) Terms and conditions Each loan or loan guarantee provided under paragraph (2) shall have a term of 5 years and shall bear interest at rates equal to the Federal long-term rate under section 1274(d)(1)(C) of the Internal Revenue Code of 1986. (4) Amount The amount of a loan or loan guarantee issued to an eligible entity under the program for the location of an eligible facility shall be an amount equal to not more than $5,000 per full-time equivalent employee to be employed at such facility. (5) Repayment Repayment of a loan issued by a State to an eligible entity under the program shall be repaid in accordance with such schedule as the State shall establish in accordance with such rules as the Secretary shall prescribe for purposes of the program. Such rules shall provide for the following: (A) Forgiveness of all or a portion of the loan, the amount of such forgiveness depending upon the following: (i) The performance of the borrower. (ii) The number or quality of the jobs at the facility located under the program. (B) Repayment of principal or interest, if any, at the end of the term of the loan. (e) Assessment and recommendations (1) Ongoing assessment The Secretary shall conduct an ongoing assessment of the program. (2) Recommendations The Secretary may submit to Congress recommendations for such legislative action as the Secretary considers appropriate to improve the program, including with respect to any findings of the Secretary derived by comparing the program established under subsection (b) with the programs and policies of governments of other countries used to recruit high-value jobs. 3. Credit for insourcing expenses (a) In general Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 45S. Credit for insourcing expenses (a) In general For purposes of section 38, the insourcing expenses credit for any taxable year is an amount equal to 20 percent of the eligible insourcing expenses of the taxpayer which are taken into account in such taxable year under subsection (d). (b) Eligible insourcing expenses For purposes of this section— (1) In general The term eligible insourcing expenses means— (A) eligible expenses paid or incurred by the taxpayer in connection with the elimination of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located outside the United States, and (B) eligible expenses paid or incurred by the taxpayer in connection with the establishment of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located within the United States, if such establishment constitutes the relocation of the business unit so eliminated. For purposes of the preceding sentence, a relocation shall not be treated as failing to occur merely because such elimination occurs in a different taxable year than such establishment. (2) Eligible expenses The term eligible expenses means— (A) any amount for which a deduction is allowed to the taxpayer under section 162, and (B) permit and license fees, lease brokerage fees, equipment installation costs, and, to the extent provided by the Secretary, other similar expenses. Such term does not include any compensation which is paid or incurred in connection with severance from employment and, to the extent provided by the Secretary, any similar amount. (3) Business unit The term business unit means— (A) any trade or business, and (B) any line of business, or functional unit, which is part of any trade or business. (4) Expanded affiliated group The term expanded affiliated group means an affiliated group as defined in section 1504(a), determined without regard to section 1504(b)(3) and by substituting more than 50 percent for at least 80 percent each place it appears in section 1504(a). 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 paragraph). (5) Expenses must be pursuant to insourcing plan Amounts shall be taken into account under paragraph (1) only to the extent that such amounts are paid or incurred pursuant to a written plan to carry out the relocation described in paragraph (1). (6) Operating expenses not taken into account Any amount paid or incurred in connection with the on-going operation of a business unit shall not be treated as an amount paid or incurred in connection with the establishment or elimination of such business unit. (c) Increased domestic employment requirement No credit shall be allowed under this section unless the number of full-time equivalent employees of the taxpayer for the taxable year for which the credit is claimed exceeds the number of full-time equivalent employees of the taxpayer for the last taxable year ending before the first taxable year in which such eligible insourcing expenses were paid or incurred. For purposes of this subsection, full-time equivalent employees has the meaning given such term under section 45R(d) (and the applicable rules of section 45R(e)). All employers treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer for purposes of this subsection. (d) Credit allowed upon completion of insourcing plan (1) In general Except as provided in paragraph (2), eligible insourcing expenses shall be taken into account under subsection (a) in the taxable year during which the plan described in subsection (b)(5) has been completed and all eligible insourcing expenses pursuant to such plan have been paid or incurred. (2) Election to apply employment test and claim credit in first full taxable year after completion of plan If the taxpayer elects the application of this paragraph, eligible insourcing expenses shall be taken into account under subsection (a) in the first taxable year after the taxable year described in paragraph (1). (e) Possessions treated as part of the United States For purposes of this section, the term United States shall be treated as including each possession of the United States (including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands). (f) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. . (b) Credit To be part of general business credit Subsection (b) of section 38 of such Code is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by adding at the end the following new paragraph: (37) the insourcing expenses credit determined under section 45S(a). . (c) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 45S. Credit for insourcing expenses. . (d) Effective date The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act. (e) Application to United States possessions (1) Payments to possessions (A) Mirror code possessions The Secretary of the Treasury shall make periodic payments to each possession of the United States with a mirror code tax system in an amount equal to the loss to that possession by reason of section 45S of the Internal Revenue Code of 1986. Such amount shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (B) Other possessions The Secretary of the Treasury shall make annual payments to each possession of the United States which does not have a mirror code tax system in an amount estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of section 45S of such Code if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payment to the residents of such possession. (2) Coordination with credit allowed against united states income taxes No credit shall be allowed against United States income taxes under section 45S of such Code to any person— (A) to whom a credit is allowed against taxes imposed by the possession by reason of such section, or (B) who is eligible for a payment under a plan described in paragraph (1)(B). (3) Definitions and special rules (A) Possessions of the United States For purposes of this section, the term possession of the United States includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands. (B) Mirror code tax system For purposes of this section, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (C) Treatment of payments For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from sections referred to in such section 1324(b)(2). 4. Denial of deduction for outsourcing expenses (a) In general Part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 280I. Outsourcing expenses (a) In general No deduction otherwise allowable under this chapter shall be allowed for any specified outsourcing expense. (b) Specified outsourcing expense For purposes of this section— (1) In general The term specified outsourcing expense means— (A) any eligible expense paid or incurred by the taxpayer in connection with the elimination of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located within the United States, and (B) any eligible expense paid or incurred by the taxpayer in connection with the establishment of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located outside the United States, if such establishment constitutes the relocation of the business unit so eliminated. For purposes of the preceding sentence, a relocation shall not be treated as failing to occur merely because such elimination occurs in a different taxable year than such establishment. (2) Application of certain definitions and rules (A) Definitions For purposes of this section, the terms eligible expenses, business unit, and expanded affiliated group shall have the respective meanings given such terms by section 45S(b). (B) Operating expenses not taken into account A rule similar to the rule of section 45S(b)(6) shall apply for purposes of this section. (c) Special rules (1) Application to deductions for depreciation and amortization In the case of any portion of a specified outsourcing expense which is not deductible in the taxable year in which paid or incurred, such portion shall neither be chargeable to capital account nor amortizable. (2) Possessions treated as part of the United States For purposes of this section, the term United States shall be treated as including each possession of the United States (including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands). (d) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations which provide (or create a rebuttable presumption) that certain establishments of business units outside the United States will be treated as relocations (based on timing or such other factors as the Secretary may provide) of business units eliminated within the United States. . (b) Limitation on subpart F income of controlled foreign corporations determined without regard to specified outsourcing expenses Subsection (c) of section 952 of such Code is amended by adding at the end the following new paragraph: (4) Earnings and profits determined without regard to specified outsourcing expenses For purposes of this subsection, earnings and profits of any controlled foreign corporation shall be determined without regard to any specified outsourcing expense (as defined in section 280I(b)). . (c) Clerical amendment The table of sections for part IX of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 280I. Outsourcing expenses. . (d) Effective date The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act. 5. Extension of bonus depreciation (a) In general Paragraph (2) of section 168(k) of the Internal Revenue Code of 1986 is amended— (1) by striking January 1, 2015 in subparagraph (A)(iv) and inserting January 1, 2019, and (2) by striking January 1, 2014 each place it appears and inserting January 1, 2018. (b) Special rule for Federal long-Term contracts Clause (ii) of section 460(c)(6)(B) of such Code is amended by striking January 1, 2014 (January 1, 2015 and inserting January 1, 2018 (January 1, 2019. (c) Extension of election To accelerate the AMT credit in lieu of bonus depreciation (1) In general Subclause (II) of section 168(k)(4)(D)(iii) of such Code is amended by striking 2014 and inserting 2018. (2) Round 4 extension property Paragraph (4) of section 168(k) of such Code is amended by adding at the end the following new subparagraph: (K) Special rules for round 4 extension property (i) In general In the case of round 4 extension property, in applying this paragraph to any taxpayer— (I) the limitation described in subparagraph (B)(i) and the business credit increase amount under subparagraph (E)(iii) thereof shall not apply, and (II) the bonus depreciation amount, maximum amount, and maximum increase amount shall be computed separately from amounts computed with respect to eligible qualified property which is not round 4 extension property. (ii) Election (I) A taxpayer who has an election in effect under this paragraph for round 3 extension property shall be treated as having an election in effect for round 4 extension property unless the taxpayer elects to not have this paragraph apply to round 4 extension property. (II) A taxpayer who does not have an election in effect under this paragraph for round 3 extension property may elect to have this paragraph apply to round 4 extension property. (iii) Round 4 extension property For purposes of this subparagraph, the term round 4 extension property means property which is eligible qualified property solely by reason of the extension of the application of the special allowance under paragraph (1) pursuant to the amendments made by section 5(a) of the Keeping Jobs in America Act (and the application of such extension to this paragraph pursuant to the amendment made by section 5(c) of such Act). . (d) Conforming amendments (1) The heading for subsection (k) of section 168 of such Code is amended by striking January 1, 2014 and inserting January 1, 2018. (2) The heading for clause (ii) of section 168(k)(2)(B) of such Code is amended by striking pre-January 1, 2014 and inserting pre-January 1, 2018. (3) Subparagraph (C) of section 168(n)(2) of such Code is amended by striking January 1, 2014 and inserting January 1, 2018. (4) Subparagraph (D) of section 1400L(b)(2) of such Code is amended by striking January 1, 2014 and inserting January 1, 2018. (5) Subparagraph (B) of section 1400N(d)(3) of such Code is amended by striking January 1, 2014 and inserting January 1, 2018. (e) Technical amendment relating to section 331 of the American Taxpayer Relief Act of 2012 (1) In general Clause (iii) of section 168(k)(4)(J) of such Code is amended by striking any taxable year and inserting its first taxable year. (2) Effective date The amendment made by this subsection shall take effect as if included in the provision of the American Taxpayer Relief Act of 2012 to which it relates. (f) Effective date The amendments made by this section shall apply to property placed in service after December 31, 2013, in taxable years ending after such date. 6. Increased expensing limitations and treatment of certain real property as section 179 property (a) In general (1) Dollar limitation Paragraph (1) of section 179(b) of the Internal Revenue Code of 1986 is amended by striking shall not exceed— and all that follows and inserting shall not exceed $500,000.. (2) Reduction in limitation Paragraph (2) of section 179(b) of such Code is amended by striking exceeds— and all that follows and inserting exceeds $2,000,000.. (b) Computer software Clause (ii) of section 179(d)(1)(A) of such Code is amended by striking , to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2014 and inserting and to which section 167 applies. (c) Election Paragraph (2) of section 179(c) of such Code is amended— (1) by striking may not be revoked and all that follows through and before 2014, and (2) by striking irrevocable in the heading thereof. (d) Air conditioning and heating units Paragraph (1) of section 179(d) of such Code is amended by striking and shall not include air conditioning or heating units. (e) Qualified real property Subsection (f) of section 179 of such Code is amended— (1) by striking beginning in 2010, 2011, 2012, or 2013 in paragraph (1), and (2) by striking paragraphs (3) and (4). (f) Inflation adjustment Subsection (b) of section 179 of such Code is amended by adding at the end the following new paragraph: (6) Inflation adjustment (A) In general In the case of any taxable year beginning after 2014, the dollar amounts in paragraphs (1) and (2) shall each 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 such calendar year, determined by substituting calendar year 2013 for calendar year 2012 in clause (ii) thereof. (B) Rounding The amount of any increase under subparagraph (A) shall be rounded to the nearest multiple of $10,000. . (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2013. 7. Permanent extension of new markets tax credit (a) Extension (1) In general Subparagraph (G) of section 45D(f)(1) of the Internal Revenue Code of 1986 is amended by striking , 2011, 2012, and 2013 and inserting and each calendar year thereafter. (2) Conforming amendment Section 45D(f)(3) of such Code is amended by striking the last sentence. (b) Inflation adjustment Subsection (f) of section 45D of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (4) Inflation adjustment (A) In general In the case of any calendar year beginning after 2013, the dollar amount in paragraph (1)(G) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2000 for calendar year 1992 in subparagraph (B) thereof. (B) Rounding rule Any increase under subparagraph (A) which is not a multiple of $1,000,000 shall be rounded to the nearest multiple of $1,000,000. . (c) Alternative minimum tax relief Subparagraph (B) of section 38(c)(4) of the Internal Revenue Code of 1986 is amended— (1) by redesignating clauses (v) through (ix) as clauses (vi) through (x), respectively, and (2) by inserting after clause (iv) the following new clause: (v) the credit determined under section 45D, but only with respect to credits determined with respect to qualified equity investments (as defined in section 45D(b)) initially made before January 1, 2014, . (d) Effective dates (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. (2) Alternative minimum tax relief The amendments made by subsection (c) shall apply to credits determined with respect to qualified equity investments (as defined in section 45D(b) of the Internal Revenue Code of 1986) initially made after the date of the enactment of this Act.