I
112th CONGRESS
2d Session
H. R. 6474
IN THE HOUSE OF REPRESENTATIVES
September 20, 2012
Mr. Ross of Florida introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Oversight and Government Reform, House Administration, Rules, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To adopt the seven immediate reforms recommended by the National Commission on Fiscal Responsibility and Reform to reduce spending and make the Federal Government more efficient.
Short title; table of contents
In general
This Act may be cited
as the Implementation of
Simpson-Bowles Spending Reductions Act of 2012
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Title I—Reduced expenditures
Sec. 101. Reduction in appropriations to the White House and Congress.
Sec. 102. No cost of living adjustment in pay of Members of Congress.
Sec. 103. Pay freeze for Federal employees.
Sec. 104. Reduction in Federal workforce.
Sec. 105. Reduction in Government travel costs.
Sec. 106. Limitation on Government printing costs.
Sec. 107. Reduction in Federal vehicle costs.
Sec. 108. Sale of excess Federal property.
Sec. 109. Prohibition on earmarks.
Title II—Tax Reform
Subtitle A—Tax rates
Sec. 201. Individual rates.
Sec. 202. Repeal of alternative minimum tax on individuals.
Sec. 203. Permanent repeal of personal exemption phaseout.
Sec. 204. Permanent repeal of phaseout of overall limitation on itemized deductions.
Sec. 205. Corporate income tax rate reduced to flat rate of 20 percent.
Sec. 206. Renewed temporary dividends received deduction.
Subtitle B—Elimination of tax expenditures
Sec. 211. Termination of credit for increasing research activities.
Sec. 212. Termination of deduction for intangible drilling and development costs.
Sec. 213. Repeal of domestic production activities deduction with respect to production of coal, lignite, or oil shale.
Sec. 214. Repeal percentage depletion for oil and natural gas wells.
Sec. 215. Termination of credit for electricity produced from certain renewable resources.
Sec. 216. Termination of energy credit.
Sec. 217. Repeal of credit for alcohol used as fuel.
Sec. 218. Repeal of credit for alcohol fuel, biodiesel, and alternative fuel mixtures.
Sec. 219. Repeal of credit for biodiesel and renewable diesel used as fuel.
Sec. 220. Repeal of credit for certain plug-in electric vehicles.
Sec. 221. Early termination of credit for qualified fuel cell motor vehicles.
Sec. 222. Repeal of deduction for energy conservation subsidies provided by public utilities.
Sec. 223. Repeal of qualifying advanced coal project credit.
Sec. 224. Repeal of qualifying gasification project credit.
Sec. 225. Repeal of special allowance for cellulosic biofuel plant property.
Sec. 226. Repeal of election to expense certain refineries.
Sec. 227. Repeal of 2-year amortization of geological and geophysical expenditures.
Sec. 228. Repeal of deduction for energy efficient commercial building property.
Sec. 229. Repeal of credit for construction of new energy efficient homes.
Sec. 230. Repeal of credit for energy efficient appliances.
Sec. 231. Repeal of credit for residential energy efficient property.
Sec. 232. Repeal of advanced energy project credit.
Sec. 233. Repeal of credit for carbon dioxide sequestration.
Sec. 234. Repeal of low-income housing credit.
Sec. 235. Repeal of Hope and Lifetime Learning Credits.
Sec. 236. Repeal of work opportunity tax credit.
Sec. 237. Repeal of credit for expenses for household and dependent care services necessary for gainful employment.
Sec. 238. Repeal of credit for adoption expenses.
Sec. 239. Repeal of credit for expenditures to provide access to disabled individuals.
Sec. 240. Repeal of earned income tax credit.
Sec. 241. Repeal of energy conservation subsidies provided by public utilities.
Sec. 242. Repeal of election to expense certain refinery property.
Sec. 243. Repeal of deduction for endangered species recovery expenditures.
Sec. 244. Repeal of exclusion of cancellation of indebtedness income of solvent farmers.
Sec. 245. Repeal of alternative minimum tax treatment of certain property and casualty insurance companies.
Sec. 246. Repeal of small life insurance company deduction.
Sec. 247. Termination of $25,000 exemption from passive loss rules for rental real estate activities.
Sec. 248. Repeal of discharge of indebtedness exclusion.
Sec. 249. Repeal of certain exceptions for imputed interest rules.
Sec. 250. Treatment of capital gains and dividends as ordinary income.
Sec. 251. Termination of partial exclusion for gain from certain small business stock.
Sec. 252. Termination of treatment of losses on small business stock as ordinary.
Sec. 253. Repeal of student loan interest deduction.
Sec. 254. Repeal of deduction of tuition and related expenses.
Sec. 255. Repeal of gross income exclusion for United States savings bonds used to pay higher education expenses.
Sec. 256. Elimination of personal exemption for students age 19 and older.
Sec. 257. Elimination of above the line deduction for certain expenses of elementary and secondary school teachers.
Sec. 258. Elimination of gross income exclusion for discharge of certain student loan debt.
Sec. 259. Repeal of exclusion from gross income for rental value of parsonages.
Sec. 260. Repeal of exclusion from gross income for benefits provided to volunteer firefighters and emergency medical responders.
Sec. 261. Repeal of special treatment of Blue Cross and Blue Shield organizations, etc.
Sec. 262. Sense of the House regarding a territorial tax system.
Sec. 263. Temporary dividends received deduction allowed for 2011 or 2012.
Subtitle C—Phaseout of Tax Expenditures
Sec. 271. Five-year phaseout of certain tax expenditures.
Subtitle D—Special Status
Sec. 381. Termination of qualified energy conservation bonds.
Sec. 382. Termination of new clean renewable energy bonds.
Sec. 383. Termination of exempt facility bond treatment for water, sewage, and solid waste facilities.
Sec. 384. Termination of expensing and amortization of reforestation expenditures and expensing of timber-growing costs.
Sec. 385. Termination of deferral of gain on sales of stock in agricultural refiners and processors to eligible farm cooperatives.
Sec. 386. Termination of election to expense certain depreciable business assets.
Sec. 387. Termination of qualified small issue bonds.
Sec. 388. Termination of exempt facility bond treatment for qualified highway or surface freight transfer facilities.
Sec. 389. Termination of exempt facility bond treatment for airports, docks, and wharves.
Sec. 390. Termination of tribal economic development bonds.
Sec. 391. Termination of exclusion from gross income of United States savings bonds interest used to pay higher education expenses.
Sec. 392. Termination of qualified zone academy bonds.
Sec. 393. Termination of exempt facility bond treatment for qualified public educational facilities.
Sec. 394. Termination of hospital bonds.
Reduced expenditures
Reduction in appropriations to the White House and Congress
Appropriations to the White House
Notwithstanding any other provision of law,
the total amount of funds appropriated to the appropriations account under the
heading The White
House
under the heading EXECUTIVE OFFICE OF THE PRESIDENT AND FUNDS
APPROPRIATED TO THE PRESIDENT
for each of fiscal years
2012 through 2016 may not exceed 85 percent of the total amount of funds
appropriated to that account for fiscal year 2011.
Appropriations to Congress
Notwithstanding any other provision of law, the total
amount of funds appropriated under the headings SENATE
and
HOUSE OF
REPRESENTATIVES
for each of fiscal years 2012 through
2016 may not exceed 85 percent of the total amount of funds appropriated under
those headings for fiscal year 2011.
No cost of living adjustment in pay of Members of Congress
Notwithstanding any other provision of law, no adjustment shall be made under section 601(a) of the Legislative Reorganization Act of 1946 (2 U.S.C. 31) (relating to cost of living adjustments for Members of Congress) during fiscal years 2013, 2014, and 2015.
Pay freeze for Federal employees
Section 147 of the Continuing Appropriations Act, 2011 (Public Law 111–242) is amended—
in subsection
(b)(1), by striking December 31, 2012
and inserting
December 31, 2015
; and
in subsection (c), by striking
December 31, 2012
and inserting December 31,
2015
.
Reduction in Federal workforce
Definition
For the purpose of this section—
the term total number of Federal employees means the total number of Federal employees in all agencies;
the term Federal employee means an employee as defined by section 2105 of title 5, United States Code; and
the term agency means an Executive agency as defined by section 105 of title 5, United States Code, excluding the Government Accountability Office.
Limitation
The President, through the Office of Management and Budget (in consultation with the Office of Personnel Management), shall take appropriate measures to ensure that, effective beginning in fiscal year 2015, the total number of Federal employees (as determined under subsection (c)) shall not exceed 90 percent of the total number of Federal employees as of September 30, 2011 (as so determined).
Monitoring and notification
The Office of Management and Budget (in consultation with the Office of Personnel Management)—
shall continuously monitor all agencies and make a determination, as of September 30, 2011, and the last day of each quarter of each fiscal year beginning thereafter, as to whether or not the total number of Federal employees exceeds the maximum number allowable under subsection (b); and
whenever a determination under paragraph (1) is made that the total number of Federal employees exceeds the maximum number allowable under subsection (b), shall provide written notice to that effect to the President and Congress within 14 days after the last day of the quarter to which such determination relates.
Compliance
Whenever, with respect to the quarter ending on September 30, 2014, or any subsequent quarter, the Office of Management and Budget provides written notice under subsection (c)(2) that the total number of Federal employees exceeds the maximum number allowable under subsection (b), no agency may thereafter appoint any employee to fill any vacancy within such agency until the Office of Management and Budget provides written notice to the President and Congress of a determination under subsection (c)(1) that the total number of Federal employees no longer exceeds the maximum number allowable under subsection (b). Any notice under the preceding sentence shall be provided within 14 days after the last day of the quarter to which the determination relates.
Waiver
Emergencies
This section may be waived upon a determination by the President that—
the existence of a state of war or other national security concern so requires; or
the existence of an extraordinary emergency threatening life, health, public safety, property, or the environment so requires.
Agency efficiency or critical mission
This section may be waived, with respect to a particular position or category of positions in an agency, upon a determination by the President that the efficiency of the agency or the performance of a critical agency mission so requires.
Replacement rate
To the extent necessary to achieve the workforce reduction required by subsection (b), the Office of Management and Budget (in consultation with the Office of Personnel Management) shall take appropriate measures to ensure that agencies shall appoint no more than 1 employee for every 3 employees retiring or otherwise separating from Government service after the date of the enactment of this Act. This subsection shall cease to apply after September 30, 2014.
Counting rule
For purposes of this section, any determination of the number of employees in an agency shall be expressed on a full-time equivalent basis.
Limitation on procurement of service contracts
The President, through the Office of Management and Budget (in consultation with the Office of Personnel Management), shall take appropriate measures to ensure that there is no increase in the procurement of service contracts by reason of the enactment of this Act, except in cases in which a cost comparison demonstrates that such contracts would be to the financial advantage of the Government.
Reduction in Government travel costs
Definition
In this section, the term agency means an executive agency as defined under section 105 of title 5, United States Code.
Reduction
Notwithstanding any other provision of law, the total amount of funds appropriated to the appropriations account providing for travel expenses for each agency for each of fiscal years 2012, 2013, 2014, 2015, and 2016 may not exceed 80 percent of the total amount of funds appropriated to each of those appropriations accounts for fiscal year 2011.
Limitation on Government printing costs
Not later than 180 days after the date of enactment of this Act, the Director of the Office of Management and Budget shall coordinate with the heads of Federal departments and independent agencies to—
determine which Government publications could be available on Government websites and no longer printed and to devise a strategy to reduce overall Government printing costs over the 10-year period beginning with fiscal year 2012, except that the Director shall ensure that essential printed documents prepared for social security recipients, medicare beneficiaries, and other populations in areas with limited internet access or use continue to remain available;
establish government-wide Federal guidelines on employee printing;
issue on the Office of Management and Budget's public website the results of a cost-benefit analysis on implementing a digital signature system and on establishing employee printing identification systems, such as the use of individual employee cards or codes, to monitor the amount of printing done by Federal employees; except that the Director of the Office of Management and Budget shall ensure that Federal employee printing costs unrelated to national defense, homeland security, border security, national disasters, and other emergencies do not exceed $860,000,000 annually; and
issue guidelines requiring every department, agency, commission or office to list at a prominent place near the beginning of each publication distributed to the public and issued or paid for by the Federal Government—
the name of the issuing agency, department, commission or office;
the total number of copies of the document printed;
the collective cost of producing and printing all of the copies of the document; and
the name of the firm publishing the document.
Reduction in Federal vehicle costs
Notwithstanding any other provision of law, for fiscal year 2012 and each fiscal year thereafter, the amount made available to the General Services Administration for the acquisition of new vehicles for the Federal fleet shall not exceed an amount equal to 80 percent of the amount made available for the acquisition of those vehicles for fiscal year 2010.
Sale of excess Federal property
In general
Chapter 5 of subtitle I of title 40, United States Code, is amended by adding at the end the following:
Expedited disposal of real property
Definitions
In this subchapter:
Director
The term Director means the Director of the Office of Management and Budget.
Landholding agency
The term landholding agency means a landholding agency (as defined in section 501(i) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11411(i))).
Real property
In general
The term real property means—
a parcel of real property under the administrative jurisdiction of the Federal Government that is—
excess;
surplus;
underperforming; or
otherwise not meeting the needs of the Federal Government, as determined by the Director; and
a building or other structure located on real property described in clause (i).
Exclusion
The term real property excludes any parcel of real property, and any building or other structure located on real property, that is to be closed or realigned under the Defense Authorization Amendments and Base Closure and Realignment Act (10 U.S.C. 2687 note; Public Law 100–526).
Disposal program
In general
Except as provided in subsection (e), the Director shall, by sale or auction, dispose of a quantity of real property with an aggregate value of not less than $100,000,000 that, as determined by the Director, is not being used, and will not be used, to meet the needs of the Federal Government for the period of fiscal years 2011 through 2015.
Recommendations
The head of each landholding agency shall recommend to the Director real property for disposal under subsection (a).
Selection of properties
After receiving recommendations of candidate real property under subsection (b), the Director—
with the concurrence of the head of each landholding agency, may select the real property for disposal under subsection (a); and
shall notify the recommending landholding agency head of the selection of the real property.
Website
The Director shall ensure that all real properties selected for disposal under this section are listed on a website that shall—
be updated routinely; and
include the functionality to allow any member of the public, at the option of the member, to receive updates of the list through electronic mail.
Transfer of property
The Director may transfer real property selected for disposal under this section to the Department of Housing and Urban Development if the Secretary of Housing and Urban Development determines that the real property is suitable for use in assisting the homeless.
.
Technical and Conforming Amendment
The table of sections for chapter 5 of subtitle I of title 40, United States Code, is amended by inserting after the item relating to section 611 the following:
SUBCHAPTER VII—Expedited disposal of real property
Sec. 621. Definitions.
Sec. 622. Disposal program.
.
Prohibition on earmarks
Section 312 of the Congressional Budget Act of 1974 is amended by inserting at the end the following:
Prohibition on earmarks
Bills and joint resolutions
In general
It shall not be in order in the Senate or the House of Representatives to consider a bill, resolution, or amendment that includes an earmark, limited tax benefit, or limited tariff benefit.
Procedure
In the Senate, a point of order under this paragraph may be raised by a Senator as provided in section 313(e) of the Congressional Budget Act of 1974.
Conference report
In general
It shall not be in order in the Senate or the House of Representatives to vote on the adoption of a report of a committee of conference if the report includes an earmark, limited tax benefit, or limited tariff benefit.
Procedure
When the Senate is considering a conference report on, or an amendment between the Houses in relation to, an appropriations act, upon a point of order being made by any Senator pursuant to this paragraph, and such point of order being sustained, such material contained in such conference report shall be deemed stricken, and the Senate shall proceed to consider the question of whether the Senate shall recede from its amendment and concur with a further amendment, or concur in the House amendment with a further amendment, as the case may be, which further amendment shall consist of only that portion of the conference report or House amendment, as the case may be, not so stricken. Any such motion in the Senate shall be debatable under the same conditions as was the conference report. In any case in which such point of order is sustained against a conference report (or Senate amendment derived from such conference report by operation of this subsection), no further amendment shall be in order.
Waiver
Any Senator may move to waive any or all points of order under this subsection by an affirmative vote of two-thirds of the Members, duly chosen and sworn.
Definitions
For the purpose of this subsection—
the term earmark means a provision or report language included primarily at the request of a Senator or Member of the House of Representatives providing, authorizing, or recommending a specific amount of discretionary budget authority, credit authority, or other spending authority for a contract, loan, loan guarantee, grant, loan authority, or other expenditure with or to an entity, or targeted to a specific State, locality or Congressional district, other than through a statutory or administrative formula-driven or competitive award process;
the term limited tax benefit means any revenue provision that—
provides a Federal tax deduction, credit, exclusion, or preference to a particular beneficiary or limited group of beneficiaries under the Internal Revenue Code of 1986; and
contains eligibility criteria that are not uniform in application with respect to potential beneficiaries of such provision; and
the term limited tariff benefit means a provision modifying the Harmonized Tariff Schedule of the United States in a manner that benefits 10 or fewer entities.
Application
This subsection shall not apply to any authorization of appropriations to a Federal entity if such authorization is not specifically targeted to a State, locality or congressional district.
.
Tax Reform
Tax rates
Individual rates
In general
Section 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Post-2012 rate table
In general
In the case of taxable years beginning after December 31, 2012, the following table shall apply in lieu of the tables under subsections (a), (b), (c), (d), and (e):
| If taxable income is: | The tax is: |
| Not over $100,000 | 10% of taxable income |
| Over $100,000 | $10,000, plus 20% of the excess over $100,000. |
Inflation adjustment
In general
In the case of any taxable year beginning after 2013, the
Secretary shall prescribe, in the same manner as under subsection (f), a table
which shall apply in lieu of the table under paragraph (1), except that
subsection (f)(3)(B) shall be applied by substituting 2012
for
1992
.
.
Maximum capital gains rate
Paragraph (1) of section 1(b) of such Code is amended to read as follows:
In general
If a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of—
a tax computed at the rates and in the same manner as if this subsection had not been enacted on taxable income reduced by the net capital gain;
0 percent of so much of the net capital gain as does not exceed $1,000,000; and
20 percent of so much of net capital gain as exceeds $1,000,000.
.
Repeal of alternative minimum tax on individuals
In general
Section 55(a) of the Internal Revenue Code of 1986 (relating to alternative minimum tax imposed) is amended by adding at the end the following new flush sentence:
For purposes of this title, the tentative minimum tax on any taxpayer other than a corporation for any taxable year beginning after December 31, 2011, shall be zero.
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2011.
Permanent repeal of personal exemption phaseout
Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to the amendments made by section 102 of such Act.
Permanent repeal of phaseout of overall limitation on itemized deductions
Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to the amendments made by section 103 of such Act.
Corporate income tax rate reduced to flat rate of 20 percent
In general
Paragraph (1) of
section 11(b) of the Internal Revenue Code of 1986 is amended by striking
shall be the sum of—
and all that follows through the period at
the end and inserting shall be 20 percent of taxable
income.
.
Personal Service Corporations
Paragraph (2) of
section 11(b) of such Code is amended by striking 35 percent
and
inserting 20 percent
.
Conforming Amendments
Subsection (a) of section 1201 of such Code is amended—
by striking
35 percent (determined without regard to the last 2 sentences of section
11(b))
and inserting 20 percent
, and
by striking
35 percent
each place it appears (other than in the matter
preceding paragraph (1)) and inserting 20 percent
.
Paragraphs (1),
(2), and (6) of section 1445(e) of such Code are each amended by striking
35 percent
and inserting 20 percent
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Renewed temporary dividends received deduction
Election
Subsection (f) of section 965 of the Internal Revenue Code of 1986 (relating to election) is amended to read as follows:
Election
The taxpayer may elect to apply this section to—
the taxpayer’s last taxable year which begins before the date of the enactment of this subsection, or
the taxpayer’s first taxable year which begins during the 1-year period beginning on such date.
.
Limitation
Paragraph (1) of section 965(b) of such Code is amended to read as follows:
In general
The amount of dividends taken into account under subsection (a) shall not exceed the sum of the current and accumulated earnings and profits described in section 959(c)(3) for the year a deduction is claimed under subsection (a), without diminution by reason of any distributions made during the election year, for all controlled foreign corporations of the United States shareholder.
.
Failure To maintain employment levels
Paragraph (4) of section 965(b) of such Code (relating to limitations) is amended to read as follows:
Reduction in benefits for failure to maintain employment levels
In general
If, during the period consisting of the calendar month in which the taxpayer first receives a distribution described in subsection (a)(1) and the succeeding 23 calendar months, the taxpayer does not maintain an average employment level at least equal to the taxpayer’s prior average employment, an additional amount equal to $25,000 multiplied by the number of employees by which the taxpayer’s average employment level during such period falls below the prior average employment (but not exceeding the aggregate amount allowed as a deduction pursuant to subsection (a)(1)) shall be taken into income by the taxpayer during the taxable year that includes the final day of such period.
Average employment level
For purposes of this paragraph, the taxpayer’s average employment level for a period shall be the average number of full-time United States employees of the taxpayer, measured at the end of each month during the period.
Prior average employment
For purposes of this paragraph, the taxpayer’s
prior average employment
shall be the average number of
full-time United States employees of the taxpayer during the period consisting
of the 24 calendar months immediately preceding the calendar month in which the
taxpayer first receives a distribution described in subsection (a)(1).
Full-time united states employee
For purposes of this paragraph—
In general
The term full-time United States employee
means an individual who provides services in the United States as a full-time
employee, based on the employer’s standards and practices; except that
regardless of the employer’s classification of the employee, an employee whose
normal schedule is 40 hours or more per week is considered a full-time
employee.
Exception for changes in ownership of trades or businesses
Such term does not include—
any individual who was an employee, on the date of acquisition, of any trade or business acquired by the taxpayer during the 24-month period referred to in subparagraph (A); and
any individual who was an employee of any trade or business disposed of by the taxpayer during the 24-month period referred to in subparagraph (A) or the 24-month period referred to in subparagraph (C).
Aggregation rules
In determining the taxpayer’s average employment level and prior average employment, all domestic members of a controlled group shall be treated as a single taxpayer.
.
Threshold period
Section 965 of such Code is amended by striking
June 30, 2003
each place it occurs and inserting June 30,
2011
.
Base period
Paragraph (2) of subsection 965(c) of such Code is amended by inserting at the end of subparagraph (A) the following flush sentence:
For purposes of this paragraph, taxable years shall not include any year for which an election under section 965 was in effect.
.
Indebtedness determination date
Subparagraph (B) of section 965(b)(3) of such
Code is amended by striking October 3, 2004
and inserting
January 19, 2012
.
Conforming amendments
Subsection 965(c) of such Code, as amended by subsection (e), is amended by striking paragraph (1) and redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively.
Paragraph 965(c)(4) of such Code, as redesignated by paragraph (1), is amended to read as follows:
Controlled groups
All United States shareholders which are members of an affiliated group filing a consolidated return under section 1501 shall be treated as one United States shareholder.
.
Effective date
The amendments made by this section shall apply to taxable years ending on or after the date of the enactment of this Act.
Elimination of tax expenditures
Termination of credit for increasing research activities
Effective for taxable years beginning after the date of the enactment of this Act, section 41 of the Internal Revenue Code of 1986 is hereby repealed.
Termination of deduction for intangible drilling and development costs
In general
Section 263(c) is amended by adding at the end the
following new sentence: This subsection shall not apply to any taxable
year beginning after the date of the enactment of this
sentence.
.
Conforming amendments
Paragraphs (2) and (3) of section 291(b) are each
amended by striking section 263(c), 616(a),
and inserting
section 616(a)
.
Effective date
The amendments made by this section shall apply to costs paid or incurred in taxable years beginning after the date of the enactment of this Act.
Repeal of domestic production activities deduction with respect to production of coal, lignite, or oil shale
In general
Subparagraph (B) of section 199(c)(4), as amended by this
Act, is amended by striking or
at the end of clause (iii), by
striking the period at the end of clause (iv) and inserting ,
or
, and by adding at the end the following new clause:
the lease, rental, license, sale, exchange, or other disposition of coal, lignite, or oil shale.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Repeal percentage depletion for oil and natural gas wells
In general
Section 613A is amended by adding at the end the following new subsection:
Termination
After the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012, this section and section 611 shall not apply to any oil or gas well.
.
Conforming amendment
Section 613A(c)(1) is amended by striking
subsection (d)
and inserting subsections (d) and
(f)
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Termination of credit for electricity produced from certain renewable resources
Effective for property placed in service after the date of the enactment of this Act, section 45 is repealed.
Termination of energy credit
Effective for property placed in service after the date of the enactment of this Act, section 48 is repealed.
Repeal of credit for alcohol used as fuel
Effective for fuel sold or used after the date of the enactment of this Act, section 40 is repealed.
Repeal of credit for alcohol fuel, biodiesel, and alternative fuel mixtures
Effective for fuel sold and used after the date of the enactment of this Act, section 6426 is repealed.
Repeal of credit for biodiesel and renewable diesel used as fuel
Effective for fuel produced, and sold or used, after the date of the enactment of this Act, section 40A is repealed.
Repeal of credit for certain plug-in electric vehicles
Effective for property placed in service after the date of the enactment of this Act, section 30 is repealed.
Early termination of credit for qualified fuel cell motor vehicles
Effective for property placed in service after the date of the enactment of this Act, section 30B is repealed.
Repeal of deduction for energy conservation subsidies provided by public utilities
Effective for amounts received after the date of the enactment of this Act, section 136 is repealed.
Repeal of qualifying advanced coal project credit
Effective for taxable years beginning after the date of the enactment of this Act, section 48A is repealed.
Repeal of qualifying gasification project credit
Effective for taxable years beginning after the date of the enactment of this Act, section 48B is repealed.
Repeal of special allowance for cellulosic biofuel plant property
In general
Section 168 is amended by striking subsection (l).
Effective date
The amendment made by this section shall apply to property placed in service after the date of the enactment of this Act.
Repeal of election to expense certain refineries
Effective for property placed in service after the date of the enactment of this Act, section 179C is repealed.
Repeal of 2-year amortization of geological and geophysical expenditures
In general
Paragraphs (1) and
(4) of section 167(h) are each amended by striking 24-month
and
inserting 7-year
.
Conforming amendment
Subsection (h) of section 167 is amended by striking paragraph (5).
Effective date
The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.
Repeal of deduction for energy efficient commercial building property
Effective for property placed in service after the date of the enactment of this Act, section 179D is repealed.
Repeal of credit for construction of new energy efficient homes
Effective for homes acquired after the date of the enactment of this Act, section 45L is repealed.
Repeal of credit for energy efficient appliances
Effective for property placed in service after the date of the enactment of this Act, section 25C is repealed.
Repeal of credit for residential energy efficient property
Effective for property placed in service after the date of the enactment of this Act, section 25D is repealed.
Repeal of advanced energy project credit
Effective for property placed in service after the date of the enactment of this Act, section 48C is repealed.
Repeal of credit for carbon dioxide sequestration
Effective for carbon dioxide captured after the date of the enactment of this Act, section 45Q is repealed.
Repeal of low-income housing credit
Effective for property placed in service after the date of the enactment of this Act, section 42 is repealed.
Repeal of Hope and Lifetime Learning Credits
Effective for amounts paid or incurred after the date of the enactment of this Act, section 25A is repealed.
Repeal of work opportunity tax credit
Effective for wages paid after the date of the enactment of this Act, section 51 is repealed.
Repeal of credit for expenses for household and dependent care services necessary for gainful employment
Effective for expenses paid after the date of the enactment of this Act, section 21 is repealed.
Repeal of credit for adoption expenses
Effective for expenses paid or incurred after the date of the enactment of this Act, section 23 is repealed.
Repeal of credit for expenditures to provide access to disabled individuals
Effective for expenditures paid or incurred after the date of the enactment of this Act, section 44 is repealed.
Repeal of earned income tax credit
Effective for taxable years beginning after the date of the enactment of this Act, section 32 is repealed.
Repeal of energy conservation subsidies provided by public utilities
Effective for amounts received after the date of the enactment of this Act, section 136 is repealed.
Repeal of election to expense certain refinery property
Effective for property placed in service after the date of the enactment of this Act, sections 168(l) and 179C are repealed.
Repeal of deduction for endangered species recovery expenditures
In general
Subsections (a) and
(c)(1) of section 175 are each amended by striking , or for endangered
species recovery
.
Conforming amendments
The heading for
section 175 is amended by striking ; endangered species recovery
expenditures
.
Paragraph (1) of section 175(c) is amended by striking the second sentence.
Subparagraph (A) of section 175(c)(3) is amended—
by striking
or the recovery plan pursuant to the Endangered Species Act of
1973
, and
by striking
, or endangered species
recovery plan
in the heading thereof.
Effective date
The amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act.
Repeal of exclusion of cancellation of indebtedness income of solvent farmers
In general
Paragraph (1) of section 108(a) is amended by striking subparagraph (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D) respectively.
Conforming amendments
Subparagraph (A) of section 108(a)(2) is
amended by striking (D), and (E)
and inserting and
(D)
.
Subparagraph (B) of section 108(a)(2) is amended—
by striking
Subparagraphs (C) and (D)
and inserting Subparagraph
(C)
, and
by striking
qualified farm
exclusion and
.
Paragraph (1) of
section 108(b) is amended by striking (B), or (C)
and inserting
or (B)
.
Subsection (c) of section 108 is amended by
striking under subparagraph (D)
each place is appears and
inserting under subparagraph (C)
.
Section 108 is amended by striking subsection (g) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively.
Effective date
The amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act.
Repeal of alternative minimum tax treatment of certain property and casualty insurance companies
In general
Clause (i) of section 56(g)(4)(B) is amended by striking the last sentence.
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Repeal of small life insurance company deduction
In general
Section 806 is repealed.
Conforming amendments
Section 804 is
amended by striking means—
and all that follows through the
period at the end and inserting the following: means the general
deductions provided in section 805.
.
Subparagraph (B)
of section 453B(e)(2) is amended by inserting , as in effect on the day
before the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act
of 2012
after section 806(b)(3)
.
Subclause (II) of section 465(c)(7)(D)(v)
is amended by inserting , as in effect on the day before the date of the
enactment of the Implementation of
Simpson-Bowles Spending Reductions Act of 2012
after
section 806(b)(3)
.
Subparagraph (A)
of section 815(c)(2) is amended by striking clause (ii), by inserting
and
at the end of clause (i), and by redesignating clause (iii)
as clause (ii).
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Termination of $25,000 exemption from passive loss rules for rental real estate activities
In general
Section 469 is amended by striking subsection (i).
Effective date
The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Repeal of discharge of indebtedness exclusion
Effective for discharges of indebtedness occurring on or after the date of the enactment of this Act, section 108 is repealed.
Repeal of certain exceptions for imputed interest rules
Determination of issue price in the case of certain debt instruments issued for property
Paragraph (3) of section 1274(c)(3) is amended by striking subparagraphs (A), (B), and (C).
Special rule for certain transactions where stated principal amount does not exceed certain amount
Section 1274A is amended by adding at the end the following new subsection:
Termination
This section shall not apply to any sales or exchanges after the date of the enactment of this Act.
.
Effective date
The amendment made by subsection (a) shall apply to sales or exchanges after the date of the enactment of this Act.
Treatment of capital gains and dividends as ordinary income
Acceleration of JGTRRA sunset
Section 303 of the Jobs and Growth Tax Relief
Reconciliation Act of 2003, as amended by section 102(a) of the Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010, is
amended by striking December 31, 2012
and inserting
December 31, 2011
.
Treatment of capital gains and dividends as ordinary income
Section 1(h), after the application of subsection (a), is amended by adding at the end the following new paragraph:
Termination
This subsection shall not apply to taxable years beginning after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of partial exclusion for gain from certain small business stock
Section 1202 is amended by adding at the end the following new subsection:
Termination
This section shall not apply to any sale or exchange of stock after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of treatment of losses on small business stock as ordinary
Section 1244 is amended by adding at the end the following new subsection:
Termination
This section shall not apply to any sale or exchange of stock after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Repeal of student loan interest deduction
Effective for any loan interest paid after the date of the enactment of this Act, section 221 is repealed.
Repeal of deduction of tuition and related expenses
Effective for amounts paid after the date of the enactment of this Act, section 222 is repealed.
Repeal of gross income exclusion for United States savings bonds used to pay higher education expenses
Effective for taxable years beginning after the date of the enactment of this Act, section 135 is repealed.
Elimination of personal exemption for students age 19 and older
In general
Subparagraph (A) of section 152(c)(3) is amended—
by striking clause (ii),
by striking
, or
at the end of clause (i) and inserting a period, and
by striking
child and
and all that follows through (i) has not
attained
and inserting child and has not
attained
.
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Elimination of above the line deduction for certain expenses of elementary and secondary school teachers
In general
Paragraph (2) of section 62(a) is amended by striking subparagraph (D) and by redesignating subparagraph (E) as subparagraph (D).
Conforming amendments
Section 62 is amended by striking subsection (d) and redesignating subsection (e) as subsection (d).
Paragraph (20) of
section 62(a) is amended by striking subsection (e)
and
inserting subsection (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.
Elimination of gross income exclusion for discharge of certain student loan debt
Section 108 is amended by adding at the end the following new paragraph:
Termination
This subsection shall not apply to discharges of indebtedness after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Repeal of exclusion from gross income for rental value of parsonages
Effective for taxable years beginning after the date of the enactment of this Act, section 107 is repealed.
Repeal of exclusion from gross income for benefits provided to volunteer firefighters and emergency medical responders
Effective for taxable years beginning after the date of the enactment of this Act, section 139B is repealed.
Repeal of special treatment of Blue Cross and Blue Shield organizations, etc
Effective for taxable years beginning after the date of the enactment of this Act, section 833 is repealed.
Sense of the House regarding a territorial tax system
It is the sense of the House that the Committee on Ways and Means of the House of Representatives should report legislation that will transition the United States to a territorial tax system.
Temporary dividends received deduction allowed for 2011 or 2012
Election
Subsection (f) of section 965 of the Internal Revenue Code of 1986 (relating to election) is amended to read as follows:
Election
The taxpayer may elect to apply this section to—
the taxpayer’s last taxable year which begins before the date of the enactment of this subsection, or
the taxpayer’s first taxable year which begins during the 1-year period beginning on such date.
.
Limitation
Paragraph (1) of section 965(b) of such Code is amended to read as follows:
In general
The amount of dividends taken into account under subsection (a) shall not exceed the sum of the current and accumulated earnings and profits described in section 959(c)(3) for the year a deduction is claimed under subsection (a), without diminution by reason of any distributions made during the election year, for all controlled foreign corporations of the United States shareholder.
.
Failure To maintain employment levels
Paragraph (4) of section 965(b) of such Code (relating to limitations) is amended to read as follows:
Reduction in benefits for failure to maintain employment levels
In general
If, during the period consisting of the calendar month in which the taxpayer first receives a distribution described in subsection (a)(1) and the succeeding 23 calendar months, the taxpayer does not maintain an average employment level at least equal to the taxpayer’s prior average employment, an additional amount equal to $25,000 multiplied by the number of employees by which the taxpayer’s average employment level during such period falls below the prior average employment (but not exceeding the aggregate amount allowed as a deduction pursuant to subsection (a)(1)) shall be taken into income by the taxpayer during the taxable year that includes the final day of such period.
Average employment level
For purposes of this paragraph, the taxpayer’s average employment level for a period shall be the average number of full-time United States employees of the taxpayer, measured at the end of each month during the period.
Prior average employment
For purposes of this paragraph, the taxpayer’s
prior average employment
shall be the average number of
full-time United States employees of the taxpayer during the period consisting
of the 24 calendar months immediately preceding the calendar month in which the
taxpayer first receives a distribution described in subsection (a)(1).
Full-time united states employee
For purposes of this paragraph—
In general
The term full-time United States employee
means an individual who provides services in the United States as a full-time
employee, based on the employer’s standards and practices; except that
regardless of the employer’s classification of the employee, an employee whose
normal schedule is 40 hours or more per week is considered a full-time
employee.
Exception for changes in ownership of trades or businesses
Such term does not include—
any individual who was an employee, on the date of acquisition, of any trade or business acquired by the taxpayer during the 24-month period referred to in subparagraph (A); and
any individual who was an employee of any trade or business disposed of by the taxpayer during the 24-month period referred to in subparagraph (A) or the 24-month period referred to in subparagraph (C).
Aggregation rules
In determining the taxpayer’s average employment level and prior average employment, all domestic members of a controlled group shall be treated as a single taxpayer.
.
Threshold period
Section 965 of such Code is amended by striking
June 30, 2003
each place it occurs and inserting June 30,
2010
.
Base period
Paragraph (2) of subsection 965(c) of such Code is amended by inserting at the end of subparagraph (A) the following flush sentence:
For purposes of this paragraph, taxable years shall not include any year for which an election under section 965 was in effect.
.
Indebtedness determination date
Subparagraph (B) of section 965(b)(3) of such
Code is amended by striking October 3, 2004
and inserting
January 19, 2011
.
Conforming amendments
Subsection 965(c) of such Code, as amended by subsection (e), is amended by striking paragraph (1) and redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively.
Paragraph 965(c)(4) of such Code, as redesignated by paragraph (1), is amended to read as follows:
Controlled groups
All United States shareholders which are members of an affiliated group filing a consolidated return under section 1501 shall be treated as one United States shareholder.
.
Effective date
The amendments made by this section shall apply to taxable years ending on or after the date of the enactment of this Act.
Phaseout of Tax Expenditures
Five-year phaseout of certain tax expenditures
In general
Effective for taxable years beginning after December 31, 2012, the amount allowable as a credit, exclusion from gross income, exemption from taxation, or deduction for the taxable year under the tax provisions specified in subsection (c) (determined without regard to this section) shall be reduced by the applicable percentage of the amount so allowable.
Applicable percentage
For purposes if this section, the applicable percentage shall be determined in accordance with the following table:
| In the case of taxable years
beginning in: | The applicable percentage shall be: |
| 2013 | 20 |
| 2014 | 40 |
| 2015 | 60 |
| 2016 | 80 |
| 2017 and thereafter | 100. |
Specified provisions
For purposes of this section, the tax provisions specified in this subsection are as follows:
Section 911 of the Internal Revenue Code of 1986 (relating to citizens or residents of the United States living abroad).
Section 912 of such Code (relating to exemption for certain allowances).
Section 41 of such Code (relating to credit for increasing research activities).
Section 631(c) of such Code (relating to disposal of coal or domestic iron ore with a retained economic interest).
Section 451(i) of such Code (relating to special rule for sales or dispositions to implement Federal Energy Regulatory Commission or State Electric Restructuring Policy).
Section 613 of such Code (relating to percentage depletion) in the case of nonfuel minerals.
Section 631(a) of such Code (relating to election to consider cutting as sale or exchange).
Section 512(b)(19) of such Code (relating to treatment of gain or loss on sale or exchange of certain brownfield sites).
Section 501(c)(14) of such Code (relating to credit unions without capital stock organized and operated for mutual purposes and without profit) and section 122 of the Federal Credit Union Act.
The exclusion from gross income of income on life insurance contracts (as determined under section 7702(g) of the Internal Revenue Code of 1986).
Section 103(a) of such Code, to the extent the interest is attributable to a qualified mortgage bond (as defined in section 143(a) of such Code), a qualified veterans’ mortgage bond (as defined is section 143(b) of such Code), or an issue described in section 142(a)(7) of such Code.
Section 199 of such Code (relating to include attributable to domestic production activities).
Section 181 of such Code (relating to treatment of certain qualified film and television productions).
Section 7518 of such Code (relating to tax incentives relating to merchant marine capital construction funds) and chapter 535 of title 46, United States Code.
Section 132(a)(5) of such Code (relating to qualified transportation fringe) to the extent attributable to a transit pass (as defined in section 132(f)(5) of such Code) or qualified parking (as so defined).
Section 45G(a) of such Code (relating to railroad track maintenance credit).
Section 46(a) of such Code (relating to rehabilitation credit).
Section 45D of such Code (relating to new markets tax credit).
Section 131 of such Code (relating to certain foster care payments).
Section 213 of such Code (relating to medical, dental, etc., payments).
Section 36B of such Code (relating to refundable credit for coverage under a qualified health plan).
Section 45R of such Code (relating to employee health insurance expenses of small employers).
Section 45C of such Code (relating to clinical testing expenses for certain drugs for rare diseases or conditions).
Section 35 of such Code (relating to health insurance costs of eligible individuals).
Means-tested payments otherwise excludable under the general welfare doctrine.
Section 79 of such Code (relating to group-term life insurance purchased for employees).
Section 106 of such Code (relating to contributions by employer to accident and health plans) to the extent attributable to employer provided coverage under an accident or disability insurance plan.
Section 165 of such Code (relating to losses) to the extent the loss is described in section 165(c)(3) of such Code.
Section 164(a)(1) of such Code (relating to real property taxes) to the extent not attributable to real property used in a trade or business or the principal residence of the taxpayer (within the meaning of section 121 of such Code).
Special Status
Termination of qualified energy conservation bonds
Subsection (a) of section 54D is amended by
striking and
at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting , and
, and by adding
at the end the following new paragraph:
the bond is issued before the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of new clean renewable energy bonds
Subsection (a) of section 54C is amended by
striking and
at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting , and
, and by adding
at the end the following new paragraph:
the bond is issued before the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of exempt facility bond treatment for water, sewage, and solid waste facilities
In general
Subsection (a) of section 142 is amended by striking paragraphs (4), (5), and (6).
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Termination of expensing and amortization of reforestation expenditures and expensing of timber-growing costs
Reforestation expenditures
Section 194 is amended by adding at the end the following new subsection:
Termination
This section shall not apply to amount paid or incurred after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Expensing of timber growing costs
Subsection (c) of section 263A is amended by striking paragraph (5).
Effective date
The amendment made by this section shall apply to expenses paid or incurred after the date of the enactment of this Act.
Termination of deferral of gain on sales of stock in agricultural refiners and processors to eligible farm cooperatives
Subsection (g) of section 1042 is amended by adding at the end the following new paragraph:
Termination
This subsection shall not apply to any sales after the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of election to expense certain depreciable business assets
In general
Subparagraph (D) of
section 179(b)(1) is amended by striking $25,000
and inserting
$0
.
Effective date
The amendment made by this section shall apply to property placed in service after December 31, 2012.
Termination of qualified small issue bonds
Paragraph (1) of section 144(a) is amended
by inserting before the date of the enactment of the Implementation of
Simpson-Bowles Spending Reductions Act of 2012
after any bond
issued
.
Termination of exempt facility bond treatment for qualified highway or surface freight transfer facilities
In general
Subsection (a) of section 142 is amended by striking paragraph (15).
Effective date
The amendment made by this section shall apply to bonds issued after the date of the enactment of this Act.
Termination of exempt facility bond treatment for airports, docks, and wharves
In general
Subsection (a) of section 142 is amended by striking paragraphs (1) and (2).
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Termination of tribal economic development bonds
Subparagraph (A) of section 7871(f)(3) is
amended by inserting before the date of the enactment of the
Implementation of Simpson-Bowles Spending Reductions Act of 2012
after
any bond issued
.
Termination of exclusion from gross income of United States savings bonds interest used to pay higher education expenses
Subparagraph (A) of section 135(c)(1) is
amended by inserting and before the date of the enactment of the
Implementation of Simpson-Bowles Spending Reductions Act of 2012
after
December 31, 1989,
.
Termination of qualified zone academy bonds
Subsection (a) of section 54E is amended by
striking and
at the end of paragraph (2), by striking the period
at the end of paragraph (3), and inserting , and
, and by adding
at the end the following new paragraph:
the bond is issued before the date of the enactment of the Implementation of Simpson-Bowles Spending Reductions Act of 2012.
.
Termination of exempt facility bond treatment for qualified public educational facilities
In general
Subsection (a) of section 142 is amended by striking paragraph (13).
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Termination of hospital bonds
In general
Paragraph (1) of
section 145(a) is amended by striking or a governmental unit
and
inserting , or a governmental unit, other than a
hospital
.
Conforming amendments
Section 145 is amended by striking subsection (c) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively.
Subsection (b) of
section 145 is amended by striking nonhospital
each place it
appears.
Paragraph (1) of
section 145(b) is amended by striking (other than a qualified hospital
bond)
.
Paragraph (2) of section 145(b) is amended—
by striking
other than a qualified hospital bond
in subparagraph (B),
and
by striking subparagraph (C).
The heading for
subsection (b) of section 145 is amended by striking on bonds other than hospital
bonds
.
The heading for
paragraph (2) of section 145(b) is amended by striking nonhospital
.
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.