S. 2162Senate113th Congress (2013-2015)In Committee

21st Century Worker Tax Cut Act

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2 earlier actions

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

March 26, 2014

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SenateIntro Referral

Introduced in Senate

March 26, 2014

SenateIntro Referral

Sponsor introductory remarks on measure. (CR S1776-1777)

March 26, 2014

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

March 26, 2014

Floor Debate

2 members

What members said about S. 2162 on the floor

1 Republican1 Democrat

Sen. John BarrassoR-WY · Mar 26, 2014

Madam President, this past Sunday was the fourth anniversary of President Obama's health care law. Four years ago Democrats in Washington were confident the law they forced through Congress would be…

Madam President, this past Sunday was the fourth anniversary of President Obama's health care law.

Four years ago Democrats in Washington were confident the law they forced through Congress would be extremely popular today. Instead, the law has broken almost every significant promise President Obama made about the law itself, and Americans regrettably have been left to deal with the consequences.

The actual law doesn't even look the same as it did 4 years ago because President Obama has lawlessly rewritten so much of it. Last night word leaked about the latest change. Now the administration is getting rid of the March 31 deadline for some people to sign up for insurance in the government exchange.

According to this morning's Washington Post, if people just check a box on the Web site saying they are having trouble signing up, they will get an extension until at least mid-April--and I wouldn't be surprised if another extension after that and then again beyond.

Remember, the Obama administration said 7 million people would have to sign up by March 31 in order for this open enrollment period to be a success. Those are the administration's words. But with less than 1 week to go, they are 2 million short of their goal. That is why they are allowing this extension because they are in a panic, a panic not enough people are signing up.

The White House may come out and say they have come close to their 7 million target. They may even claim they were somehow able to find all of the 2 million people they needed to buy insurance on the exchanges, but looking at some of the dubious numbers the administration has released so far, we can predict there will be many unanswered questions about the numbers--whatever numbers the White House claims to now be the new numbers.

The first question we should ask about the numbers is, how many of the people signing up actually have insurance?

Apparently, it doesn't seem to matter much to the administration how many people who go to the Web site actually have insurance. The Obama administration released a report showing how many people went through the signup process on the Web site through the exchanges. Those people don't actually have insurance until they write a check, pay their premiums, and make sure they do have insurance.

Secretary of Health and Human Services Kathleen Sebelius said recently she had no idea in the world--no idea at all--about how many people had paid and how many had not paid, and she is the President's Secretary of Health and Human Services--no idea.

Insurance companies say they have given Washington plenty of information to know the answer to that question, but the person in charge has no idea.

One industry official told Politico:

If they have not processed those yet and compiled the data,

that is a choice they are making. But they have that data

now.

The White House can say whatever they want--and they tend to do that--but they have the data. They are not admitting the truth.

Why isn't the administration playing it straight with these numbers? The point of ObamaCare was to get people insurance, not just register them on a Web site. A recent survey by McKinsey & Company found that only 53 percent of the previously uninsured people who had selected a plan actually then went and paid the first month's premium. So only about half of the people that didn't have insurance before, who signed up on the Web site, actually went to pay for and buy the insurance. That is question number one.

Question No. 2 is: How many people are newly insured? That was the major goal of the Obama health care legislation. Washington Democrats said time and time again that we needed a massive overall of the entire health care system of this country in order to cover the uninsured. Many of the people who are signing up today and people who have signed up are doing so because the insurance they had, that they liked, that worked for them, that they could afford, under the health care law was canceled. The President's health care law forced them to switch.

How many people? We don't know that either. One Health and Human Services official admitted as much. He said: ``That is not a data point that we are really collecting in any sort of systemic way.''

The government officials overseeing this part of the Web site are not even collecting the data. The goal of the whole policy plan was to get people that didn't have insurance on insurance. They are not collecting that data point at all. It turns out that the paper application for ObamaCare included a question--reasonably so--as to whether that person already had insurance because it is information we want to know. But the bureaucrats and the contractors who were apparently overseen by the President of the United States, who created the healthcare.gov Web site--the Web site that the President said was going to be easier to use than Amazon for insurance and cheaper than your cell phone bill-- apparently they just dropped the question. Why did they do that? Why did they drop the question that was on the paper form and leave it off of the Web site to ask if somebody had actually had insurance before? That is what they did.

Isn't it something the Obama administration would want to know if they wanted to be honest with the American people. The best estimate has been from this McKinsey survey. They figure that by early February only about a quarter of the people who signed up for ObamaCare insurance were actually newly insured. Three-fourths of them were just changing out insurance, many of whom had their insurance canceled. If that number holds, the exchanges might end up covering fewer than 2 million previously uninsured Americans this year--fewer than 2 million people who didn't have insurance before covered on the exchange. Think about how much simpler, how much more cost effective health care could have been while still covering that same number of people.

Here is the third important question. Who exactly is signing up? The administration is pushing young adults between the ages of 18 and 34 to buy insurance. It is not happening the way the administration wants it to happen. Through February, less than 10 percent--less than 1 in 10-- of the young adults who potentially could enroll

have actually done so. Insurance companies need lots of young, healthy people to pay premiums--to pay for premiums and then not use much care in return. That is the only way this works. Unless more of those young people sign up by the beginning of next week, theoretically--now extended by checking a box--premiums are going to jump.

Here is the final question. When people buy insurance through the ObamaCare exchanges, what kind of care will it provide? Just remember what the President said: If you like what you have, you could keep it; you could keep your doctor--easier than Amazon and cheaper than your cell phone. People are losing access to doctors they have known and trusted for years. We have heard from people around the country that this has happened. But for some people having a doctor won't mean they can actually see the doctor. According to the Association of American Medical Colleges, we are facing a shortage of about 90,000 physicians by the end of this decade.

Some patients may be able to get to see a doctor but maybe not the one they need. According to an Associated Press survey that was reported last week, only 4 of 19 leading cancer hospitals--only 4 of 19 leading cancer hospitals--said that they accept the plans from all the insurance companies in their State's exchanges. For many other patients, the doctor is going to be spending more time looking at the computer instead of looking at them, even though they are in the same office together because of the burdensome new rules and recordkeeping requirements in the law. Maybe you can keep your doctor, maybe you cannot. Do you need special cancer care? Are you worried about whether you are going to be able to get that, and is the doctor going to be able to look at you and interact or is the doctor going to be staring at his computer screen instead of you in the limited time they have because of the burdensome requirements? It is going to be bad for patients.

So patients are going to be getting less care and many will be paying a lot more than they were paying before. Secretary Sebelius finally conceded that the rates will continue to rise in 2015. Now The Hill newspaper that is around--this is what they said on Wednesday, March 19: ``ObamaCare premiums are about to skyrocket.''

The President said: cheaper than your cell phone. Reuters ran a headline that said: ``Insurers see double-digit Obamacare price rises in many states next year.'' Bloomberg's headline yesterday was almost the same: ``Obamacare insurer WellPoint Sees Double-Digit Rate Rise.''

The President said recently the law ``is working the way it should.'' The President of the United States looked into the camera and said it is working the way it should. What does he think of the people who are on the other side watching him on TV? Does he realize how he is losing credibility with the American people when he makes blatant statements like that, when they see how poorly it is working?

I believe the President has no idea how the law is working, how poorly it is working or what is going to happen next. Does he really think the law is working or is it just a line that somebody wrote for him and that he read? It is hard to know. Does he think that double- digit premium increases are a sign that the law is working? I heard from one of my constituents the other day, as we were away for the week talking to people around Wyoming, and he put it in writing. He is from western Wyoming. He said:

Senator Barrasso, I am sorry for the snide subject of our

e-mail but the truth hurts. I know I am preaching to the

choir but I just wanted to share our story and frustration.

Now I know the majority leader has been to the floor and said all of these stories that we tell are all lies. This is a person who lives in Wyoming. This is what is happening in that person's life. He said:

We have finally just finished applying for health care

through the exchange and found out that our health insurance

will double if we sign up. Fortunately for us, we are covered

under our own insurance until this December. Our current plan

is $505 a month, and it has a $15 thousand deductible after

which it is an 80/20 split. The rub for us is the following:

Under the construct of the subsidy plan we would

theoretically qualify, based on our family size (5 girls) and

our income. But since my employer offers health insurance for

me and my family, we don't qualify. So we are stuck in limbo.

Nonetheless, if we go on my employer's health insurance, we

will be paying over $1000 more each month. If we go on the

health care market place plan, the least expensive is $1,054/

month. This is a significant increase for our middle class

family.

I thought the affordable health care act was supposed to

help us not hurt us.

The affordable health care act was supposed to help us, he said, not hurt us.

We are panicked on how we are going to pay for this in

December? We will be taking all of the money that was going

into savings to pay for a terrible insurance plan. Please

help us and share our story with people who say this act is

helping the middle class.

I wish the majority leader were here to hear this. Please share this story--our story--a true story about a family in Wyoming, with those who say the act is helping the middle class.

Madam President, it clearly is not. Does it sound like the law is working for this man and his family? President Obama says it is working just the way it is supposed to work. It is not working for this man and his family.

Our health care system needed reform. It needs it now more than ever. We all know that. What Americans got with the Obama health care law was a monstrous new bureaucracy. It is raising costs for millions of people. It is leading to worse care and other unintended consequences. Now these questions are just a small part of what the American people want to know.

In fact, as of last night, I can think of another question. How does the Obama administration define the word deadline? Kathleen Sebelius in the House the other day said the deadline is March 31. We are not going to extend it. We are not under any circumstances going to extend it. The White House press secretary said the same. Are there any deadlines at all for anything in this administration? Is it all on the honor system?

As we start to get answers to these questions, we are going to see even more clearly that this health care law has failed patients, it has failed health care providers, and it has failed taxpayers. The President needs to admit that his law is not working. He needs to accept Republican ideas to replace it. Americans need better access to quality, affordable health care, not just broken promises, tired excuses, and unanswered questions.

Thank you, Madam President. I yield the floor, and I suggest the absence of a quorum.

Sen. Patty MurrayD-WA · Mar 26, 2014

Mr. President, our workforce has changed a lot in the last few decades. Thirty years ago the majority of families with children had only one parent working outside the home. More of the country's…

Mr. President, our workforce has changed a lot in the last few decades. Thirty years ago the majority of families with children had only one parent working outside the home. More of the country's low-wage workers were teenagers earning some extra spending money. Today two-thirds of families with children rely on earnings from both parents, and millions of low-wage workers in our country are far less likely to be teens supplementing their allowance and far more likely to be adults struggling to support their families. It has also gotten a lot harder for young people just starting out to find work that puts them on a strong path. There is a very concerning pattern of young people dropping out of the labor force rather than keeping up their search.

These are the kinds of trends we need to be thinking about as we look for

ways to help today's workforce succeed in today's economy. There are many steps we can and absolutely should take to tackle the barriers our workers and our families are facing. We should start with raising the minimum wage because no one working full time in the United States today should live in poverty. Low-wage workers in today's economy, who are putting in very long hours while raising their children, paying taxes, and trying to pay the bills, deserve a better shot at success.

But that is not the last step we should take. As we are looking for ways to expand opportunity for struggling workers and families, we should be using every tool in the box--including our Tax Code. Policies such as the earned-income tax credit have succeeded in helping millions of households lift themselves out of poverty, which is why Republicans and Democrats have come together to strengthen the EITC so many times in the past. But today too many struggling workers and families are left behind under our outdated Tax Code.

It is time to build on these efforts to support work, including the critical expansions of the EITC in 2009, which should be made permanent, and we need to update our Tax Code so that it reflects the needs of today's workforce.

I am proud to be here today to introduce the 21st Century Worker Tax Cut Act. It is a bill that would complement critical reforms, such as raising the minimum wage, by providing targeted tax cuts designed for today's workforce. It is paid for by closing wasteful loopholes that both Democrats and Republicans have proposed eliminating.

The 21st Century Worker Tax Cut Act would put in place a new tax deduction to help struggling families with two workers keep more of what they earn. The way our Tax Code is currently structured, the second earner in a household often pays a higher tax rate on his or her earnings. Making matters worse, when a second earner decides to enter the workforce, the family usually faces many new costs, such as childcare or transportation, and the family can lose eligibility for credits, such as the EITC and other benefits.

Add it all up, and many struggling two-earner families today end up taking home a smaller percentage of their paycheck than many of the wealthiest households in America. These realities often discourage a potential second earner, such as a mother who is considering reentering the workforce to return to her professional career.

Struggling families face a lot of challenges to getting ahead today. The very least we can do is keep our Tax Code from forcing families to take a half step backward for every step forward, and that is exactly the problem the 21st Century Worker Tax Cut Act will help to solve.

This bill will give our working families a 20-percent deduction on the second earner's income. A mom or dad who goes back into the workforce and brings home an extra $25,000, for example, would get a $5,000 deduction. For a family in the 25-percent bracket, that means $1,250 back in their pocket for groceries, childcare, transportation, or retirement savings.

The bill also reflects the reality that workers without dependent children and young workers who are just starting out are being left behind under the current EITC. My colleague Senator Brown has been a leader on this issue. He is a cosponsor of the bill I am introducing today.

Unlike low-income workers with kids at home, workers without dependent children receive little or nothing from this credit. As workers file their 2013 tax returns this spring, a single worker with no dependent children is eligible for a maximum credit of only $487. She is entirely phased out of the credit once her income reaches $14,340, which is about what a full-time minimum wage worker would earn in a year. Young, childless workers under 25, who are starting out in a tough labor market, are not eligible at all. In an economy today where more low-wage earners are middle-aged and where young people are struggling to gain a toehold in the job market, it doesn't make any sense.

Our bill, the 21st Century Worker Tax Cut Act, would increase the EITC for workers without dependent children to about $1,400 next year and expand the income range over which workers are eligible for the credit. It would also lower the eligibility age for the childless worker to qualify for the EITC from 25 years old to 21 so that young workers without dependents get the same incentives that have helped so many others get on their feet. The Treasury Department estimated that EITC changes similar to these would help more than 13 million struggling workers climb the economic ladder.

As we expand the EITC, we have a responsibility to do everything we can to make sure this credit is going straight to the workers and families who need it, and part of that responsibility is to make sure that the EITC claims are filed correctly. Professional tax return preparers complete 70 percent of these EITC claims. Under our bill, the 21st Century Worker Tax Cut, they would receive twice the current penalty if they don't follow due diligence requirements put in place by the IRS.

Workers and families are playing fair, and the biggest corporations should too, and that is why this bill would be paid for by closing loopholes that the biggest corporations take advantage of. The 21st Century Worker Tax Cut would draw on a proposal from my colleague Senator Reed of Rhode Island, who is also a cosponsor of this bill. His proposal closes a loophole that lets corporations claim outsized tax breaks by paying their executives stock options instead of regular paychecks. This bill would also stop multinational corporations from shifting profits into tax havens such as Bermuda and the Cayman Islands to avoid paying their fair share.

There is bipartisan support for closing those loopholes. Both Democrats and House Ways and Means chairman Dave Camp have proposed eliminating each of them. Updating our Tax Code to give tax breaks to our struggling workers instead of big corporations is the right thing to do.

As we continue this important debate about how to expand opportunity to those who are struggling today, we need to make sure we are giving today's workforce the best shot in today's economy. We should increase our outdated minimum wage to give millions of workers a raise, and then Democrats and Republicans need to come together to update our Tax Code and give today's struggling workers the tax relief they deserve. The 21st Century Worker Tax Cut would be a strong, fiscally responsible step toward that bipartisan goal, and I am hopeful we can get this done for our workers as quickly as possible.

Sen. Patty MurrayD-WA · Mar 26, 2014

Mr. President, our workforce has changed a lot in the last few decades. Thirty years ago the majority of families with children had only one parent working outside the home. More of the country's…

These are the kinds of trends we need to be thinking about as we look for

Sen. Patty MurrayD-WA · Mar 26, 2014

I ask unanimous consent that the order for the quorum call be rescinded. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Bill Text

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Introduced in SenateIssued March 26, 2014

113th CONGRESS

2d Session

S. 2162

IN THE SENATE OF THE UNITED STATES

March 26, 2014

Mrs. Murray (for herself, Mr. Reed, and Mr. Brown) 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 establish a deduction for married couples who are both employed and have young children and to increase the earned income tax credit for childless workers, and to provide for budget offsets.

Short title

This Act may be cited as the 21^st Century Worker Tax Cut Act.

Deduction for dual-earner families

(a)

In general

Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:

224.

Dual-earner families

(a)

Deduction allowed

In the case of an eligible taxpayer, there shall be allowed as a deduction for the taxable year an amount equal to 20 percent of the lesser of—

(1)

$60,000, or

(2)

the earned income of the spouse with the lower amount of earned income for such taxable year.

(b)

Limitation

The amount of the deduction allowable under subsection (a) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount determined under subsection (a) (as determined without regard to this subsection) as the amount of the taxpayer's excess adjusted gross income bears to $20,000.

(c)

Definitions

In this section:

(1)

Earned income

The term earned income has the same meaning given such term in section 32(c)(2).

(2)

Eligible taxpayer

(A)

In general

The term eligible taxpayer means a taxpayer who—

(i)

files a joint return for the taxable year under section 6013, and

(ii)

has at least 1 qualifying child (as defined in section 152(c)) who has not attained 12 years of age before the close of the taxable year.

(3)

Excess adjusted gross income

The term excess adjusted gross income means the amount of the eligible taxpayer's adjusted gross income (as defined in section 62, determined without regard to this section) that exceeds $110,000 for the taxable year.

(d)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2015, each of the dollar amounts in subsections (a)(1) and (c)(3) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2014 for calendar year 1992 in subparagraph (B) thereof.

(2)

Rounding

If any dollar amount in subsection (a)(1) or (c)(3), after being increased under paragraph (1), is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.

(e)

Additional eligibility requirements

(1)

Individual claiming benefits under section 911

No deduction shall be allowed under this section if an individual (or the individual's spouse) claims the benefits of section 911 for the taxable year.

(2)

Non-resident aliens

No deduction shall be allowed under this section if an individual (or the individual's spouse) is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.

(3)

Identification number requirement

(A)

In general

No deduction shall be allowed under this section if the eligible taxpayer does not include on the joint return of tax for the taxable year—

(i)

the taxpayer identification number of the individual and the individual's spouse, and

(ii)

the name, age, and taxpayer identification number of any qualifying children.

(B)

Social security numbers

For purposes of this paragraph, the term taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act).

(f)

Taxable year must be full taxable year

Except in the case of a taxable year closed by reason of the death of an individual, no deduction shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.

(b)

Deduction allowed in computing adjusted gross income

Section 62(a) of such Code is amended by inserting after paragraph (21) the following new paragraph:

(22)

Dual-earner families

The deduction allowed by section 224.

(c)

Enhancement of earned income tax credit

Section 32 of such Code is amended—

(1)

in subsection (a)(2)(B), by striking earned income and inserting modified earned income (as defined in subsection (c)(5)), and

(2)

in subsection (c), by adding at the end the following new paragraph:

(5)

Modified earned income

The term modified earned income means an amount equal to the earned income of the taxpayer minus the amount of any deduction allowed to the taxpayer under section 224 for the taxable year.

(d)

Conforming amendment

The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by redesignating the item relating to section 224 as relating to section 225 and by inserting after the item relating to section 223 the following:

Sec. 224. Dual-earner families.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Strengthening the earned income tax credit for individuals with no qualifying children

(a)

Credit for certain individuals over age 21

(1)

In general

Paragraph (1) of section 32(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(G)

Special rule for working individuals over age 20 and without qualifying child

(i)

In general

In the case of an individual (or, if the individual is married, either the individual or the individual’s spouse) who—

(I)

has attained the age of 21 but not attained age 25 before the close of the taxable year, and

(II)

is not a full-time student at any time during the taxable year,

paragraph (1)(A)(ii)(II) shall not apply for purposes of determining whether such individual is an eligible individual.

(ii)

Student

For purposes of this subparagraph, an individual shall be considered a full-time student if such individual is carrying more than 1/2 the normal full-time work load for the course of study the individual is pursuing.

(2)

Information return matching

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall develop and implement procedures for checking an individual’s claim for a credit under section 32 of the Internal Revenue Code of 1986, by reason of subsection (c)(1)(G) thereof, against any information return made with respect to such individual under section 6050S.

(b)

Increased credit

(1)

Credit percentage and phaseout percentage

The table contained in section 32(b)(1)(A) of such Code is amended by striking 7.65 each place it appears and inserting 15.3.

(2)

Earned income amount and phaseout amount

(A)

In general

The table contained in section 32(b)(2)(A) of such Code is amended—

(i)

by striking $4,220 and inserting $8,820, and

(ii)

by striking $5,280 and inserting $10,425.

(B)

Inflation adjustments

Subparagraph (B) of section 32(j)(1) of such Code is amended—

(i)

by inserting except as provided in clause (iii) in clause (i) before in the case of amounts,

(ii)

by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and, and by adding at the end the following new clause:

(iii)

in the case of the $8,820 and $10,425 amounts in subsection (b)(2)(A), by substituting calendar year 2014 for calendar year 1992 in subparagraph (B) of such section 1.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Increased penalty for tax return preparers who fail to comply with due diligence requirements for the earned income tax credit

(a)

In general

Section 6695(g) of the Internal Revenue Code of 1986 is amended by striking $500 and inserting $1,000.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Expansion of denial of deduction for certain excessive employee remuneration

(a)

Application to all current and former employees

(1)

In general

Section 162(m) of the Internal Revenue Code of 1986 is amended—

(A)

by striking covered employee each place it appears in paragraphs (1) and (4) and inserting covered individual, and

(B)

by striking such employee each place it appears in subparagraphs (A) and (G) of paragraph (4) and inserting such individual.

(2)

Covered individual

Paragraph (3) of section 162(m) of such Code is amended to read as follows:

(3)

Covered individual

For purposes of this subsection, the term covered individual means any individual who is an officer, director, or employee of the taxpayer or a former officer, director, or employee of the taxpayer.

(3)

Conforming amendments

(A)

Section 48D(b)(3)(A) of such Code is amended by inserting (as in effect for taxable years beginning before January 1, 2015) after section 162(m)(3).

(B)

Section 409A(b)(3)(D)(ii) of such Code is amended by inserting (as in effect for taxable years beginning before January 1, 2015) after section 162(m)(3).

(b)

Expansion of applicable employee remuneration

(1)

Elimination of exception for commission-based pay

(A)

In general

Paragraph (4) of section 162(m) of such Code, as amended by subsection (a), is amended by striking subparagraph (B) and by redesignating subparagraphs (C) through (G) as subparagraphs (B) through (F), respectively.

(B)

Conforming amendments

(i)

Section 162(m)(5) of such Code is amended—

(I)

by striking subparagraphs (B), (C), and (D) thereof in subparagraph (E) and inserting subparagraphs (B) and (C) thereof, and

(II)

by striking subparagraphs (F) and (G) in subparagraph (G) and inserting subparagraphs (E) and (F).

(ii)

Section 162(m)(6) of such Code is amended—

(I)

by striking subparagraphs (B), (C), and (D) thereof in subparagraph (D) and inserting subparagraphs (B) and (C) thereof, and

(II)

by striking subparagraphs (F) and (G) in subparagraph (G) and inserting subparagraphs (E) and (F).

(2)

Inclusion of performance-based compensation

(A)

In general

Paragraph (4) of section 162(m) of the Internal Revenue Code of 1986, as amended by subsection (a) and paragraph (1) of this subsection, is amended by striking subparagraph (B) and redesignating subparagraphs (C) through (F) as subparagraphs (B) through (E), respectively.

(B)

Conforming amendments

(i)

Section 162(m)(5) of such Code, as amended by paragraph (1), is amended—

(I)

by striking subparagraphs (B) and (C) thereof in subparagraph (E) and inserting subparagraph (B) thereof, and

(II)

by striking subparagraphs (E) and (F) in subparagraph (G) and inserting subparagraphs (D) and (E).

(ii)

Section 162(m)(6) of such Code, as amended by paragraph (1), is amended—

(I)

by striking subparagraphs (B) and (C) thereof in subparagraph (D) and inserting subparagraph (B) thereof, and

(II)

by striking subparagraphs (E) and (F) in subparagraph (G) and inserting subparagraphs (D) and (E).

(c)

Expansion of applicable employer

Paragraph (2) of section 162(m) of the Internal Revenue Code of 1986 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)) that—

(A)

has a class of securities registered under section 12 of such Act (15 U.S.C. 78l), or

(B)

is required to file reports under section 15(d) of such Act (15 U.S.C. 780(d)).

(d)

Regulatory authority

(1)

In general

Section 162(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(7)

Regulations

The Secretary may prescribe such guidance, rules, or regulations, including with respect to reporting, as are necessary to carry out the purposes of this subsection.

(2)

Conforming amendment

Paragraph (6) of section 162(m) of such Code is amended by striking subparagraph (H).

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Low-taxed cross-border foreign income treated as subpart F income

(a)

In general

Subsection (a) of section 952 of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (3), (4), and (5) as paragraphs (4), (5), and (6), respectively, and by inserting after paragraph (2) the following new paragraph:

(3)

low-taxed cross-border income (as defined under subsection (e)),

(b)

Low-Taxed cross-Border income

Section 952 of such Code is amended by adding at the end the following new subsection:

(e)

Low-Taxed cross-Border income

(1)

In general

For purposes of subsection (a), the term low-taxed cross-border income means the gross income of the controlled foreign corporation unless the taxpayer establishes to the satisfaction of the Secretary that—

(A)

such income was derived in the home country of the controlled foreign corporation, or

(B)

such income was subject to an effective rate of income tax imposed by a foreign country in excess of 15 percent.

(2)

Rules related to income derived in home country

For purposes of paragraph (1)(A), income shall be treated as derived in the home country of a controlled foreign corporation only if—

(A)

such income is derived in the conduct of a trade or business of such corporation in the country in which such corporation is created or organized,

(B)

such corporation maintains an office or other fixed place of business in such country, and

(C)

such income is derived in connection with—

(i)

property which is sold for use, consumption, or disposition in such country, or

(ii)

services provided with respect to persons or property located in such country.

(3)

Rules related to determination of effective rate of foreign income tax

(A)

Country-by-country determination

Paragraph (1)(B) shall be applied—

(i)

separately with respect to each foreign country in which a controlled foreign corporation conducts any trade or business, and

(ii)

with respect to the aggregate gross income derived with respect to such country.

(B)

Treatment of losses

For purposes of determining the effective rate of income tax imposed by any foreign country under paragraph (1)(B)—

(i)

such effective rate shall be determined without regard to any losses carried to the relevant taxable year, and

(ii)

to the extent the income of the controlled foreign corporation reduces losses in the relevant taxable year, such effective rate shall be treated as being the effective rate which would have been imposed on such income without regard to such losses.

(4)

Deductions to be taken into account

The gross income of a controlled foreign corporation taken into account under this subsection shall be reduced, under regulations prescribed by the Secretary, so as to take into account deductions (including taxes) properly allocable to such income.

(c)

Effective date

The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2014, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.