H.R. 691 (103rd): Competitiveness Tax Credit Act

103rd Congress, 1993–1994. Text as of Jan 27, 1993 (Introduced).

Status & Summary | PDF | Source: GPO

HR 691 IH

103d CONGRESS

1st Session

H. R. 691

To amend the Internal Revenue Code of 1986 to encourage immediate investments in new manufacturing and other productive equipment by temporarily allowing an investment tax credit to taxpayers who increase the amount of such investments.

IN THE HOUSE OF REPRESENTATIVES

January 27, 1993

Mr. RIDGE introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to encourage immediate investments in new manufacturing and other productive equipment by temporarily allowing an investment tax credit to taxpayers who increase the amount of such investments.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Competitiveness Tax Credit Act’.

SEC. 2. TEMPORARY INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER PRODUCTIVE EQUIPMENT.

    (a) ALLOWANCE OF CREDIT- Section 46 of the Internal Revenue Code of 1986 (relating to amount of investment credit) 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:

      ‘(4) the manufacturing and other productive equipment credit.’

    (b) AMOUNT OF CREDIT- Section 48 of such Code is amended by adding at the end the following new subsection:

    ‘(c) Manufacturing and Other Productive Equipment Credit-

      ‘(1) IN GENERAL- For purposes of section 46, the manufacturing and other productive equipment credit for any taxable year is an amount equal to the sum of--

        ‘(A) the domestic equipment credit, and

        ‘(B) the nondomestic equipment credit.

      ‘(2) AMOUNT OF DOMESTIC AND NONDOMESTIC EQUIPMENT CREDITS- For purposes of this subsection--

        ‘(A) Domestic equipment credit-

          ‘(i) IN GENERAL- The domestic equipment credit for any taxable year is 10 percent of the amount equal to the product of--

            ‘(I) the domestic equipment ratio, and

            ‘(II) the qualified increase amount.

          ‘(ii) DOMESTIC EQUIPMENT RATIO- The domestic equipment ratio for any taxable year is a fraction in which--

            ‘(I) the numerator is the aggregate bases of the qualified manufacturing and other productive equipment properties placed in service during such taxable year which are of domestic origin, and

            ‘(II) the denominator is the aggregate bases of all qualified manufacturing and other productive equipment properties placed in service during such taxable year.

        ‘(B) Nondomestic equipment credit-

          ‘(i) IN GENERAL- The nondomestic equipment credit for any taxable year is 7 percent of the amount equal to the product of--

            ‘(I) the nondomestic equipment ratio, and

            ‘(II) the qualified increase amount.

          ‘(ii) NONDOMESTIC EQUIPMENT RATIO- The nondomestic equipment ratio for any taxable year is a fraction in which--

            ‘(I) the numerator is the aggregate bases of the qualified manufacturing and other productive equipment properties placed in service during such taxable year which are not of domestic origin, and

            ‘(II) the denominator is the aggregate bases of all qualified manufacturing and other productuve equipment properties placed in service during such taxable year.

        ‘(C) Determination of domestic origin-

          ‘(i) IN GENERAL- Property shall be treated as being of domestic origin only if--

            ‘(I) the property was completed in the United States, and

            ‘(II) at least 50 percent of the basis of the property is attributable to value added within the United States.

          ‘(ii) UNITED STATES- The term ‘United States’ includes the Commonwealth of Puerto Rico and the possessions of the United States.

      ‘(3) QUALIFIED MANUFACTURING AND OTHER PRODUCTIVE EQUIPMENT PROPERTY- For purposes of this subsection--

        ‘(A) IN GENERAL- The term ‘qualified manufacturing and other productive equipment property’ means any property--

          ‘(i) which is used as an integral part of the manufacture or production of tangible personal property and increases the efficiency of the manufacturing or production process;

          ‘(ii) which is tangible property to which section 168 applies, other than 3-year property (within the meaning of section 168(e)),

          ‘(iii) which is section 1245 property (as defined in section 1245(a)(3)), and

          ‘(iv)(I) the construction, reconstruction, or erection of which is completed by the taxpayer, or

          ‘(II) which is acquired by the taxpayer, if the original use of such property commences with the taxpayer.

        ‘(B) SPECIAL RULE FOR COMPUTER SOFTWARE- In the case of any computer software--

          ‘(i) which is used to control or monitor a manufacturing or production process,

          ‘(ii) which increases the efficiency of the manufacturing or production process, and

          ‘(iii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

        such software shall be treated as qualified manufacturing and other productive equipment property.

      ‘(4) QUALIFIED INCREASE AMOUNT- For purposes of this subsection--

        ‘(A) IN GENERAL- The term ‘qualified increase amount’ means the excess (if any) of--

          ‘(i) the aggregate bases of qualified manufacturing and other productive equipment properties placed in service during the taxable year, over

          ‘(ii) the base amount.

        ‘(B) BASE AMOUNT- The term ‘base amount’ means the product of--

          ‘(i) the fixed-base percentage, and

          ‘(ii) the average annual gross receipts of the taxpayer for the 4 taxable years preceding the taxable year for which the credit is being determined (in this subsection referred to as the ‘credit year’).

        ‘(C) MINIMUM BASE AMOUNT- In no event shall the base amount be less than 50 percent of the amount determined under subparagraph (A)(i).

        ‘(D) Fixed-base percentage-

          ‘(i) IN GENERAL- The fixed-base percentage is the percentage which the aggregate amounts described in subparagraph (A)(i) for taxable years beginning after December 31, 1987, and before January 1, 1993, is of the aggregate gross receipts of the taxpayer for such taxable years.

          ‘(ii) ROUNDING- The percentages determined under clause (i) shall be rounded to the nearest 1/100 of 1 percent.

        ‘(E) OTHER RULES- Rules similar to the rules of paragraphs (4) and (5) of section 41(c) shall apply for purposes of this paragraph.

      ‘(5) COORDINATION WITH OTHER CREDITS- This subsection shall not apply to any property to which the energy credit or rehabilitation credit would apply unless the taxpayer elects to waive the application of such credits to such property.

      ‘(6) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- Rules similar to rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.

      ‘(7) TERMINATION DATE- This subsection shall not apply to any property placed in service after the expiration of the 2-year period beginning on the date of the enactment of this Act.’

    (c) Technical Amendments-

      (1) Clause (ii) of section 49(a)(1)(C) of such Code is amended by inserting ‘or qualified manufacturing and other productive equipment property’ after ‘energy property’.

      (2) Subparagraph (E) of section 50(a)(2) of such Code is amended by inserting ‘or 48(c)(6)’ before the period at the end.

      (3)(A) The section heading for section 48 of such Code is amended to read as follows:

‘SEC. 48. OTHER CREDITS.’

      (B) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 48 and inserting the following:

      ‘Sec. 48. Other credits.’

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to--

      (1) property acquired by the taxpayer after the date of the enactment of this Act, and

      (2) property the construction, reconstruction, or erection of which is completed by the taxpayer after the date of the enactment of this Act, but only to the extent of the basis thereof attributable to construction, reconstruction, or erection after such date.