< Back to H.R. 2800 (104th Congress, 1995–1996)

Text of the Education Trust Fund Act

This bill was introduced on December 18, 1995, in a previous session of Congress, but was not enacted. The text of the bill below is as of Dec 18, 1995 (Introduced).

Source: GPO

HR 2800 IH

104th CONGRESS

1st Session

H. R. 2800

To amend the Internal Revenue Code of 1986 to impose a 5-percent tax on all wagering and to use the revenues from such tax to enhance funding for public elementary and secondary education, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

December 18 (legislative day, DECEMBER 15), 1995

Mr. FIELDS of Louisiana introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Economic and Educational Opportunities, 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 amend the Internal Revenue Code of 1986 to impose a 5-percent tax on all wagering and to use the revenues from such tax to enhance funding for public elementary and secondary education, and for other purposes.

    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 ‘Education Trust Fund Act’.

TITLE I--TAX AND TRUST FUND

SEC. 101. ADDITIONAL 5 PERCENT TAX ON NET PROCEEDS OF WAGERING.

    (a) IN GENERAL- Chapter 35 of the Internal Revenue Code of 1986 (relating to taxes on wagering) is amended by redesignating subchapter C as subchapter D and by inserting after subchapter B the following new subchapter:

‘Subchapter C--Tax on Net Proceeds From Wagers

‘Sec. 4415. Imposition of tax.

‘Sec. 4416. Definitions and special rules.

‘SEC. 4415. IMPOSITION OF TAX.

    ‘(a) IN GENERAL- There is hereby imposed on the payment of wagering proceeds an excise tax equal to 5 percent of the net wagering proceeds paid during any calendar quarter.

    ‘(b) NET WAGERING PROCEEDS- For purposes of subsection (a)--

      ‘(1) IN GENERAL- The term ‘net wagering proceeds’ means the proceeds from a wager determined--

        ‘(A) by reducing the amount paid by the amount of the wager, and

        ‘(B) without regard to any tax imposed by this section.

      ‘(2) NONCASH PROCEEDS- Proceeds which are not money shall be taken into account at their fair market value.

    ‘(c) LIABILITY FOR TAX- The tax imposed by subsection (a) shall be paid by the person making payment of the wagering proceeds.

    ‘(d) CREDIT FOR DEDICATED STATE TAXES-

      ‘(1) IN GENERAL- The tax imposed by this section on the net wagering proceeds paid during any calendar quarter shall be reduced (but not below zero) by an amount equal to the dedicated State tax imposed on such proceeds.

      ‘(2) DEDICATED STATE TAX- For purposes of paragraph (1), the term ‘dedicated State tax’ means any excise tax imposed by a maintenance-of effort State on net wagering proceeds to the extent that the revenues from such tax are set-aside solely for purposes described in title II of the Education Trust Fund Act.

      ‘(3) MAINTENANCE-OF-EFFORT STATE- For purposes of paragraph (2), the term ‘maintenance-of-effort State’ means, with respect to any calendar year, any State if--

        ‘(A) the average per pupil expenditure in such State (as determined for purposes of part A of title I of the Elementary and Secondary Education Act of 1965) for such calendar year is not less than such average for the preceding calendar year, or

        ‘(B) in any case in which such average for the calendar year is less than such average for the preceding calendar year, there is a percentage reduction in State expenditures for all purposes which is at least as great as the percentage reduction in such average.

      For purposes of the preceding sentence, State funding shall be determined without regard to any dedicated State tax on net wagering proceeds to the extent the amount of such tax on such proceeds does not exceed 5 percent of such proceeds.

‘SEC. 4416. DEFINITIONS AND SPECIAL RULES.

    ‘(a) WAGER- For purposes of section 4415, the term ‘wager’ means--

      ‘(1) any wager placed with a person engaged in the business of accepting wagers,

      ‘(2) any wager placed in a wagering pool if such pool is conducted for profit, and

      ‘(3) any wager placed in a lottery conducted for profit.

    Such term shall not include bingo.

    ‘(b) TERRITORIAL EXTENT- The tax imposed by this subchapter shall apply only to wagers--

      ‘(1) accepted in the United States, or

      ‘(2) placed by a person who is in the United States--

        ‘(A) with a person who is a citizen or resident of the United States, or

        ‘(B) in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States.’

    (b) CONFORMING AMENDMENTS-

      (1) Subsection (a) of section 4411 of such Code is amended by inserting ‘or 4415’ after ‘4401’.

      (2) Paragraph (1) of section 4421 of such Code is amended by striking ‘The term’ and inserting ‘Except as provided in section 4416, the term’.

      (3) The table of subchapters for chapter 35 of such Code is amended by striking the last item and inserting the following new items:

‘Subchapter C. Tax on net proceeds from wagers.

‘Subchapter D. Miscellaneous provisions.’

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall apply to calendar quarters beginning more than 90 days after the date of the enactment of this Act.

      (2) TRANSITIONAL RULE- Any person who, on the first day of the first calendar quarter beginning more than 90 days after the date of the enactment of this Act, is engaged in an activity which makes such person liable for payment of the tax imposed by section 4415 of the Internal Revenue Code of 1986 shall be treated as commencing such activity on such date for purposes of such section and section 4901 of such Code. The preceding sentence shall not apply to any person who before such date paid the tax imposed by section 4411 of such Code for the year which includes such date.

SEC. 102. NATIONAL EDUCATION TRUST FUND.

    (a) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following new section:

‘SEC. 9512. NATIONAL EDUCATION TRUST FUND.

    ‘(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the ‘National Education Trust Fund’, consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section or section 9602(b).

    ‘(b) TRANSFERS TO TRUST FUND-

      ‘(1) IN GENERAL- There are hereby appropriated to the National Education Trust Fund amounts equivalent to the net revenues received in the Treasury from the taxes imposed by section 4401 (relating to tax on wagers) to the extent attributable to the basic percentage under such section.

      ‘(2) NET REVENUES- For purposes of paragraph (1), the term ‘net revenues’ means the amount estimated by the Secretary based on the excess of--

        ‘(A) the taxes referred to in paragraph (1) which are received in the Treasury, over

        ‘(B) the decrease in the tax imposed by chapter 1 resulting from such taxes.

    ‘(c) EXPENDITURES FROM TRUST FUND- Amounts in the National Education Trust Fund shall be available, as provided in appropriation Acts, only for purposes of making expenditures to carry out title II of the Education Trust Fund Act.’

    (b) CLERICAL AMENDMENT- The table of sections for such subchapter A is amended by adding at the end the following new item:

‘Sec. 9512. National Education Trust Fund.’

TITLE II--EDUCATIONAL ENHANCEMENT

SEC. 201. EDUCATION TRUST FUND PURPOSES.

    Funds from the National Education Trust Fund may be used by local educational agencies only for the purpose of educating students, including improving classroom instructional materials, renovating or building school facilities and buildings, and increasing teacher salaries.

SEC. 202. GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    (a) IN GENERAL- The Secretary of Education is authorized to provide grants from the National Education Trust Fund established under section 9512 of the Internal Revenue Code of 1986 to State educational agencies for use by local educational agencies to improve education in elementary and secondary schools as described in section 201.

    (b) ELIGIBILITY OF LOCAL EDUCATIONAL AGENCIES- A local educational agency in a State is eligible to receive a grant under this section from the Education Trust Fund established pursuant to section 9512 of the Internal Revenue Code of 1986 for any fiscal year if the number of children in the local educational agency counted under subsection 1124(c) of the Elementary and Secondary Education Act of 1965, before application of the weighting factor described in subsection (d) of this section, is at least 10, and if the number of children counted for grants under section 1124 of the Elementary and Secondary Education Act of 1965 is at least 18 percent of the total population aged 5 to 17 years, inclusive, in the local educational agency. Funds made available as a result of applying this subsection shall be reallocated by the State educational agency to other eligible local educational agencies in the State in proportion to the distribution of other funds under this section.

    (c) GRANTS FOR LOCAL EDUCATIONAL AGENCIES, THE DISTRICT OF COLUMBIA, AND PUERTO RICO-

      (1) IN GENERAL- Of the funds made available for the National Education Trust Fund as established under section 9512 of the Internal Revenue Code of 1986 in a fiscal year, seventy-four percent shall be made available to carry out this section. The amount of the grant that a local educational agency in a State or that the District of Columbia is eligible to receive under this section for any fiscal year shall be the product of--

        (A) the weighted child count determined under subsection (d); and

        (B) the amount in the second sentence of subparagraph 1124(a)(1) of the Elementary and Secondary Education Act of 1965.

      (2) PUERTO RICO- For each fiscal year, the amount of the grant for which the Commonwealth of Puerto Rico is eligible under this section shall be equal to the number of children counted under subsection (d) for Puerto Rico, multiplied by the amount determined in subparagraph 1124(a)(3) of the Elementary and Secondary Education Act of 1965.

    (d) WEIGHTED CHILD COUNT-

      (1) IN GENERAL- The weighted child count used to determine a local educational agency’s allocation under this section is the larger of the two amounts determined under clause (i) or (ii), as follows:

        (A) BY PERCENTAGE OF CHILDREN- This amount is determined by adding--

          (i) the number of children determined under section 1124(c) of the Elementary and Secondary Education Act of 1965 for that local educational agency constituting up to 12.20 percent, inclusive, of the local educational agency’s total population aged 5 to 17, inclusive, multiplied by 1.0;

          (ii) the number of such children constituting more than 12.20 percent, but not more than 17.70 percent, of such population, multiplied by 1.75;

          (iii) the number of such children constituting more than 17.70 percent, but not more than 22.80 percent, of such population, multiplied by 2.5;

          (iv) the number of such children constituting more than 22.80 percent, but not more than 29.70 percent, of such population, multiplied by 3.25; and

          (v) the number of such children constituting more than 29.70 percent of such population, multiplied by 4.0.

        (B) BY NUMBER OF CHILDREN- This amount is determined by adding--

          (i) the number of children determined under section 1124(c) of the Elementary and Secondary Education Act of 1965 constituting up to 1,917, inclusive, of the local educational agency’s total population aged 5 to 17, inclusive, multiplied by 1.0;

          (ii) the number of such children between 1,918 and 5,938, inclusive, in such population, multiplied by 1.5;

          (iii) the number of such children between 5,939 and 20,199, inclusive, in such population, multiplied by 2.0;

          (iv) the number of such children between 20,200 and 77,999, inclusive, in such population, multiplied by 2.5; and

          (v) the number of such children in excess of 77,999 in such population, multiplied by 3.0.

      (2) PUERTO RICO- Notwithstanding subparagraph (A), the weighting factor for Puerto Rico under this paragraph shall not be greater than the total number of children counted under subsection 1124(c) of the Elementary and Secondary Education Act of 1965 multiplied by 1.72.

SEC. 203. LOANS TO LOCAL EDUCATIONAL AGENCIES.

    (a) ELIGIBILITY OF LOCAL EDUCATIONAL AGENCIES- A local educational agency in a State is eligible to receive a low interest loan, payable over a period not to exceed 30 years, under this section from the Education Trust Fund established pursuant to section 9512 of the Internal Revenue Code of 1986 for any fiscal year if the number of children in the local educational agency counted under subsection 1124(c) of the Elementary and Secondary Education Act of 1965, before application of the weighting factor described in section 201(c), is at least 10, and if the number of children counted for grants under section 1124 of the Elementary and Secondary Education Act of 1965 is less than 18 percent of the total population aged 5 to 17 years, inclusive, in the local educational agency.

    (b) LOANS FOR LOCAL EDUCATIONAL AGENCIES, THE DISTRICT OF COLUMBIA, AND PUERTO RICO-

      (1) IN GENERAL- Of the funds made available for the National Education Trust Fund as established under the section 9512 of the Internal Revenue Code of 1986 in a fiscal year, twenty-four percent shall be made available to carry out this section. The amount of the loan that a local educational agency in a State or that the District of Columbia is eligible to receive under this section for any fiscal year shall be the product of--

        (A) the weighted child count determined under section 202(c); and

        (B) the amount in the second sentence of subparagraph 1124(a)(1) of the Elementary and Secondary Education Act of 1965.

      (2) PUERTO RICO- For each fiscal year, the amount of the grant for which the Commonwealth of Puerto Rico is eligible under this section shall be equal to the number of children counted under section 202(c) for Puerto Rico, multiplied by the amount determined in subparagraph 1124(a)(3) of the Elementary and Secondary Education Act of 1965.

    (c) LOAN REPAYMENT- Interest for a loan received under subsection (a) shall be based upon administrative costs, but shall not exceed 2 percent of the loan amount.

    (d) DISTRIBUTION- Funds made available as a result of applying subsection (a) shall be reallocated by the State educational agency to other eligible local educational agencies in the State in proportion to the distribution of other funds under section 201.

SEC. 204. EDUCATION COMMISSION.

    (a) ESTABLISHMENT- There is established a commission to be known as the ‘National Commission on Educational Enhancement’.

    (b) PURPOSE- The purpose of the Commission is to make recommendations to the Secretary of Education to enhance educational programs for elementary and secondary school students, including purchasing of necessary textbooks and providing a safe physical environment by improving the structural soundness of school facilities.

    (c) MEMBERS-

      (1) APPOINTMENT- The Commission shall be composed of 9 members, appointed by the President with not less than two individuals to represent the following groups or organizations:

        (A) Local educational agencies.

        (B) Teachers or principals.

        (C) Parents.

      (2) CHAIRPERSON. The Chairperson shall be elected by the members of the Commission each year.

      (3) TERMS- The term of office of a member appointed to the Commission shall be for four years.

      (4) VACANCY- A member appointed to fill a vacancy shall be appointed only for the remainder of such term. A member may serve after the expiration of that member’s term until a successor has taken office.

      (5) APPOINTMENT DATE- Members of the Commission shall be appointed no later than 90 days after the enactment of this Act.

    (d) BASIC PAY-

      (1) RATES OF PAY- Except as provided in paragraph (2), each member shall be entitled to receive the daily equivalent of the minimum annual rate of basic pay payable for grade GS-15 of the General Schedule for each day (including travel time) during which they are engaged in the actual performance of duties vested in the Commission.

      (2) PROHIBITION OF COMPENSATION OF FEDERAL EMPLOYEES- Members of the Commission who are full-time officers or employees of the United States or Members of Congress may not receive additional pay, allowances, or benefits by reason of their service on the Commission.

    (3) TRAVEL EXPENSES- Each member shall receive travel expenses, including per diem in lieu of subsistence, in accordance with sections 5702 and 5703 of title 5, United States Code.

    (e) APPLICABILITY OF CERTAIN CIVIL SERVICE LAWS- The Director of the Commission may be appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of that title relating to classification and General Schedule pay rates, except that an individual so appointed may not receive pay in excess of the annual rate of basic pay payable for GS-15 of the General Schedule.

    (f) EXPERTS AND CONSULTANTS- The Commission may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, but at rates for individuals not to exceed the daily equivalent of the minimum annual rate of basic pay payable for GS-15 of the General Schedule.

    (g) ANNUAL REPORT- The Commission shall transmit an annual report to the Secretary of Education, President, and the Congress not later than one year after the date of the appointment of a majority of members and every succeeding year thereafter. The report shall contain a detailed statement of the findings and conclusions of the Commission and a review of how funds from the Education Trust Fund were spent.

    (h) FUNDS FOR COMMISSION- Of the funds made available for the National Education Trust Fund as established under section 9512 of the Internal Revenue Code of 1986, two percent may be used by the Commission to comply with the requirements of this section.