Friday, August 3, 2012

Tax Reform Bill - Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012


To provide for expedited consideration of a bill providing for comprehensive tax reform.


Mr. DREIER (for himself and Mr. CAMP) introduced the following bill


To provide for expedited consideration of a bill providing for comprehensive tax reform.

1          Be it enacted by the Senate and House of Representa-

2  tives of the United States of America in Congress assembled,


4          This Act may be cited as the ‘‘Pathway to Job  Cre-

5  ation through  a Simpler, Fairer  Tax Code Act of 2012’’.


7          (a)  FINDINGS.—Congress  finds  that   the  following

8  problems exist with the  Internal  Revenue Code of 1986

9  (in this section referred to as the ‘‘tax code’’):

2 p.m.)

Tax  Reform Pathway]


1                  (1) The tax code is unfair, containing hundreds

2          of provisions that  only benefit certain  special inter-

3          ests, resulting in a system of winners and losers.

4                  (2) The tax code violates the fundamental  prin-

5          ciple of equal justice by subjecting families in similar

6          circumstances to significantly different tax bills.

7                  (3)(A)   Many  tax   preferences,  sometimes  re-

8          ferred to as ‘‘tax expenditures,’’ are  similar to gov-

9          ernment spending—instead of markets directing eco-

0          nomic  resources  to  their  most  efficient  uses,  the

1          Government directs resources to other uses, creating

2          a drag on economic growth and job creation.

3                  (B)   The  exclusions,  deductions,  credits,   and

4          special  rules  that   make  up  such  tax  expenditures

5          amount to over $1 trillion per year, nearly matching

6          the total amount of annual revenue that  is generated

7          from the income tax itself.

8                  (C)  In  some cases,  tax  subsidies  can  literally

9          take the form of spending through  the tax code, re-

0          distributing  taxes  paid by some Americans to indi-

1          viduals and  businesses who do not  pay any income

2          taxes at all.

3                  (4)  The failure to adopt  a permanent  tax code

4          with stable  statutory  tax  policy has  created  greater

5          economic uncertainty.  Tax rates have been scheduled

2 p.m.)

Tax  Reform Pathway]


1          to increase sharply in 3 of the last 5 years, requiring

2          the enactment of repeated temporary extensions. Ad-

3          ditionally, approximately 70 other, more targeted tax

4          provisions expired in  2011  or  are  currently  sched-

5          uled to expire by the end of 2012.

6                  (5)  Since 2001,  there  have been nearly  4,500

7          changes made to the tax code, averaging more than

8          one each day over the past decade.

9                  (6) The tax code’s complexity leads nearly nine

0          out of ten  families either  to hire tax  preparers  (60

1          percent)  or  purchase  software  (29  percent)  to  file

2          their taxes, while 71 percent of unincorporated busi-

3          nesses  are  forced  to  pay  someone else to  prepare

4          their taxes.

5                  (7)  The cost of complying with the tax code is

6          too  burdensome,  forcing  individuals,  families,  and

7          employers to  spend over six billion hours  and  over

8          $160 billion per year trying to comply with the law

9          and pay the actual tax owed.

0                  (8)  Compliance with the  current  tax  code is a

1          financial hardship for employers that  falls dispropor-

2          tionately on small businesses, which spend an aver-

3          age of $74 per hour on tax-related compliance, mak-

4          ing it the most expensive paperwork burden they en-

5          counter.

2 p.m.)

Tax  Reform Pathway]


1                  (9)  Small businesses have been responsible for

2          two-thirds  of the  jobs created  in the  United  States

3          over the  past  15  years,  and  approximately  half  of

4          small-business profits are taxed at the current  top 2

5          individual rates.

6                  (10)  The  historic  range  for  tax  revenues  col-

7          lected by the  Federal  government has  averaged 18

8          to  19  percent  of Gross  Domestic  Product  (GDP),

9          but  will rise to 21.2 percent of GDP  under  current

0          law—a level never reached,  let  alone sustained,  in

1          the Nation’s history.

2                  (11)  The  current  tax  code is  highly punitive,

3          with a top Federal  individual income tax rate  of 35

4          percent (which is set to climb to over 40 percent in

5          2013   when  taking   into   account   certain   hidden

6          rates),  meaning some Americans could face a  com-

7          bined local, State  and  Federal  tax  rate  of 50  per-

8          cent.

9                  (12)  The tax code contains harmful provisions,

0          such as the Alternative Minimum Tax (AMT), which

1          was initially designed to affect only the very highest-

2          income taxpayers  but  now threatens  more than  30

3          million middle-class households because of a flawed

4          design.

2 p.m.)

Tax  Reform Pathway]


1                  (13)  As  of  April  1,  2012,  the  United  States

2          achieved the dubious distinction of having the high-

3          est corporate tax rate  (39.2 percent for Federal  and

4          State combined) in the developed world.

5                  (14)  The  United  States  corporate  tax  rate  is

6          more than  50 percent  higher than  the average rate

7          of member states  of the Organization for Economic

8          Cooperation  and   Development  (OECD)—a   factor

9          that  discourages employers and investors from locat-

0          ing jobs and investments in the United States.

1                  (15)  The United  States  has  become an  outlier

2          in  that  it  still  uses  a  ‘‘worldwide’’  system  of tax-

3          ation—one that  has not been substantially  reformed

4          in 50  years, when the  United  States  accounted for

5          nearly half of global economic output and had no se-

6          rious competitors around the world.

7                  (16)  The combination of the  highest corporate

8          tax rate with an antiquated  ‘‘worldwide’’ system sub-

9          jects  American companies to  double taxation  when

0          they attempt  to compete with foreign companies in

1          overseas markets and then reinvest their earnings in

2          the United States.

3                  (17)  The  Nation’s outdated  tax  code has  con-

4          tributed  to the fact that  the world’s largest  compa-

5          nies  are  more  likely to  be  headquartered   overseas

2 p.m.)

Tax  Reform Pathway]


1          today  than  at  any  point  in  the  last  50  years:  In

2          1960,  17 of the  world’s 20 largest  companies were

3          based in the  United  States;  by 2010,  that  number

4          sank to a mere six out of 20.

5                  (18)  The United States  has one of the highest

6          levels of taxation  on capital—taxing  it  once at  the

7          corporate  level and  then  again  at   the  individual

8          level—with integrated  tax  rates  on  certain  invest-

9          ment  income already  reaching  roughly  50  percent

0          (and scheduled to reach nearly 70 percent in 2013).

1                  (19) The United States’ overall taxation of cap-

2          ital  is higher than  all but  four of the  38 countries

3          that   make  up  the  OECD  and  the  BRIC  (Brazil,

4          Russia, India and China).

5          (b) PURPOSES.—It is the purpose of this Act to pro-

6  vide for enactment  of comprehensive tax reform in 2013

7  that—

8                  (1) protects taxpayers by creating a fairer, sim-

9          pler,  flatter   tax  code for  individuals  and  families

0          by—

1                          (A) lowering marginal tax rates and broad-

2                  ening the tax base;

3                          (B) eliminating special interest loopholes;

4                          (C)  reducing  complexity in  the  tax  code,

5                  making tax compliance easier and less costly;

2 p.m.)

Tax  Reform Pathway]



2                  Tax;


(D)   repealing   the   Alternative   Minimum

(E)  maintaining  modern levels of progres-

4                  sivity so as to not overburden any one group or

5                  further  erode the tax base;

6                          (F)  making it easier for Americans to save;

7                  and

8                          (G)  reducing the  tax  burdens  imposed on

9                  married couples and families;

0                  (2)   is  comprehensive  (addressing   both   indi-

1          vidual and corporate  rates),  so as to have the max-

2          imum economic impact by benefitting employers and

3          their   employees regardless   of  how  a  business  is

4          structured;

5                  (3)  results  in  tax  revenue consistent  with his-

6          torical norms;

7                  (4)  spurs  greater   investment,  innovation  and

8          job creation, and therefore increases economic activ-

9          ity and the size of the economy on a dynamic basis

0          as compared to the current  tax code; and

1                  (5)  makes  American  workers  and  businesses

2          more competitive by—

3                          (A) creating  a stable, predictable tax code

4                  under  which families  and  employers are  best

5                  able to plan for the future;

2 p.m.)

Tax  Reform Pathway]


1                          (B) keeping taxes on small businesses low;

2                          (C) reducing America’s corporate tax rate,

3                  which is currently  the  highest  in  the  industri-

4                  alized world;

5                          (D)  maintaining  a  level of parity  between

6                  individual  and  corporate  rates  to  reduce  eco-

7                  nomic distortions;

8                          (E)   promoting  innovation  in  the  United

9                  States;

0                          (F)  transitioning  to a globally competitive

1                  territorial  tax system;

2                          (G) minimizing the  double taxation  of in-

3                  vestment and capital; and

4                          (H)  reducing the impact of taxes on busi-

5                  ness decision-making to allow such decisions to

6                  be driven by their economic potential.


8                        VIDING FOR  COMPREHENSIVE TAX REFORM.

9          (a)  DEFINITION.—For purposes of this  section, the

0  term  ‘‘tax reform  bill’’ means  a  bill of the  113th  Con-

1  gress—

2                  (1) introduced in the House of Representatives

3          by the chair of the Committee on Ways and Means

4          not later than  April 30, 2013, or the first legislative

5          day thereafter  if the House is not in session on that

2 p.m.)

Tax  Reform Pathway]


1          day, the title of which is as follows: ‘‘A bill to pro-

2          vide for comprehensive tax reform.’’; and

3                  (2) which is the subject of a certification under

4          subsection (b).

5          (b)  CERTIFICATION.—The chair  of the  Joint  Com-

6  mittee on Taxation  shall notify the House and Senate in

7  writing whenever the chair of the Joint  Committee deter-

8  mines  that   an  introduced  bill  described  in  subsection

9  (a)(1)  contains  at  least  each of the  following proposals:

0                  (1)  a  consolidation of the  current  6 individual

1          income tax brackets into not more than two brackets

2          of 10 and not more than 25 percent;

3                  (2) a reduction in the corporate tax rate  to not

4          greater than 25 percent;

5                  (3)  a  repeal  of the  Alternative Minimum Tax;

6                  (4)  a  broadening  of the  tax  base  to  maintain

7          revenue between 18 and 19 percent of the economy;

8          and

9                  (5)  a  change  from a  ‘‘worldwide’’  to  a  ‘‘terri-

0          torial’’ system of taxation.



3                  (1) Any committee of the House of Representa-

4          tives to which the tax reform bill is referred shall re-

5          port it to the House not later than 20 calendar days

2 p.m.)

Tax  Reform Pathway]


1          after  the  date  of  its  introduction.  If  a  committee

2          fails to report the tax reform bill within that  period,

3          such  committee  shall  be  automatically  discharged

4          from further  consideration of the bill.

5                  (2) If the House has not otherwise proceeded to

6          the consideration of the tax reform bill upon the ex-

7          piration of 15 legislative days after  the bill has been

8          placed on the  Union Calendar,  it  shall be in order

9          for the Majority Leader or a designee (or, after  the

0          expiration  of  an  additional  2  legislative days,  any

1          Member), to offer one motion that  the House resolve

2          into the Committee of the Whole House on the state

3          of the Union for the consideration of the tax reform

4          bill. The previous question shall be considered as or-

5          dered  on the  motion to  its  adoption  without  inter-

6          vening motion except 20  minutes  of debate  equally

7          divided and controlled by the proponent and an op-

8          ponent.  If  such  a  motion is adopted,  consideration

9          shall  proceed in  accordance with paragraph  (3).  A

0          motion to  reconsider the  vote by which the  motion

1          is disposed of shall not be in order.

2                  (3)  The  first  reading  of the  bill shall  be dis-

3          pensed with. General debate shall be confined to the

4          bill and shall not exceed 4 hours, equally divided and

5          controlled by the  chair  and  ranking  minority mem-

2 p.m.)

Tax  Reform Pathway]


1          ber of the  Committee on Ways and  Means. At the

2          conclusion of general  debate,  the  bill shall be read

3          for amendment under the five-minute rule. Any com-

4          mittee  amendment  shall  be considered as  read.  At

5          the conclusion of consideration of the bill for amend-

6          ment the Committee shall rise and report  the bill to

7          the House with such amendments as may have been

8          adopted.  The  previous question  shall  be considered

9          as  ordered  on the  bill and  amendments  thereto  to

0          final passage without intervening motion except one

1          motion to recommit with or without instructions.  A

2          motion to reconsider the vote on passage of the bill

3          shall not be in order.


5                  (1)   COMMITTEE   CONSIDERATION.—A  tax  re-

6          form  bill, as  defined in  subsection  (a),  received in

7          the Senate shall be referred to the Committee on Fi-

8          nance. The Committee shall report  the bill not later

9          than  15 calendar days after receipt of the bill in the

0          Senate.  If  the  Committee  fails  to  report  the  bill

1          within  that   period,  that   committee  shall  be  dis-

2          charged  from consideration of the  bill, and  the  bill

3          shall be placed on the calendar.

4                  (2)   MOTION    TO    PROCEED.—Notwithstanding

5          rule XXII of the Standing  Rules of the Senate, it is

2 p.m.)

Tax  Reform Pathway]


1          in order, not later  than  2 days of session after  the

2          date on which the tax reform bill is reported or dis-

3          charged from committee, for the  majority leader of

4          the Senate or the majority leader’s designee to move

5          to  proceed to  the  consideration  of  the  tax  reform

6          bill. It  shall also be in order for any Member of the

7          Senate  to  move to  proceed to  the  consideration  of

8          the tax reform bill at  any time after  the conclusion

9          of such 2-day period. A motion to proceed is in order

0          even though  a  previous motion  to  the  same  effect

1          has  been disagreed  to.  All points  of order  against

2          the  motion  to  proceed  to  the  tax  reform  bill  are

3          waived. The motion to proceed is not debatable. The

4          motion is not subject to a motion to postpone.

5                  (3)  CONSIDERATION.—No  motion to  recommit

6          shall be in order and debate on any motion or appeal

7          shall  be limited  to  one hour,  to  be divided in  the

8          usual form.

9                  (4)  AMENDMENTS.—All   amendments  must  be

0          relevant  to  the  bill and  debate  on any  amendment

1          shall be limited to 2 hours to be equally divided in

2          the  usual  form  between  the  opponents  and  pro-

3          ponents  of the  amendment.  Debate  on any amend-

4          ment to an amendment, debatable motion, or appeal

5          shall be limited to  1  hour  to  be equally divided in

2 p.m.)

Tax  Reform Pathway]


1          the  usual  form  between  the  opponents  and  pro-

2          ponents of the amendment.

3                  (5) VOTE  ON  PASSAGE.—If the Senate has pro-

4          ceeded to the bill, and following the conclusion of all

5          debate,  the  Senate  shall proceed to  a  vote on pas-

6          sage of the bill as amended, if amended.

7          (e) CONFERENCE IN  THE  HOUSE.—If the House re-

8  ceives a message that  the Senate  has passed the tax re-

9  form bill with an amendment or amendments,  it shall be

0  in  order  for  the  chair  of the  Committee on  Ways and

1  Means or a designee, without intervention of any point of

2  order,  to  offer any  motion specified in  clause 1  of rule

3  XXII.

4          (f) CONFERENCE IN  THE  SENATE.—If the Senate re-

5  ceives from the  House a message to accompany the  tax

6  reform bill, as defined in subsection (a), then no later than

7  two session days after its receipt—

8                  (1)  the  Chair  shall lay the  message before the

9          Senate;

0                  (2)  the  motion to insist  on the  Senate  amend-

1          ment   or   disagree   to   the   House   amendment   or

2          amendments  to the Senate  amendment,  the request

3          for  a  conference with  the  House  or  the  motion to

4          agree to the request  of the House for a conference,

5          and  the  motion  to  authorize  the  Chair  to  appoint

2 p.m.)

Tax  Reform Pathway]


1          conferees on the part  of the Senate  shall be agreed

2          to; and

3                  (3)  the  Chair  shall  then  be authorized  to  ap-

4          point conferees on the part  of the Senate without in-

5          tervening  motion,  with  a  ratio  agreed  to  with  the

6          concurrence of both leaders.

7          (g)  RULEMAKING.—This  section  is  enacted  by the

8  Congress as an  exercise of the  rulemaking power of the

9  House of Representatives and Senate, respectively, and as

0  such is deemed a part  of the rules of each House, respec-

1  tively, or of that  House to which they specifically apply,

2  and such procedures supersede other rules only to the ex-

3  tent  that  they are inconsistent with such rules; and with

4  full recognition of the constitutional right of either House

5  to change the rules (so far as relating  to the procedures

6  of that  House) at  any time, in the same manner,  and to

7  the same extent as any other rule of that House.

2 p.m.) (212) 588-1113

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