[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5857 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5857
To amend the Internal Revenue Code of 1986 to decrease the top marginal
corporate rate to 28 percent and to prevent corporations from
exploiting tax treaties to evade taxation of United States income.
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IN THE HOUSE OF REPRESENTATIVES
July 26, 2010
Mr. Djou introduced the following bill; which was referred to the
Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to decrease the top marginal
corporate rate to 28 percent and to prevent corporations from
exploiting tax treaties to evade taxation of United States income.
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 ``Fair American Corporate Tax Act'' or
``FACT Act''.
SEC. 2. DECREASE IN TOP MARGINAL RATE.
(a) In General.--Paragraph (1) of section 11(b) of the Internal
Revenue Code of 1986 is amended--
(1) by inserting ``and'' at the end of subparagraph (B),
(2) by striking subparagraphs (C) and (D) and inserting the
following subparagraph:
``(C) 28 percent of so much of the taxable income
as exceeds $75,000.'',
(3) by striking ``of $100,000'' and inserting ``of
$75,000'',
(4) by striking ``$11,750'' and inserting ``$7,250'', and
(5) by striking the third sentence.
(b) Certain Personal Service Corporations.--Paragraph (2) of
section 11(b) of such Code is amended by striking ``35 percent'' and
inserting ``28 percent''.
(c) Conforming Amendments.--
(1) Subsection (a) of section 1201 of such Code is amended
by striking ``35 percent'' each place it appears and inserting
``28 percent''.
(2) Paragraphs (1), (2), and (6) of section 1445(e) of such
Code are each amended by striking ``35 percent'' and inserting
``28 percent''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2010.
SEC. 3. LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE PAYMENTS.
(a) In General.--Section 894 of the Internal Revenue Code of 1986
(relating to income affected by treaty) is amended by adding at the end
the following new subsection:
``(d) Limitation on Treaty Benefits for Certain Deductible
Payments.--
``(1) In general.--In the case of any deductible related-
party payment, the amount of any withholding tax imposed under
chapter 3 (and any tax imposed under subpart A or B of this
part) with respect to such payment shall not be less than the
amount which would be imposed if the payment were made directly
to the foreign parent corporation (taking into account any
income tax treaty between the United States and the country in
which the foreign parent corporation is resident).
``(2) Deductible related-party payment.--For purposes of
this subsection, the term `deductible related-party payment'
means any payment made, directly or indirectly, by any person
to any other person if the payment is allowable as a deduction
under this chapter and both persons are members of the same
foreign controlled group of entities.
``(3) Foreign controlled group of entities.--For purposes
of this subsection--
``(A) In general.--The term `foreign controlled
group of entities' means a controlled group of entities
the common parent of which is a foreign corporation.
``(B) Controlled group of entities.--The term
`controlled group of entities' means a controlled group
of corporations as defined in section 1563(a)(1),
except that--
``(i) `more than 50 percent' shall be
substituted for `at least 80 percent' each
place it appears therein, and
``(ii) the determination shall be made
without regard to subsections (a)(4) and (b)(2)
of section 1563.
A partnership or any other entity (other than a
corporation) shall be treated as a member of a
controlled group of entities if such entity is
controlled (within the meaning of section 954(d)(3)) by
members of such group (including any entity treated as
a member of such group by reason of this sentence).
``(4) Foreign parent corporation.--For purposes of this
subsection, the term `foreign parent corporation' means, with
respect to any deductible related-party payment, the common
parent of the foreign controlled group of entities referred to
in paragraph (3)(A).
``(5) Regulations.--The Secretary may prescribe such
regulations or other guidance as are necessary or appropriate
to carry out the purposes of this subsection, including
regulations or other guidance which provide for--
``(A) the treatment of two or more persons as
members of a foreign controlled group of entities if
such persons would be the common parent of such group
if treated as one corporation, and
``(B) the treatment of any member of a foreign
controlled group of entities as the common parent of
such group if such treatment is appropriate taking into
account the economic relationships among such
entities.''.
(b) Effective Date.--The amendment made by this section shall apply
to payments made after the date of the enactment of this Act.
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