To amend the Internal Revenue Code of 1986 to provide tax incentives and job training grants for communities affected by the migration of businesses and jobs to Canada or Mexico as a result of the North American Free Trade Agreement.

January 8, 2003

Mr. MCINTYRE introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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

To amend the Internal Revenue Code of 1986 to provide tax incentives and job training grants for communities affected by the migration of businesses and jobs to Canada or Mexico as a result of the North American Free Trade Agreement.

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 `NAFTA-Impacted Community Relief Act'.

SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR NAFTA-IMPACTED COMMUNITIES.

(a) IN GENERAL- Chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter:

`Subchapter Z--NAFTA-Impacted Communities

`Sec. 1400M. Designation of NAFTA-impacted communities.

`Sec. 1400N. NAFTA-impacted community employment credit.

`Sec. 1400O. Increase in expensing under section 179.

`Sec. 1400P. NAFTA-impacted community business defined.

`SEC. 1400M. DESIGNATION OF NAFTA-IMPACTED COMMUNITIES.

`(a) DESIGNATION-

`(1) NAFTA-IMPACTED COMMUNITY- For purposes of this title, the term `NAFTA-impacted community' means any area--

`(A) which is nominated by one or more local governments and the State or States in which it is located for designation as a community impacted by the North American Free Trade Agreement (hereinafter in this section referred to as a `nominated area'), and

`(B) which the Secretary of Commerce designates as a NAFTA-impacted community, after consultation with--

`(i) in the case of an area in a rural area, the Secretary of Agriculture;

`(ii) in the case of an area in an urban area, the Secretary of Housing and Urban Development; and

`(iii) in the case of an area on an Indian reservation, the Secretary of the Interior.

`(2) NUMBER OF DESIGNATIONS- The Secretary of Commerce may designate not more than 35 nominated areas as NAFTA-impacted communities.

`(3) AREAS DESIGNATED BASED ON DEGREE OF LOSS OF JOBS RESULTING FROM NAFTA, ETC- Except as otherwise provided in this section, the nominated areas designated as NAFTA-impacted communities under this subsection shall be those nominated areas with the highest average ranking with respect to the criteria described in subsection (c)(3). For purposes of the preceding sentence, an area shall be ranked within each such criterion on the basis of the amount by which the area exceeds such criterion, with the area which exceeds such criterion by the greatest amount given the highest ranking.

`(4) LIMITATION ON DESIGNATIONS-

`(A) PUBLICATION OF REGULATIONS- The Secretary of Commerce shall prescribe by regulation no later than 4 months after the date of the enactment of this section, after consultation with the officials described in paragraph (1)(B)--

`(i) the procedures for nominating an area under paragraph (1)(A),

`(ii) the parameters relating to the size and population characteristics of a NAFTA-impacted community, and

`(iii) the manner in which nominated areas will be evaluated based on the criteria specified in subsection (c).

`(B) PROCEDURAL RULES- The Secretary of Commerce shall not make any designation of a nominated area as a NAFTA-impacted community under paragraph (2) unless--

`(i) a nomination regarding such area is submitted in such a manner and in such form, and contains such information, as the Secretary of Commerce shall by regulation prescribe, and

`(ii) the Secretary of Commerce determines that any information furnished is reasonably accurate.

`(5) NOMINATION PROCESS FOR INDIAN RESERVATIONS- For purposes of this subchapter, in the case of a nominated area on an Indian reservation, the reservation governing body (as determined by the Secretary of the Interior) shall be treated as being both the State and local governments with respect to such area.

`(b) PERIOD FOR WHICH DESIGNATION IS IN EFFECT-

`(1) IN GENERAL- Any designation of an area as a NAFTA-impacted community shall remain in effect during the period beginning on the date of the designation and ending on the earliest of--

`(A) December 31, 2010,

`(B) the termination date designated by the State and local governments in their nomination, or

`(C) the date the Secretary of Commerce revokes such designation.

`(2) REVOCATION OF DESIGNATION- The Secretary of Commerce may revoke the designation under this section of an area if the Secretary determines that the loss of jobs and other effects of NAFTA on the area have been substantially alleviated. Such determination shall include, at a minimum, a finding that the unemployment rate in the area is equal to or lower than the national unemployment rate, and a finding that new businesses are being attracted to the area.

`(c) AREA AND ELIGIBILITY REQUIREMENTS-

`(1) IN GENERAL- The Secretary of Commerce may designate a nominated area as a NAFTA-impacted community under subsection (a) only if the area meets the requirements of paragraphs (2) and (3) of this subsection.

`(2) AREA REQUIREMENTS- For purposes of paragraph (1), a nominated area meets the requirements of this paragraph if--

`(A) the area is within the jurisdiction of one or more local governments,

`(B) the boundary of the area is continuous,

`(C) the area does not include an empowerment zone (as defined in section 1393(b)), and

`(D) the area does not include a renewal community designated under section 1400E.

`(3) ELIGIBILITY REQUIREMENTS-

`(A) IN GENERAL- For purposes of paragraph (1), a nominated area meets the requirements of this paragraph if the State and the local governments in which it is located certify (and the Secretary of Commerce, after such review of Department of Labor data and other appropriate supporting data as he deems appropriate, accepts such certification) that--

`(i) the unemployment rate in the area, as determined by the most recent available data, was at least 1 percentage point above the national unemployment rate for the period to which such data relate, and

`(ii) in the case of--

`(I) a rural area, at least 300 workers who live or work in the area have been certified as eligible to apply for NAFTA transitional adjustment assistance under subchapter D of chapter 2 of title II of the Trade Act of 1974 (19 U.S.C. 2341 et seq.), and

`(II) an urban area, at least 500 workers have been so certified.

`(B) RURAL AREA DEFINED- For purposes of this section, the term `rural area' means an area--

`(i) which is within a local government jurisdiction or jurisdictions with a population of less than 10,000,

`(ii) which is outside of a metropolitan statistical area (within the meaning of section 143(k)(2)(B)), or

`(iii) which is determined by the Secretary of Commerce, after consultation with the Secretary of Agriculture, to be a rural area.

`(C) URBAN AREA DEFINED- For purposes of this section, the term `urban area' means any area that is not a rural area.

`(d) COORDINATION WITH TREATMENT OF ENTERPRISE COMMUNITIES- For purposes of this title, if there are in effect with respect to the same area both--

`(1) a designation as a NAFTA-impacted community, and

`(2) a designation as an enterprise community,

both of such designations shall be given full effect with respect to such area.

`(e) DEFINITIONS AND SPECIAL RULES- For purposes of this subchapter, rules similar to the rules of paragraphs (5) and (7) of section 1393 shall apply.

`SEC. 1400N. NAFTA-IMPACTED COMMUNITY EMPLOYMENT CREDIT.

`(a) AMOUNT OF CREDIT- For purposes of section 38, the amount of the NAFTA-impacted community employment credit determined under this section with respect to any employer for any taxable year is 8.5 percent of the qualified NAFTA-impacted community wages paid or incurred during the calendar year which ends with or within such taxable year.

`(b) QUALIFIED NAFTA-IMPACTED COMMUNITY WAGES-

`(1) IN GENERAL- For purposes of this section, the term `qualified NAFTA-impacted community wages' means any wages paid or incurred by an employer for services performed by an employee while such employee is a qualified NAFTA-impacted community employee.

`(2) ONLY FIRST $15,000 OF WAGES PER YEAR TAKEN INTO ACCOUNT- With respect to each qualified NAFTA-impacted community employee, the amount of qualified NAFTA-impacted community wages which may be taken into account for a calendar year shall not exceed $15,000.

`(3) COORDINATION WITH WORK OPPORTUNITY CREDIT-

`(A) IN GENERAL- The term `qualified NAFTA-impacted community wages' shall not include wages taken into account in determining the credit under section 51.

`(B) COORDINATION WITH PARAGRAPH (2)- The $15,000 amount in paragraph (2) shall be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section 51.

`(c) QUALIFIED NAFTA-IMPACTED COMMUNITY EMPLOYEE- For purposes of this section--

`(1) IN GENERAL- Except as otherwise provided in this subsection, the term `qualified NAFTA-impacted community employee' means, with respect to any period, any employee of an employer if--

`(A) substantially all of the services performed during such period by such employee for such employer are performed within a NAFTA-impacted community in a trade or business of the employer, and

`(B) the principal place of abode of such employee while performing such services is within such NAFTA-impacted community.

`(2) OTHER RULES- Rules similar to the rules of paragraphs (2) and (3) of section 1396(d) shall apply.

`(d) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this section, the rules of section 1397 shall apply.

`SEC. 1400O. INCREASE IN EXPENSING UNDER SECTION 179.

`(a) GENERAL RULE- In the case of a NAFTA-impacted community business (as defined in section 1400P), for purposes of section 179--

`(1) the limitation under section 179(b)(1) shall be increased by the lesser of--

`(A) $10,000, or

`(B) the cost of section 179 property which is qualified NAFTA-impacted property placed in service during the taxable year, and

`(2) the amount taken into account under section 179(b)(2) with respect to any section 179 property which is qualified NAFTA-impacted property shall be 50 percent of the cost thereof.

`(b) RECAPTURE- Rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified NAFTA-impacted property which ceases to be used in a NAFTA-impacted community by a NAFTA-impacted community business.

`(c) QUALIFIED NAFTA-IMPACTED PROPERTY- For purposes of this section--

`(1) IN GENERAL- The term `qualified NAFTA-impacted property' means section 179 property (as defined in section 179(d)) if--

`(A) such property was acquired by the taxpayer after December 31, 2001, and before January 1, 2009, and

`(B) such property would be qualified zone property (as defined in section 1397C) if references

to NAFTA-impacted communities were substituted for references to empowerment zones in section 1397C.

`(2) CERTAIN RULES TO APPLY- The rules of subsections (a)(2) and (b) of section 1397C shall apply for purposes of this section.

`SEC. 1400P. NAFTA-IMPACTED COMMUNITY BUSINESS DEFINED.

`For purposes of this part, the term `NAFTA-impacted community business' means any entity or proprietorship which would be a qualified business entity or qualified proprietorship under section 1397C if references to NAFTA-impacted communities were substituted for references to empowerment zones in such section.'.

(b) TECHNICAL AND CONFORMING AMENDMENTS-

(1) NAFTA-IMPACTED COMMUNITY EMPLOYMENT CREDIT PART OF GENERAL BUSINESS CREDIT-

(A) Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking `plus' at the end of paragraph (12), by striking the period at the end of paragraph (13) and inserting `, plus', and by adding at the end the following new paragraph:

`(14) the NAFTA-impacted community employment credit determined under section 1400N(a).'.

(B) Subsection (d) of section 39 of such Code (relating to carryback and carryforward of unused credits) is amended by adding at the end the following new paragraph:

`(10) NO CARRYBACK OF SECTION 1400N CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 1400N (relating to NAFTA-impacted community employment credit) may be carried to any taxable year ending before January 1, 2002.'.

(2) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO NAFTA-IMPACTED COMMUNITY EMPLOYMENT CREDIT-

(A) Subsection (a) of section 280C (relating to rule for employment credits) is amended by striking `and 1396(a)' and inserting `1396(a), and 1400N(a)'.

(B) Subsection (c) of section 196 (relating to deduction for certain unused business credits) is amended by striking `and' at the end of paragraph (8), by striking the period at the end of paragraph (9) and inserting `, and', and by adding at the end the following new paragraph:

`(10) the NAFTA-impacted community employment credit determined under section 1400N(a)'.

(3) CARRYOVERS- Subsection (c) of section 381 (relating to carryovers in certain corporate acquisitions) is amended by adding at the end the following new paragraph:

`(27) NAFTA-IMPACTED COMMUNITY PROVISIONS- The acquiring corporation shall take into account (to the extent proper to carry out the purposes of this section and subchapter XI, and under such regulations as may be prescribed by the Secretary) the items required to be taken into account for purposes of subchapter XI in respect of the distributor or transferor corporation.'.

(c) CLERICAL AMENDMENTS- The table of subchapters for chapter 1 is amended by adding at the end the following new item:

`Subchapter Z. NAFTA-Impacted Communities.'

SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR NAFTA-IMPACTED COMMUNITIES.

(a) IN GENERAL- The Secretary of Labor shall provide grants to States that contain NAFTA-impacted communities, as designated under section 1400M of the Internal Revenue Code of 1986 (as added by section 2(a) of this Act), for the purpose of providing sub-grants to nonprofit organizations and community or junior colleges in order to provide short-term job training courses, courses in entrepreneurism and self-employment, and other related job training assistance that will promote the economic self-sufficiency of individuals located in NAFTA-impacted communities.

(b) MAXIMUM AMOUNT OF GRANT- The total amount provided under a grant to a State under subsection (a) for a fiscal year may not exceed the product of--

(1) $1,000,000; and

(2) the number of NAFTA-impacted communities located in the State.

(c) AUTHORIZATION OF APPROPRIATIONS-

(1) IN GENERAL- There are authorized to be appropriated to carry out this section $35,000,000 for each of the fiscal years 2004 through 2010.

(2) AVAILABILITY- Amounts appropriated pursuant to the authorization of appropriations under paragraph (1) are authorized to remain available until expended.

END