To amend the Internal Revenue Code of 1986 to allow a deduction for dividends paid by domestic corporations, to reduce the tax on capital gains from assets held for more than 3 years, and to restore the investment tax credit for certain property.

Amends the Internal Revenue Code to permit an income tax deduction in the amount of dividends paid by domestic corporations, except S corporations, regulated investment companies, real estate investment trusts, and personal holding companies. Repeals the income tax deductions currently permitted in connection with: (1) dividends received by a corporation; (2) dividends received by a corporation on the preferred stock of a public utility; and (3) dividends paid by a public utility on its preferred stock. Revises the deductible percentage of amounts received by a corporation from a qualified ten-percent owned foreign corporation. Revises the maximum capital gains rate to limit such tax to the sum of: (1) a tax computed at the rates and in the same manner as if capital gains provisions had not been enacted on taxable income reduced by the qualified net capital gain; and (2) a tax equal to the sum of specified percentages of net gains based on number of years (with a maximum percentage of 23 percent of three-to-six year net gains and lower percentages of gains of more than six years). Restores the investment tax credit for manufacturing equipment.