[Congressional Record Volume 140, Number 92 (Friday, July 15, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 15, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. D'AMATO:
  S. 2289. A bill to authorize the Export-Import bank of the United 
States to provide financing for the export of nonlethal defense 
articles and defense services the primary end use of which will be for 
civilian purposes; to the Committee on Banking, Housing, and Urban 
Affairs.


          nonlethal defense articles and defense services act

  Mr. D'AMATO. Mr. President, I introduce a bill to authorize the 
Export-Import Bank to provide financing for the export of nonlethal 
defense articles and defense services for which the primary end use 
will be for civilian purposes. The Export-Import Bank's jurisdiction 
should be expanded in this limited way, in order to maintain the U.S. 
defense industrial base that is so crucial to America's well-being.
  With the end of the cold war, changes in the defense industry are 
warranted. Overall, though, the defense industrial base must remain 
strong. The United States must continue to occupy a position of 
leadership in an era in which the health of our economy is paramount.
  The defense budget has been cut substantially. Due to this decline in 
the monetary resources available, the country must find innovative ways 
to keep the defense industry strong. One way is through the development 
of dual-use technologies--technologies that may be used for both 
civilian and military purposes. This move to dual-use is a very 
important part of a defense conversion plan. However, at this time, the 
Export-Import Bank may not participate in transactions that involve 
even the slightest defense application. Export sales financing is 
always an important factor in trade opportunities. However, it is 
crucial in sales to developing Third-World countries which is an ever-
increasing market.
  The defense industry needs the assistance that would be provided for 
dual-use products by this legislation. The Export-Import Bank should be 
authorized to provide financing for the export of such articles and 
services when the primary end use is civilian. I urge my colleagues to 
support this legislation which has already been introduced by 
Representative Bereuter, and is making its way through the House.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2289

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORITY TO PROVIDE FINANCING FOR THE EXPORT OF 
                   NONLETHAL DEFENSE ARTICLES AND DEFENSE SERVICES 
                   THE PRIMARY END USE OF WHICH WILL BE FOR 
                   CIVILIAN PURPOSES.

       Section 2(b)(6) of the Export-Import Bank Act of 1945 (12 
     U.S.C. 635(b)(6)) is amended by adding at the end the 
     following:
       ``(I)(i) Subparagraph (A) shall not apply to a sale of 
     defense articles or services if--
       ``(I) the Bank determines that--
       ``(aa) the defense articles or services are nonlethal; and
       ``(bb) the primary end use of the defense articles or 
     services will be for civilian purposes; and
       ``(II) not less than 15 calendar days before the date on 
     which the Board of Directors of the Bank gives final approval 
     to Bank participation in the transaction, the Bank provides 
     notice of the transaction to the Committees on Banking, 
     Finance and Urban Affairs and on Appropriations of the House 
     of Representatives and the Committees on Banking, Housing, 
     and Urban Affairs and on Appropriations of the Senate.
       ``(ii) Not more than 10 percent of the loan, guarantee, and 
     insurance authority available to the Bank for a fiscal year 
     may be used by the Bank to support the sale of defense 
     articles or services to which subparagraph (A) does not apply 
     by reason of clause (i) of this subparagraph.
       ``(iii) Not later than September 1 of each fiscal year, the 
     Comptroller General of the United States, in consultation 
     with the Bank, shall submit to the Committees on Banking, 
     Finance and Urban Affairs and on Appropriations of the House 
     of Representatives and the Committees on Banking, Housing, 
     and Urban Affairs and on Appropriations of the Senate, a 
     report on the end uses of any defense articles or services 
     described in clause (i) with respect to which the Bank 
     provided support during the fiscal year ending 1 year before 
     that September 1.
       ``(iv) The provisions of clause (i) shall not apply after 
     September 30, 1997.''.

     SEC. 2. REPORT TO THE CONGRESS.

       The first sentence of section 2(b)(6)(H) of the Export-
     Import Bank Act of 1945 (12 U.S.C. 635(b)(6)(H)) is amended 
     by inserting before the period ``, or any sale of defense 
     articles or services as described in subparagraph (I)(i)''.

     SEC. 3. PROMOTION OF EXPORTS OF ENVIRONMENTALLY BENEFICIAL 
                   GOODS AND SERVICES.

       (a) In General.--Section 11(b) of the Export-Import Bank 
     Act of 1945, the first place it appears (12 U.S.C. 635i-
     5(b)), is amended--
       (1) by striking ``The Bank'' and inserting the following:
       ``(1) In general.--The Bank'';
       (2) in the first sentence, by inserting before the period 
     ``(such as by encouraging environmentally sustainable 
     development, promoting efficient use of resources, and 
     promoting energy efficiency)''; and
       (3) by adding at the end the following new paragraph:
       ``(2) Authorization of Funds.--In addition to other funds 
     available to support the export of goods and services 
     described in paragraph (1), there are authorized to be 
     appropriated to the Bank not more than $35,000,000 for the 
     cost (as defined in section 502(5) of the Federal Credit 
     Reform Act of 1990) of supporting such exports.''.
       (b) Technical Correction.--The Export-Import Bank Act of 
     1945 (12 U.S.C. 635 et seq.) is amended by redesignating 
     section 11, the second place it appears (12 U.S.C. 635i-8), 
     as section 14.
                                 ______

      By Mr. HATCH:
  S. 2290. A bill to repeal the increase in withholding from 
supplemental wage payments included in the Revenue Reconciliation Act 
of 1993; to the Committee on Finance.


       the 20-percent withholding rate reinstatement act of 1994

  Mr. HATCH. Mr. President, I rise today to introduce legislation to 
correct a tax provision that is causing undue and unintended hardship 
to many Americans. This provision is the 28-percent withholding rate on 
supplemental wages that Congress passed last year as part of the 
Omnibus Budget Reconciliation Act [OBRA] of 1993.
  Supplemental wages are any payments made by employers to employees 
that are not connected with a regular pay period, such as bonuses, 
commissions, and certain sick pay. OBRA 1993 increased the withholding 
rate on supplemental wages from 20 to 28 percent--a 40-percent increase 
in the withholding rate. My bill would simply repeal this increase and 
return the law to a 20-percent rate.
  The ostensible purpose for last year's change was to bring the 
supplemental wage withholding rate more closely in line with the top 
individual tax bracket, which last year's tax bill raised to 39.6 
percent. In other words, the provision was intended to force employers 
to withhold more income tax from bonuses and other payments to wealthy 
Americans in tax brackets higher than 20 percent.
  As so often happens, in an effort to increase taxes on the rich, this 
misguided provision created an undue hardship for taxpayers in the 
lowest tax bracket and has had little or no effect on taxpayers in the 
higher tax brackets.
  Mr. President, I would like to explain how this increase in the 
supplemental wage withholding rate is an unfair seizure of taxpayers' 
money, a hidden tax on the lower and middle-income classes, and a 
manipulation of Federal revenues. To do this, I will share with you the 
stories of two Utah taxpayers, Brian Neilson and Deborah Young.
  Brian Neilson of Sandy, UT, is a father of five and a salesman whose 
compensation is comprised of both salary and commissions. Although he 
expects to earn slightly more this year than last year, he noticed this 
year's paychecks have not covered the same expenses they had covered 
last year. After researching this situation, he discovered the 
withholding rate on his commission checks had increased from 20 to 28 
percent.
  Neilson, whose taxable income generally falls into the lowest tax 
bracket because of the size of his family, projects his tax liability 
for 1994 to be approximately $5,000. By the end of the year, he will 
have had appoximately $12,400 withheld from his paychecks. This 
translates into an overwithholding of $7,400, which is 148 
percent more than is necessary. In other words, Brian is unwillingly 
providing a $7,400 interest-free loan to Uncle Sam. This is an unjust, 
irresponsible provision. In essence, the Government is confiscating his 
income.
  Deborah Young of West Valley City, UT, is the mother of three 
children, one of whom is a newborn. When she first contacted my office 
several weeks ago, she was in desperate straits. Complications with her 
pregnancy had forced her to go on sick leave. Even though her sick pay, 
which the IRS considers a supplemental wage, would just cover her 
living and medical expenses, she believed she would be able to survive. 
After receiving her first sick pay check, however, she found that 28 
percent of her money--she did not owe it in taxes--was being seized by 
the Government at the point in her life when she needed it most.
  Mr. President, the increase in the withholding rate on supplemental 
wages was aimed at the commissions and bonuses of taxpayers with high 
income levels. But look at who is being hurt by this law: people like 
Brian Neilson and Deborah Young. Brian is in the lowest tax bracket. 
Deborah does not owe any taxes. And, while the $7,400 excess withheld 
from Brian Neilson's income or the money withheld from Deborah Young's 
sick pay may seem like chicken feed to some here in Washingon, it is 
real money in Utah.
  As I stated earlier, supplemental wages are any wages or salary paid 
that are not connected with a regular pay period. Obviously, 
supplemental wages are not restricted to the rich. Bonuses, 
commissions, and sick pay apply to wage-earners from all walks of life. 
The 28 percent withholding provision assumes that everyone receiving 
these kinds of payments is in the highest tax brackets. This is absurd.
  Moreover, the tax law already has a provision in place to ensure that 
taxpayers make proper payments on their tax obligations throughout the 
year. Taxpayers must pay 90 percent of their projected tax or 100 
percent of the previous year's tax in four estimated tax installments 
throughout the year or they are assessed a penalty. Because of this 
estimated tax requirement, the increase in the withholding rate is not 
necessary to ensure proper tax collections for taxpayers whose tax 
rates are 28 percent of greater.
  The effect of this provision is that only those taxpayers in the 15 
percent tax bracket, or those who will owe no tax at all, will 
experience an increase in the amount of taxes paid during the year. 
These are the same taxpayers for whom the 20 percent withholding rate 
was already too high.
  Ironically, the Clinton administration continues to claim that taxes 
were raised last year on only the richest 1.2 percent of Americans. It 
can be argued that an increase in withholding is not an increase in 
tax. But, in reality, what else can it be? Money is being confiscated 
from citizens that they do not owe in taxes and is subsequently used to 
fund Government spending. The only difference between this provision 
and a raw tax increase is the taxpayer eventually gets his or her money 
back, without interest.
  Moreover, the provision to raise the supplemental wage withholding 
rate was scored to raise $228 million over 5 years with $188 million of 
that revenue coming in the first year. If increasing the withholding 
rate isn't an increase in tax, where did the $228 million in revenue 
come from? The fact that this is an increase in tax on the lower and 
middle-income classes is clearly demonstrated in Brian Neilson's and 
Deborah Young's cases.
  Finally, I would like to discuss the misleading nature of the $228 
million raised by the increase in the withholding rate. This increase 
is actually just an artificial windfall created by forcing individuals 
to pay tax they don't necessarily owe to the IRS earlier than it is 
due. The fact that 83 percent of this revenue is raised in this first 
year is further evidence of its misleading nature. Counting improperly 
withheld money toward deficit reduction is just smoke-and-mirrors 
accounting. Congress has reached either new heights of creativity or 
new depths of deceit in its never-ending effort to collect more and 
more taxes from the American people. Collecting and spending citizens' 
unowed tax money is unjust and irresponsible.
  Mr. President, I urge the Senate to take immediate action to correct 
this injustice. The Government should not be allowed to confiscate and 
spend taxpayers' unowed money. We must attempt to understand the 
hopelessness these taxpayers fell when money they do not owe in taxes 
is seized by the Government and there is nothing they can do except 
wait until the next tax return is filed so they can claim a refund. 
Restoring the supplemental wage wihholding rate to 20 percent will 
bring the withholding rate closer into line with actual tax liability.
  I urge my colleagues to support this bill.

                          ____________________