[Congressional Record Volume 141, Number 38 (Wednesday, March 1, 1995)]
[Extensions of Remarks]
[Pages E474-E475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


        INTRODUCTION OF THE AMT DEPRECIATION RELIEF ACT OF 1995

                                 ______


                        HON. BENJAMIN L. CARDIN

                              of maryland

                    in the house of representatives

                        Wednesday, March 1, 1995
  Mr. CARDIN. Mr. Speaker, today I am introducing legislation to 
provide much-needed relief to American companies who currently are 
being penalized for investing in new plant and equipment.
  Under the 1986 Tax Reform Act, Congress established an alternative 
minimum tax system for corporations. The purpose of the AMT was to 
prevent profitable corporations from escaping Federal income tax 
liability by making excessive use of tax preferences.
  Unfortunately, the AMT has turned out to have a very different impact 
than was intended. Instead of ensuring that profitable companies do not 
escape Federal taxation, the AMT has worked, in many cases, as a trap, 
especially for capital intensive manufacturing companies.
  The problems with the AMT arise principally because of depreciation 
differences. Under the regular tax system, companies are permitted to 
depreciate investments in plant and equipment under an accelerated 
system designed to encourage investment.
  Regular tax depreciation schedules are structured to encourage 
companies to invest in new equipment and to enhance productivity. The 
effect is to help keep U.S. companies competitive by providing 
accelerated recovery of costs.
  Under the AMT, however, we turn around and take away the tax 
incentives we have offered to encourage investment under the regular 
tax. The effect is that through the regular tax, we tell U.S. companies 
that we want them to invest in productivity-enhancing plant and 
equipment. Then, under the AMT, we tell them that if they act according 
to those incentives, and according to the dictates of their own 
competitive position, we will punish them. It makes no sense, and we 
should change the law.
  [[Page E475]] The legislation I am introducing today will eliminate 
depreciation as a preference under the alternative minimum tax. That 
is, in determining AMT tax liability, for both recovery periods and 
methods of calculating depreciation, companies will compute 
depreciation as they currently do under the regular tax.
  Removing the separate AMT calculation of depreciation will eliminate 
a significant source of complexity in the Tax Code. No longer will 
companies be forced to conduct two separate sets of depreciation 
computations. No longer will companies be penalized for implementing 
investment strategies warranted by their own economic circumstances 
because of concerns related to the AMT.
  Largely because of the AMT, U.S. companies currently enjoy less 
favorable cost recovery provisions than their foreign competitors. By 
eliminating depreciation as an AMT preference, we can remove the 
disadvantage American companies face.
  I urge my colleagues to join me in supporting fairness, simplicity, 
and sensible tax policy by cosponsoring the AMT Depreciation Relief Act 
of 1995.


                          ____________________