[Congressional Record Volume 141, Number 42 (Tuesday, March 7, 1995)]
[Extensions of Remarks]
[Page E533]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E533]]
            DISLOCATED WORKERS' SELF-HELP TAX RELIEF PACKAGE

                                 ______


                            HON. RICK LAZIO

                              of new york

                    in the house of representatives

                         Tuesday, March 7, 1995
  Mr. LAZIO of New York. Mr. Speaker, my congressional district on Long 
Island, like several others around the country, has been especially 
hard hit by the downsizing of our Nation's defense production lines. 
The Pentagon estimates that total defense-related employment has 
dropped by 1.5 million workers over the last 7 years, and that trend is 
expected to continue into the foreseeable future.
  More than 40 percent of manufacturing on Long Island is dependent on 
the Defense Department. Consequently, this defense builddown has had a 
devastating financial effect on many of Long Island's workers and their 
families.
  What can be done to bring much needed economic relief to people who 
lose their livelihood through no fault of their own? Last August, I 
introduced two bills designed to help such dislocated workers under 
these circumstances help themselves get back on their feet. Today, with 
bipartisan support, I am reintroducing these bills, which would change 
the tax laws on capital gains and individual retirement accounts to 
enable dislocated workers to use their hard-earned assets to help them 
in their time of need.
  My first bill would allow unemployed workers to make penalty-free 
withdrawals from individual retirement accounts [IRA's] and 401(k) 
retirement plans. IRA's and 401(k) plans allow tax-deferred 
accumulations of retirement savings. Currently both are subject to a 
10-percent penalty tax if funds are withdrawn before retirement. My 
proposal would let dislocated workers withdraw funds from these 
accounts and not be charged the 10-percent penalty tax. Allowing these 
workers to use some of their retirement savings without paying the 10-
percent penalty could be of considerable benefit to them at a time when 
they are in need of money to pay their bills.
  My second bill would allow any person eligible for unemployment 
benefits--or an unemployed person whose benefits have expired--to 
exclude from taxable income the capital gain from the sale of his or 
her home.
  Under current law, homeowners are taxed on the gain from the sale of 
a principal residence unless the home is replaced within 2 years with a 
new one of equal or greater value. Taxpayers aged 55 or over can 
exclude--on a one-time occurrence--the capital gains from the sale of a 
principal residence of up to $125,000. This allows such individuals to 
move into a smaller home and apply the capital gain toward their 
retirement years.
  Dislocated workers are often forced to move into a smaller home--or 
even rent--just to make ends meet. So, it makes no sense to impose a 
capital gains tax on someone under those circumstances.
  My bill would allow an unemployed worker to claim an exemption from 
the capital gains tax--up to $125,000--when they sell their home during 
their period of unemployment. The definition of unemployment 
corresponds to the definition used in calculating eligibility for 
unemployment insurance.
  These proposals can provide solutions to problems that unemployed 
workers face: the challenge to meet the daily demands of life--food, 
shelter, and clothing; and the need to find a new source of income. The 
money realized by the sale of one's home or withdrawing from an IRA 
can, in fact, be used as an investment in the future, perhaps even for 
an entrepreneurial undertaking as a way to start over.
  We should not deny dislocated workers who face hard times the ability 
to use their assets to support themselves and their families. I believe 
these two measures offer a commonsense approach to help Americans pull 
themselves out of financial hard times so they can get on with their 
lives.


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