[Congressional Record Volume 141, Number 55 (Friday, March 24, 1995)]
[Senate]
[Pages S4551-S4559]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                              BLACK HUMOR

  Mr. BYRD. Mr. President, a cartoon by Mr. Garry Trudeau appeared in 
the Washington Post last Sunday, March 19, 1995, and I assume in many 
other newspapers, in which he is syndicated, a cartoon which is an 
unfortunate example of tasteless, offensive, black humor. It belittles 
the war record, bravery, and selfless sacrifice of the distinguished 
majority leader, Mr. Dole, by ridiculing the wounds he suffered and 
still carries, and always will, from the Italian campaign of World War 
II. The war record of all elected officials is usually a matter of some 
attention during political campaigns, and Mr. Dole is no exception. But 
why anyone would take an excursion into cynical dark cartoon humor over 
this is incomprehensible and inexcusable.
  Our political system and culture must be based on civility, mutual 
respect and honor. The discourse and debate in Presidential campaigns, 
indeed any campaign, should properly focus on the positions of the 
candidates on the major issues of the day, and what solutions are being 
offered. We have had too much of personal attacks, negative 
campaigning, and the politics of cynicism in America in recent years. I 
think it would be beneficial if we all tried a little more to elevate 
the political discourse in America, and that we focus on where we 
should, constructively, lead the Nation. Our attitude should certainly 
be positive and, while we differ on many issues, strive for unfailing 
courtesy and respect.
  Mr. Dole carries with him the symbol and the physical result of his 
valor in combat, defending our country, defending the very ability of 
cartoonists to exercise their trade in freedom, and our very ability to 
conduct an honorable, civil, enlightened debate in a democracy. Mr. 
Dole has dedicated his entire life to the service of the Nation. Mr. 
Trudeau, I believe, owes Mr. Dole an apology for this entirely 
inappropriate attack and innuendo.
  Mr. President, I yield the floor.


             SELF-EMPLOYED HEALTH INSURANCE COSTS DEDUCTION

  The Senate continued with the consideration of the bill.


    material terms under the binding contract exception in H.R. 831

  Ms. MOSELEY-BRAUN. Mr. President, I rise to request a clarification 
to a provision in H.R. 831 relating to the binding contract exception 
to the repeal of section 1071.
  Binding contract exceptions to changes to the tax laws are commonly 
included in tax legislation to protect taxpayers who, in reliance on 
the laws, entered into legally binding agreements prior to the 
effective date of the statutory change but where the transaction itself 
will not be completed until after that effective date. H.R. 831 
includes such a binding contract exception to the repeal of section 
1071. The intent of this exception is to honor taxpayers' good faith 
reliance on the law.
  The binding contract exception in this bill, however, would not apply 
if 
[[Page S4552]] the contract, or the material terms of the contract, are 
contingent on issuance of an FCC tax certificate. It is not clear what 
would constitute a material term being contingent on the issuance of an 
FCC tax certificate for purposes of this legislation.
  It is important that we provide the FCC and the Internal Revenue 
Service with appropriate guidance in determining whether a contract for 
the sale of a broadcasting station qualifies for the binding contract 
exception to the repeal of section 1071 and therefore eligible for an 
FCC tax certificate. If a transaction contemplates a third-party 
action, such as the FCC issuing a tax certificate, but the contract 
requires that the transaction go forward even if the third-party action 
does not occur, it is only reasonable that the parties to the agreement 
provide in that agreement for a relatively minor adjustment to offset 
the effects of the failure of the third-party to act. Such a contract 
clearly is still binding--the transaction must go forward with the 
contract-required adjustment. It is my understanding that the 
``material terms'' of a contract are not to be considered contingent on 
the issuance of an FCC tax certificate simply because the parties 
provided for a relatively minor adjustment of less than 10 percent of 
the selling price if the FCC certificate is not issued. Is this 
consistent with your understanding of what is intended by the clause 
``or the material terms of such contract''?
  Mr. PACKWOOD. Yes, the clause ``or the material terms of such 
contract'' is not intended to exclude binding contracts from the 
benefits of the legislation's binding contract rule simply because the 
parties included a relatively minor price adjustment of less than 10 
percent in the original binding contract to compensate for the failure 
of the FCC to issue a tax certificate.
  Mr. President, we are waiting for Senator Dole to come, and then we 
will be ready to close up on this bill, I believe. I suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GORTON. Mr. President, I am here to support this proposal and to 
praise the Finance Committee and those in the House of Representatives 
who thought of a way in which to do justice on both sides of the 
equation of a tax proposal and to provide an extension and ultimately 
an increase in an overwhelmingly just--but still inadequate--deduction 
for the health care expenses of the self-employed.
  For many years, the Tax Code has permitted a modest deduction of 25 
percent of the health care insurance costs of the self-employed--
modest, of course, in comparison with the very, very large number of 
Americans who have health care insurance premiums paid for by their 
employers, fully deductible to those employers. Yet, even this 25-
percent deduction for the self-employed, for hard-working Americans in 
small towns and large cities and on farms across this country, is 
threatened. It has for years been a deduction with a terminal point. In 
every previous year in which that terminal point was reached, the 
Congress has extended the deduction for a few more years.
  In 1994, it did not do so and technically there is no such provision 
today. There will be, however, if this bill passes. A deduction will be 
effective for the current year and will move up modestly from 25 to 30 
percent next year. I believe that almost every Member of this body 
hopes that the time will come that, with a more sound and all-
encompassing set of health care reforms, we will be able to allow the 
deduction of 100 percent of such health care insurance costs. In the 
meantime, however, to extend the present deduction and modestly to 
increase the present deduction is clearly overwhelmingly in the public 
interest.
  Standing alone, that would not be a difficult task, except for its 
effect on the budget deficit. It is here that the thoughtfulness and 
the genius of the sponsors of this bill are in particular evidence. 
This bill is going to be paid for by four changes in the Internal 
Revenue Code, three of which are of considerable significance with 
respect to the amount of money that they produce.
  The first is a denial of the earned-income tax credit to those who 
have substantial unearned income; that is to say, investment income. 
The earned-income tax credit, of course, is designed to see to it that 
the working poor--those who are trying to move out of poverty, who are 
below the level at which they would normally pay an income tax--
literally get some money back from the Government as a reward for that 
work. To allow it, however, to those who have low levels of earned 
income but significant levels of unearned income is, of course, a 
perversion of the whole design of the earned-income tax credit itself. 
So this narrowing, this focus of the earned-income tax credit on those 
who are truly the working poor is a matter of tax justice and fiscal 
equity without regard for its use for this health care insurance 
deduction.
  Second, we are for the first time actually going to penalize those 
Americans, those I think perverse Americans, who renounce their 
citizenship in order to save on taxes. They will be hit when they 
renounce that citizenship with what amounts to a capital gains tax on 
the assets they take with them out of the United States. The Finance 
Committee, I should note, has said that this provision is not designed 
to be a direct offset against the health care insurance premium 
deduction for the self-employed, but literally to be a modest 
contribution to our budget deficit.
  The most significant of the tax changes, of course, is the 
cancellation of section 1071 of the Internal Revenue Code, which 
started out as a recognition of forced sales some 50 or more years ago, 
when we first developed rules that did not allow more than one radio 
station, in that case, to be owned by the same people in the same 
community; but since, that has become a rather famous and notorious 
form of affirmative action.
  This provision, of course, was triggered by a huge sale involving 
Viacom and one member of a minority group, the cost of which to the 
Federal Treasury would be over half a billion dollars. It may very well 
have been one of the triggering causes of the attention being paid 
today to the whole subject of affirmative action. Yet, I think it is 
safe to say that this provision should be repealed without regard to 
the varying views of Members of this body and of the public as a whole 
on affirmative action overall. The kind of affirmative action that 
benefits one quite successful and fairly wealthy member of a minority 
group at the cost of half a billion dollars to the State treasury is a 
perversion of any kind of theory of equity, affirmative action or 
otherwise.
  We will have in this body more than enough time to debate the whole 
subject of affirmative action, whether or not it has been a success, 
whether or not it deserves continuation in whole or in part in the 
future. In the meantime, however, we need to pass this bill in order to 
prevent this perverse use of affirmative action and in order to provide 
justice for literally hundreds of thousands of self-employed Americans. 
Here, a handful of people who do not deserve tax benefits will be 
penalized. Hundreds of thousands of hard-working self-employed 
Americans will at least retain, and ultimately have a slight increase, 
in a tax deduction for a highly worthy social and economic purpose.
  This bill, in other words, does justice to the self-employed, ends a 
terrible loophole in the field of affirmative action, ends a loophole 
in the earned-income tax credit, and ends up helping us in some slight 
manner to reduce our deficit.
  We very rarely get bills through this House in which every single 
element is a plus for our society, and it deserves the support of all 
Members of the Senate.
  Mr. DOMENICI. Mr. President, April 15, is only 22 days away and 
unless the President signs a bill restoring the 25-percent health 
insurance deduction for the self-insured more than 4 million small 
business persons will experience yet another tax increase.
  If a person is doing business as a corporation, health insurance is 
100 percent deductible. Under the tax law in effect without this 
legislation, zero 
[[Page S4553]] percent, zip, none of their health insurance costs is 
deductible for the self-employed. There is no tax policy justification 
for treating corporations one way and the self-employed another. The 
majority of all businesses in this country are self-employed. These are 
often firms with very little cash, a good idea and talent struggling to 
make a success. Once they do succeed, they are the ones that create 
nearly two out of every three net new jobs. These small firms have 
sustained this job-creating record for more than 20 years. Clearly, the 
Tax Code should not treat them so shabbily.
  The need for the deduction is indisputable. Unincorporated business 
owners experience the worst of all possible worlds in the health 
insurance marketplace. Usually they can only buy an insufficient health 
insurance policy for a very high price and they are denied the same 
incentives and tax treatment enjoyed by incorporated, bigger 
businesses.
  If this legislation becomes law, the self-employed will be able to 
take 25-percent deduction for their health insurance costs on their 
1994 taxes and receive a 30-percent deduction for tax years 1995 and 
beyond. I am pleased that Congress is taking this step to address the 
health insurance deductibility gap and to make it permanent.
  We really should be working to achieve 100-percent parity and equity 
with corporations so that all businesses, regardless of form, would be 
treated the same. Total deductibility has been a top priority of the 
various State small business conferences which have been held prior to 
the 1995 White House Conference on Small business. In the mid-1980's, I 
sponsored legislation that was enacted calling for a White House 
Conference on Small Business once every Presidential term. These are 
valuable conferences because they help identify legislative priorities. 
In the past, a vast majority of the Small Business Conference 
recommendations have been enacted into law. I hope we will be able to 
make good on that record when it comes to the deduction of health 
insurance for the self-employed.
  In addition to tax policy fairness and job creation, restoring the 
deduction for the self-employed is important because the self-employed 
are one of the largest groups of uninsured citizens in America. There 
are 3 million self-employed Americans without health insurance. The 30-
percent deduction is a small, but meaningful incentive for 
unincorporated business owners to purchase health insurance for 
themselves and their families.
  In New Mexico, there are 75,000 self-employed individuals about one-
third of them take advantage of the deduction. This number does not 
include farmers and ranchers who are another group that will benefit 
from the tax law change we are making today.
  I sincerely hope the Congress can complete it work on this 
legislation in time for the April 15 filing deadline. Making the 
deduction permanent will stop the uncertainty that has historically 
accompanied this section of the Tax Code. It will help millions of 
small business entrepreneurs, farmers, and ranchers provide health 
insurance for their families.
  Mr. GRASSLEY. Mr. President, I want to lend my strong support for 
H.R. 831 to make the self-employed deduction permanent and to raise it 
to 30 percent.
  There had been a number of threats to hold this legislation up by 
filibustering or offering numerous contentious amendments. I'm very 
glad that these threats disappeared, because holding up this bill would 
have only hurt the millions of taxpayers that are waiting for this 
relief.
  Mr. President, most of the major health care bills introduced in the 
last Congress called for an increased extension of the 25 percent 
health insurance deduction for the self-employed. There's a broad 
consensus that an increased health insurance deduction would contribute 
to tax fairness and would also lead to a significant reduction in the 
number of uninsured Americans.
  Unfortunately, as we all know, the self-employed health insurance 
deduction expired on December 31, 1993, with the understanding that an 
extension, and possible expansion, would be part of health care reform 
in 1994. However, we all know what happened to President Clinton's 
disastrous health care reform effort. And, unfortunately, the self-
employed deduction went down with it.
  Mr. President, if the 25-percent deduction is not retroactively 
reinstated, the self-employed will be hit with a sizable tax increase. 
Moreover, it would be a tax increase on predominantly middle-income 
persons since about 73 percent of those persons who pay self-employment 
tax earn under $50,000 in adjusted gross income.
  Mr. President, I have introduced a separate bill that would reinstate 
the 25-percent deduction for the 1994 tax year, and then increase the 
deduction to 50 percent this year, 75 percent next year, and 100 
percent the year after.
  Organizations as diverse as the Farm Bureau, the National Federation 
of Independent Businesses, the Association for the Self-Employed, and 
the National Restaurant Association support this legislation.
  I look forward to the Congress finally dealing with this problem by 
taking care of the 1994 tax year, making it permanent and increasing it 
to 30 percent. Hopefully, we will be able to expand the deduction up to 
100 percent at a later date.
  Mr. McCAIN. Mr. President, I strongly support legislation to 
permanently extend and expand the health insurance tax deduction for 
self-employed individuals. In addition to allowing these individuals 
and their dependents to deduct 25 percent of the cost of their health 
insurance for 1994, it will allow them to deduct 30 percent of these 
costs for all future years. This bill, which addresses one of the most 
unfair provisions in the Tax Code, is fully paid for without adding a 
penny to the budget deficit by eliminating an outdated and inequitable 
corporate tax break.
  This issue has justifiably been a major concern to the small business 
community for a long time. The 25 percent deduction for the self-
employed was first contained in the tax Reform Act of 1986. Due to 
congressional inaction, it expired at the end of 1993. Consequently, if 
we didn't pass an extension before April 15, self-employed individuals 
would not have been able to deduct any of their health insurance 
expenses this year. This would have been incredibly unfair. Employees 
of corporations continue to be able to deduct almost all of their 
health insurance costs.
  Since 1989, we have been keeping small business in limbo each year 
while Congress decides whether to reextend this tax deduction. Small 
businesses are extremely important to our country. In Arizona, they are 
the fastest growing component of our economy and, in aggregate, our 
largest source of employment. They rely upon the modest insurance tax 
benefit that they are entitled to receive. By passing this bill today, 
and by making it retroactive so that the deduction can be taken this 
year, we make a major step forward in providing equity and certainly to 
small business people throughout our Nation.
  Throughout the health reform debate last year, I argued that the 
deduction for self-employed individuals should be expanded to be 
comparable to the full deduction that other employees receive. I 
further contended that the result of allowing the deduction to expire 
would have been to substantially increase the number of uninsured 
Americans. It would have imposed a large burden on individuals who we 
should be helping, those who have taken the initiative and risk 
associated with small business and self-employment. Today, we vote to 
start to remedy their problems.
  Passing this extension and expansion of the self-employed insurance 
tax deduction today is a major step in the right direction. I urge 
President Clinton to sign this bill into law as soon as possible. It is 
outrageous that self-employed individuals are not permitted to deduct 
the same percentage of their health insurance costs as do employees of 
large corporations. It is even more outrageous that we almost took away 
the small amount that they can currently deduct, and may still do so if 
President Clinton does not act quickly.
  I remain committed to ensuring that all Americans receive the same 
tax advantages in deducting their health insurance, and to creating a 
more equitable and efficient health care system.

[[Page S4554]]

  Mr. KENNEDY. Mr. President, with passage of H.R. 831, the Senate 
begins the effort to pick up this year where we left off last year on 
the very important issue of health care reform.
  To some extent, this legislation simply extends a tax break for 
health insurance for small business that expired last year because it 
was closely related to other health reforms that also failed to pass.
  Many of us had hoped to use this legislation as an opportunity to 
revise this tax deduction and make it fairer to all those involved in 
small businesses--employees as well as owners.
  But because the tax deadline is so near, there is no real opportunity 
to have such a debate at this time. Small businesses deserve to have 
the expired provision extended as soon as possible, so that the 
applicable law will be clear as they file their tax returns for 1994. 
Many of them purchased their health insurance in expectation that the 
tax deduction would be continued, and it would be unfair to them to let 
it lapse now. So I join with many other Senators in expediting action 
on this bill.
  But it is appropriate to point out the key issues involved in this 
tax incentive, and I am confident we will have an opportunity to 
address them on other tax bills and as part of our effort in the coming 
months to enact health reform in this Congress.
  In the wake of our failure to enact health reform last year, the 
health care crisis facing American families has continued to grow 
worse. Last year, the number of uninsured increased by more than 1 
million, to over 40 million of our fellow citizens. If current trends 
continue, the number of uninsured will exceed 50 million in the year 
2000--1 in every 5 nonelderly Americans. But for the expansion of 
public health insurance coverage to more than 10 million people in the 
past decade, the current situation would be even worse.
  Even those who have insurance are not secure. No family can be 
confident that the insurance which protects them today will be there 
for them tomorrow if serious illness strikes.
  The decline in health insurance coverage on the job is especially 
serious. As recently as 1988, two-thirds of all nonelderly Americans 
received coverage through their employer. Today, that number has fallen 
to 61 percent. By the year 2000, only about half of all nonelderly 
Americans will be able to depend on private, job-based coverage for the 
health protection they need for their families and themselves.
  Few, if any, people are more seriously victimized by the health care 
crisis than small business owners and their employees. If they try to 
buy coverage, they routinely face insurance company markups as much as 
eight times greater than large businesses. Despite reforms enacted by 
many States in recent years, small businesses in many areas of the 
country still face exorbitant prices or are denied coverage altogether 
if someone in the business is in poor health, or is elderly, or lives 
in the wrong part of town, or works in the wrong occupation.
  The legislation before us provides some tax assistance for the self-
employed, including the owners of small businesses, but I am 
disappointed that the imminent tax filing deadline prevents us from 
taking this opportunity to deal with the problems in a more balanced 
and more effective way.
  The legislation offers a tax subsidy of $800 million a year--$8 
billion over the next 10 years--to help the self-employed purchase the 
coverage they need. Many, many citizens in our society need help in 
purchasing health insurance. For $800 million a year, we could do a 
great deal to insure children, or give greater health security to 
workers who lose their jobs, or more assistance to senior citizens 
struggling desperately to pay the high cost of long-term care or 
prescription drugs.
  But the entire $8 billion in this bill goes to the owners of small 
businesses. No one else benefits--not even the employees of those 
businesses. In fact, more than $3 billion of these funds goes to people 
making more than $50,000 a year. More than $2 billion goes to people 
making $75,000 or more--and that isn't fair. The wealthier they are, 
the bigger their tax benefit. Changing the tax deduction to a tax 
credit would be fairer, and making the tax credit refundable would be 
even fairer.
  But if we're going to make the current system fairer to small
   business owners, we should at least make it fairer to their 
employees too. Small business owners and their families deserve help--
but so do their employees and their families.

  Under current tax law, any business, large or small, that provides 
health insurance to its employees can deduct the cost of that insurance 
as a business expense, just as it can deduct the wages paid to its 
employees.
  The employees who receive the insurance get a significant tax break 
too, because the value of the insurance is a fringe benefit that is not 
counted as income to the employees for tax purposes.
  This favorable tax treatment was one of the principal engines driving 
the expansion of private, job-based health insurance coverage in the 
past generation. It has also been a major factor in helping to make the 
loss of coverage in recent years less serious than it would otherwise 
have been.
  This tax exclusion for fringe benefits is also one of the most 
expensive tax subsidies in the entire Internal Revenue Code. It will 
cost the Treasury $60 billion this year, and that revenue loss will 
rise to $94 billion in the year 2000.
  Under a quirk in the tax laws, however, owners of small businesses 
that are not incorporated were not eligible for this tax break. In 
fact, they were at a serious disadvantage. No matter what contribution 
they made to health insurance coverage for their workers--and some 
small businesses do make such a contribution--the owners still could 
not deduct the cost of their own insurance.
  So in 1986, Congress reduced this disparity by granting a separate 
tax deduction for small business owners, equal to 25 percent of the 
cost of the insurance they bought for themselves. Many people feel that 
the deduction should be 100 percent, in order to achieve full parity 
with managers of large corporations, and there is a good deal of merit 
in that view, at least in cases where the owners provide coverage for 
their employees.
  The 1986 deduction was enacted on a temporary basis. It was extended 
by Congress on several occasions, but it expired at the end of 1993. A 
further extension was considered in 1994 as part of comprehensive 
health reform, but it died when the overall health reform effort 
failed.
  The question now is whether, in this time of limited resources, it is 
fair to restore the subsidy--and make it permanent--and even sweeten it 
from a 25 percent deduction to a 30 percent deduction--for small 
business owners at a cost of $800 million a year, but do nothing for 
the employees of those small businesses.
  Even large corporations don't do this well. The managers of large, 
self-insured corporations are not eligible for a tax break that is 
greater than the tax break given to their workers. Yet under the 
committee bill, owners of small businesses are eligible for the tax 
break even if they make no contribution at all to the cost of their 
workers' coverage.
  Yet employees of small businesses have even more difficulty than 
their employers in obtaining good coverage. It is bad enough that 18 
percent of all workers are uninsured. It is worse that 25 percent of 
the self-employed are uninsured. But it is even worse that 33 percent 
or workers in firms with fewer than 10 workers are uninsured.
  The smaller the business, the more serious the problem. More than 90 
percent of firms with over 250 employees offer coverage to their 
workers. But only a third of firms with fewer than 10 workers offer 
coverage to their employees.
  This legislation does the right thing by helping the self-employed. 
But it should have gone farther. It should have helped both the owners 
and their employees.
  Under this bill, mom and pop, the owners of the small mom and pop 
store, get a tax break, but the cashier or the worker in the stock room 
does not.
  The partners in the law firms get the tax break, but the secretaries 
and the filing clerks and the paralegals do not.
  The doctors in the group practice get the tax break, but the nurses 
and technicians and lab assistants and receptionists do not. And that 
isn't fair.
  [[Page S4555]] A fairer bill could have maintained the 30 percent 
deduction for the small business owners, as provided in the committee 
bill. But it should have required them to make group health insurance 
available to their workers as a condition of taking the deduction for 
themselves.
  The owners would not have had to make any contribution to the cost of 
the coverage for their employees. They would only have to make the 
coverage available for the employers to purchase themselves. But 
employees exercising this choice should also be eligible for the same 
30 percent tax break available to the owner.
  This proposal is not an employer mandate. It does not require 
employers to contribute to the cost of coverage. It does not even 
require employers to offer coverage to their employees. All it says is 
that if they want to take advantage of a tax break to purchase health 
insurance for themselves, they will have the minimal obligation of 
arranging the availability of group coverage for their employees.
  This proposal is a modest one. It does not even go as far as the 
Republican health reform bills offered by Senator Dole and Congressman 
Michel last year. The Michel bill required all employers to make 
coverage available to their workers, regardless of whether the 
employers took a tax deduction for their own coverage. The Dole bill 
required all employers to administer a payroll deduction program for 
their employees, even if the employers took no tax deduction for 
themselves.
  This proposal is not an expensive one--just a fair one. Final cost 
estimates are not yet available from the Joint Tax Committee. But it is 
likely that the program could be financed by using some of the excess 
revenue generated by the bill before us, or by retaining the level of 
the deduction at 25 percent instead of raising it to 30 percent.
  Small business owners on the whole are not a wealthy group, and they 
often have trouble obtaining affordable insurance. They need the help 
that we are providing in this bill. But their employees have even lower 
incomes and are even less likely to be insured. Surely, they are at 
least as deserving a tax subsidy as the owners of the business.
  This proposal has other benefits for workers, in addition to the tax 
subsidy it provides. Group coverage is less expensive than individual 
coverage. A majority of States have adopted limits on preexisting 
conditions and limits on premiums. They guarantee the issue of policies 
and the renewal of policies for such group coverage.
  But only a handful of States have enacted comparable rules for 
individual coverage. By assuring the availability of group coverage to 
a broader number of people, the benefits of the insurance reforms 
already enacted by some States can be extended to many more citizens 
who need them.
  Finally, a fair bill should provide tax parity for small business 
owners who do contribute to the cost of insurance coverage for their 
employees. They should be able to deduct 100 percent of the cost of 
their own coverage, if they pay the full coverage of their workers as 
well, as some small businesses already do.
  Under the reform I favor, whatever share they provide to their 
workers would also be deductible for them. If they pay 70 percent of 
the premium for their workers, they could deduct 70 percent of their 
own premiums. They would have full parity with the manager of a large 
business.
  In summary, the committee bill provides a tax subsidy for health 
insurance for the owners of small business. I regret that it does not 
provide a similar tax subsidy for the employees of small business too.
  During the course of this Congress, there will be opportunities to 
consider measures to expand health care for the employees of small 
businesses, for other members of working families, for children, and 
for senior citizens. When these reforms come to a vote, I hope that the 
Members of the Senate will remember that these Americans need health 
care, too.
  I also intend to do all I can, in these times of deep budget cuts and 
limited Federal resources, to see that the large tax subsidies now 
available through the Internal Revenue Code meet the same strict 
scrutiny that Congress is giving to other forms of Federal spending. We 
made bipartisan progress yesterday by extending the line-item veto to 
tax subsidies, and we need to do more to rein in this rapidly growing 
part of the Federal budget.
  Mr. GRAMM. Mr. President, I rise today to voice my support for H.R. 
831 and the protections it will provide to America's self-employed 
business owners--the men and women who create the jobs on Main Street.
  Today, the Senate is finally ready to deliver the tax relief that 
should have been provided a long time ago.
  And today, more than 3 million small business men and women--
including as many as 146,000 in my home State of Minnesota--are 
breathing a sigh of relief.
  Up until last year, the self-employed were allowed to deduct 25 
percent of their health insurance premiums.
  It was a powerful incentive: Small business owners were much more 
likely to buy insurance for their employees when they were offered an 
incentive to purchase health insurance for themselves.
  That deduction, however, was allowed to lapse in December 1993 when 
it appeared that Congress would address health care reform in 1994.
  But health care reform never materialized--and Congress never 
restored the deduction.
  The self-employed have seen their 25-percent deduction expire five 
times over the past 8 years, leaving them in the precarious position of 
trying to second guess Congress each time as to whether the deduction 
would be extended.
  H.R. 831 will restore the 25-percent deductibility for 1994--increase 
it to 30 percent this year--and make it permanent.
  That is good news for the 3.2 million unincorporated, self-employed 
Americans the U.S. Treasury Department estimates would claim the 
deduction on their 1994 returns.
  H.R. 831 moves us in the right direction, and I am pleased to join my 
colleagues in acting swiftly today to approve this desperately needed 
tax relief.
  Yet, Mr. President, we should not look at 30 percent deductibility as 
our final goal.
  We should use this opportunity during the 104th Congress to give 
small businesses the same benefit enjoyed by big business and their 
employees--by increasing the health insurance deduction to 100 percent 
for 1995 and beyond.
  That is why I have also committed my support to S. 262, the Grassley-
Roth-Pryor-Dole 100 percent deductibility bill.
  Self-employers face the worst of all possible worlds in the health 
insurance marketplace.
  Far too often, there aren't enough options--the price is too high--
and the self-employed are denied the very incentives and tax treatment 
big business has come to expect.
  And too often, the self-employed lack access to cost-saving managed 
care arrangements because insurers are reluctant to create and market 
them in the small towns and rural areas where most self-employers are 
located.
  Even when they do buy insurance, self-employed business owners often 
pay approximately 30 percent more than larger companies for similar 
benefits.
  That is because of costly State mandates for specific types of 
insurance coverage, which prevent self-employed business owners from 
shopping for only the basic care that they and their employees might 
need.
  Larger firms that self-insure, on the other hand, are not subject to 
these costly mandates. The health insurance deduction helps small 
business owners defray at least some of the high cost of insurance.
  The businesses that would benefit most from deductibility legislation 
represent almost 10 percent of the working population, and cover a 
tremendous variety of employers--from farmers and florists--grocers and 
bankers--to smalltown clothing stores, hardware stores, and 
photographers.
  Mr. President, a tax deduction for the cost of insurance premiums 
would go a long way to help these self-employed business owners and 
their employees--especially in high-risk fields such as agriculture, 
where the hazards of the job often result in relatively high health 
insurance costs.
  [[Page S4556]] The health deduction is simply good business--a simple 
way for the Federal Government to help the people who create the jobs 
and deliver the paychecks on Main Street.
  Small business needs encouragement, along with some incentives, to 
survive and continue creating jobs--providing for their employees. It 
is in our best interest to see that they do.
  Since the 1970's small business has created two of every three new 
jobs in this country, and a substantial majority of those jobs were 
created in firms with fewer than five employees.
  Congress should not neglect these entrepreneurs, Mr. President.
  Self-employed business owners are the very people whose firms will 
have to thrive in order to create the jobs of the future.
  These are often people with very little cash, but a lot of good ideas 
and talent, struggling to make their ideas work.
  For them, the health insurance deduction could mean the difference 
between an ``Open for Business'' sign on the door and one reading 
``Going Out of Business.''
  It is time, Mr. President, for Washington to treat America's job 
providers equally.
  I want to thank my colleagues for coming together in a bipartisan 
manner to ensure that 3.2 million more Americans will have access to 
more affordable care.
  In fact, this is our first step toward serious and sensible health 
care reform.
  It is legislation like H.R. 831 which I believe helps restore the 
people's faith in this great institution.
  Mr. President, our ultimate aim should be to give the self-employed 
the same 100 percent health insurance deduction we've granted to 
incorporated businesses.
  But today, passage of H.R. 831 moves us closer toward a goal we all 
share: Insuring more people, under policies that cost less, that allow 
them greater access to the health care services and providers they 
choose.
  Mr. DASCHLE. Mr. President, I am pleased we will pass legislation 
today that, if enacted, will finally make permanent the health 
insurance deduction for the self-employed. This certainly will be a 
victory for small business in America.
  During my entire tenure in the Senate, I have supported and 
cosponsored legislation to make the deduction permanent. It is very 
gratifying, therefore, to see that an overwhelming number of my 
colleagues share this goal.
  Extension of the deduction is a bipartisan issue--one on which there 
is a very broad consensus. A letter signed by 75 Members of this body, 
earlier this year, bears testimony to that fact.
  For too long, small businesses, including farmers, have been treated 
unfairly compared to corporations. Corporations may deduct 100 percent 
of the cost of qualified health insurance they purchase. But the self-
employed do not receive equal treatment. In the past they have been 
able to deduct only 25 percent of the cost of purchasing health 
insurance for themselves and their families.
  What is more, small businesses have not been able to rely on the 
availability of this deduction from year to year, preventing them from 
budgeting for their health insurance costs. For many, the existence of 
the deduction means the difference between having health insurance or 
not having it at all.
  Frankly, it is not clear why this deduction was subject to sunset in 
the first place, often forcing an annual extensions of the measure. 
This is not a case of a controversial provision needing further review. 
Virtually all Members agree that, as a matter of fairness, the self-
employed should be able to deduct at least some portion of these costs, 
if not the full amount.
  I am also pleased that the deduction will be increased to 30 percent. 
It is my hope that at some point in the future we can increase the 
amount of the deduction; though it is of paramount importance that any 
further extension be offset appropriately.
  I regret that we were unable to pass this measure earlier this year. 
Most farmers who are self-employed faced a March 1 filing deadline for 
their 1994 tax returns. Assuming the measure we are considering today 
is passed, they will have to go to the expense of filing amended 
returns for 1994. This situation could have been avoided if not for 
unnecessary delay in the House of Representatives unrelated to the 
self-employed deduction.
  I am concerned that funding for this measure relies on the repeal of 
section 1071 benefits used to promote minority ownership of broadcast 
facilities. I would prefer that section 1071 benefits be reviewed in 
the context of a comprehensive analysis of affirmative action programs, 
as the administration has suggested. I ask unanimous consent that the 
administration's ``Statement of Administration Policy'' on H.R. 831 be 
printed in the Record at the close of my remarks.
  The PRESIDING OFFICER. Without objection it is so ordered.
  (See exhibit 1.)
  Mr. DASCHLE. I am pleased that the Senate was able to move this bill 
so quickly. In light of this, I am optimistic that the extension of the 
deduction will be enacted in time for the remaining self-employed to 
take advantage of it before they file their returns on April 15.
  With the passage of the permanent extension of the self-employed 
health insurance deduction today, we can all claim victory for bringing 
greater fairness in the Tax Code to small businesses and for helping 
ensure that more Americans are covered by health insurance.
                               Exhibit 1

                   Statement of Administration Policy


H.R. 831--Permanently Extend the Tax Deductibility for Health Insurance 
  Costs for Self-Employed Individuals (Archer (R) TX and 3 cosponsors)

       The Administration supports the primary purpose of H.R. 
     831, as reported by the Senate Finance Committee--to 
     reinstate for 1994 the 25 percent tax deduction for health 
     insurance premiums for self-employed individuals and increase 
     the deduction to 30 percent on a permanent basis thereafter.
       The Administration, however, opposes one of the bill's 
     offsets--i.e., the outright repeal of the current tax 
     treatment for the sale of radio and television broadcast 
     facilities and cable television systems to minority-owned 
     businesses (so-called ``section 1071 benefits''). The 
     Administration is undertaking a comprehensive review of 
     affirmative action programs, including certain aspects of 
     section 1071 benefits. As part of the section 1071 review, 
     the Administration will consider possible modifications to 
     the ownership and holding period requirements as well as caps 
     on the amount of gain eligible for deferral.
       While the Administration, in the FY 1996 Budget, proposed 
     limiting earned income tax credit (EITC) eligibility based on 
     certain kinds of investment income, the Administration 
     strongly believes that the cap on such income--as set forth 
     in this bill--should be indexed for inflation.
       The Administration supports the provision in H.R. 831 that 
     would tax expatriating citizens on untaxed gains--a provision 
     which is very similar to one included in the President's FY 
     1996 Budget.


                 Scoring for Purposes of Pay-As-You-Go

       H.R. 831 would affect receipts; therefore, it is subject to 
     the pay-as-you-go requirement of the Omnibus Budget 
     Reconciliation Act (OBRA) of 1990.
       The Administration's preliminary scoring estimates of this 
     bill are presented in the table below. Final scoring of this 
     legislation may deviate from these estimates. If H.R. 831 
     were
      enacted, final OMB scoring estimates would be published 
     within five days of enactment, as required by OBRA.

                                             PAY-AS-YOU-GO ESTIMATES                                            
                                             [Receipts in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                          1999- 
                                              1995      1996      1997      1998      1999      2000      2000  
----------------------------------------------------------------------------------------------------------------
SE Health.................................      -513      -525      -571      -621      -678      -740     -3648
FCC.......................................       399       449       213       220       226       233      1740
EITC......................................  ........        23       464       507       543       576      2113
Citizen...................................        60       200       300       410       530       650      2150
Other.....................................         8        23        32        40        44        48       195


                                                                                                                
[[Page S4557]]
                                       PAY-AS-YOU-GO ESTIMATES--Continued                                       
                                             [Receipts in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                                         1999-  
                                             1995      1996      1997      1998      1999      2000       2000  
----------------------------------------------------------------------------------------------------------------
  Totals.................................       -46       170       438       556       665       767      2550 
----------------------------------------------------------------------------------------------------------------
Note.--                                                                                                         
SE Health -- 30 percent tax deduction for self-employed persons (includes 25 percent tax deduction retroactive  
  to 1994).                                                                                                     
FCC -- Repeal of current tax treatment on sale of broadcast facilities to minority-owned businesses.            
EITC -- Modification of the Earned Income Tax Credit.                                                           
Citizen -- Bar citizens from renouncing their citizenship to avoid tax obligations incurred before they         
  renounced.                                                                                                    
Other -- Change in Section 1033 of the Internal Revenue Code.                                                   


Ms. SNOWE. Mr. President, I rise this morning to express my strong 
support for passage of H.R. 831, legislation which restores the 25-
percent tax deduction for the health insurance costs of the self-
employed.
  At a time when America's small businesses are under virtual attack 
from Federal regulations and mandates, we must take a leadership role 
in Congress to bring them the relief they deserve.
  In order to create jobs in Maine and across America, we need to 
assist small businesses in any way we can; they are the engine that 
keeps our Nation's economy running. Businesses with fewer than 10 
employees make up more than 85 percent of Maine's jobs, and, 
nationally, small businesses employ 54 percent of the private work 
force. In 1993, small businesses created an estimated 71 percent of the 
1.9 million new jobs. When we call small businesses the engine of our 
economy, we mean it--and America's small are jump-starting our economy 
in all 50 States.
  From investors to startup businesses, self-employed workers make up 
an important and vibrant part of the small business sector--and too 
often they are forgotten in providing benefits and assistance. Indeed, 
the 11 percent of uninsured workers in America are self-employed. By 
extending tax credits for health insurance to these small businesses--
which is what H.R. 831 does--we will help provide health care coverage 
to millions of Americans.
  There is an old saying that is particularly appropriate this time of 
year: ``Nothing is certain but death and taxes.'' The 3 million self-
employed in this country are particularly aware of the tax part this 
year, as they have sat and watched and worried about whether we would 
restore the 25-percent deduction before they had to pay Uncle Sam on 
April 17.
  Earlier this year, I joined 74 of my colleagues in asking the 
majority leader and the minority leader to expedite the passage of this 
legislation because of its importance to the self-employed.
  In doing so, I promised that I would not offer any amendments and 
that I would vote against any amendments offered, again, in order to 
expedite its passage. At this late date, we cannot keep the self-
employed taxpayer hostage any longer. As it is, we have forced them to 
wait until the very end of the tax period to file.
  I would like to thank the Senator from Oregon [Mr. Packwood], 
chairman of the Finance Committee, for getting this bill to the floor 
and for getting agreement to make this deduction a permanent part of 
the tax code. That way, neither the self-employed, nor Congress, will 
have to go through this exercise again. I know that the 74,000 self-
employed in my home State of Maine will breath a sigh of relief once we 
complete action on this bill.
  After all, it is not as if there is disagreement on the need to 
assist the self-employed in this manner. In fact, amid all the 
disagreement on health care reform over the last 2 years, this is one 
of the areas where we all agreed. Why? Because the self-employed--the 
hard-working, tax-paying, job-creating small business men and women of 
America--cannot afford their own health care insurance. I am 
particularly, pleased that the bill before us expands the deduction to 
30 percent for the 1995 tax year. This is an important step in the 
right direction, as I believe we should expand it further, and grant 
the same tax treatment to the self-employed that we provide for 
corporations. In fact, I have introduced a bill to assist small 
businesses which includes phasing in a 100-percent deduction.
  So I urge my colleagues to join me in support of H.R. 831 and in 
support of the 3 million self-employed Americans who need our help 
today.
  Mr. PRESSLER. Mr. President, let me begin by emphasizing the 
fundamental reason why we are here today--to extend the 25 percent tax 
deduction for health insurance costs of self-employed Americans. This 
is one of the most important items Congress will consider this year.
  We must put the needs of self-employed Americans--small business men 
and women, farmers and ranchers--at the forefront of our agenda. 
Passing the 25 percent deduction on a permanent basis is a step in that 
direction. By doing so, these hard-working individuals can make their 
business plans knowing they can depend on this reasonable deduction. 
Without the deduction, self-employed individuals will see their taxes 
increase and their ability to afford health insurance decrease. That is 
unfair, and must not happen.
  Frankly, Mr. President, the legislation we are considering today is a 
modest deduction, particularly when compared to the corporate deduction 
of 100 percent, but it is nonetheless critical. It is critical to the 
48,000 small business men and women, farmers and ranchers in South 
Dakota, as well as the millions of other self-employed people across 
this country.
  As a member of the Finance Committee I supported the legislation 
before the Senate today. It retroactively reinstates the 25 percent 
deduction for last year. More importantly, it permanently increases the 
deduction to 30 percent for 1995 and thereafter. This legislation is a 
first step toward bringing self-employed individuals onto equal footing 
with corporations, which are allowed to deduct 100 percent of their 
health insurance costs.
  We have already done a great disservice to our family farmers by not 
passing this legislation prior to the March 1 filing deadline for their 
Federal tax returns. It is my hope that we will not do the same for all 
the other self-employed individuals by missing the April 17 deadline, 
thereby creating a paperwork avalanche of amended returns.
  Approximately 67,200 South Dakotans are either self-employed or are 
employed by the self-employed. These men and women represent almost 20 
percent of South Dakota's total workforce--many of them are farmers and 
ranchers. This tax deduction makes insurance more affordable for them 
and their families. Immediate passage of this bill should be a top 
priority for the Senate.
  I know that most of my colleagues agree that this is a bill of 
critical importance. However, as we all know, controversy surrounds the 
offset. This is unfortunate because it threatens the timely passage of 
the 25 percent provision.
  I support the offset so that we can get this legislation permanently 
placed in law and also expand it to 30 percent. The FCC tax 
certificates program--the program we terminate to pay for this 
legislation--is no longer justifiable.
  When the choice is between giving multibillion dollar corporations a 
tax break or giving small businesses, farmers and ranchers relief for 
health insurance coverage, the choice is clear: I side with the hard-
working small business people, and farmers and ranchers--not large 
corporations.
  I encourage my colleagues to recognize the core issue here today and 
to vote to retroactively reinstate the 25 percent deduction for 1994 
and to permanently extend the deduction at the 30 percent level 
thereafter. We must do this for the sake of our farmers, ranchers, 
small business people, and the families and employees who rely upon 
them.
  I urge my colleagues to vote for H.R. 831 as approved by the Finance 
Committee, and urge our colleagues in the House to approve it as well.
                      [[Page S4558]] section 1071

  Mr. BRADLEY. Mr. President, section 1071 of the Internal Revenue Code 
authorizes the FCC to permit sellers of broadcast properties to defer 
capital gains taxes on a sale or exchange if the sale or exchange is 
deemed by the agency to be necessary or appropriate to effectuate a 
change in a policy of, or adoption of a new policy by, the Commission 
with respect to the ownership and control of radio broadcasting 
stations. As such, the Commission has used tax deferral certificates 
for, among other things, the promotion of minority ownership of 
broadcasting stations and cable television systems.
  From a tax perspective, I believe that the FCC's tax deferral program 
is not appropriate tax policy. Over the past 16 years, and as the 
author of the Tax Reform Act of 1986, I have consistently advocated 
that we spend just as easily through the Tax Code as we do through 
appropriated and mandatory spending. I have consistently opposed these 
special interest loopholes. Indeed, in this bill, I offered an 
amendment that eliminated the granddaddy of all tax loopholes--one that 
benefits those who renounce their U.S. citizenship. By closing this 
expatriate loophole, we raise $1.3 billion that incredibly benefitted 
only 12 taxpayers.
  Tax loopholes raise taxes on those in society who do not use them and 
distort rational economic decisionmaking. Thus, as a member of the 
Finance Committee, I voted to place a moratorium on section 1071 
effective as of January 17, 1995, thereby overturning commercial 
transactions that would have sheltered approximately $500 million in 
capital gains taxes.
  I am profoundly disturbed, however, that the issue of affirmative 
action has been interjected into the underlying issue of how to finance 
the 25 percent health insurance deduction for self-employed 
individuals. I support the concept of affirmative action, which is a 
remedial measure designed to identify qualified women and minorities 
and afford them the opportunity to enter the mainstream of American 
life and contribute their skills and talents to make America more 
competitive on the world stage. Further, I thought it best to consider 
affirmative action in full, not simply one small provision. As such, I 
voted in committee to place a 2-year moratorium on the application of 
section 1071 so that Congress could study the program and alternative 
ways to increase broadcast diversity.
  As the affirmative action debate rages, I will attempt to broaden the 
discussion to deal with the underlying issues of race in American 
society. In addition, I will be offering my views and suggestions about 
how to assure that individuals who are truly discriminated against on 
the basis of race and gender have a means of obtaining a remedy, not 
simply lip service. I challenge my colleagues to join me in this 
discussion.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. DOLE. Mr. President, I will take but a few moments here so we can 
finish this bill. First, I want to congratulate the managers of the 
bill, Senator Packwood and Senator Moynihan.
  Mr. President, we start debate today on an issue that is important to 
many Americans across the country. H.R. 831 seeks to make permanent the 
deductibility of health care insurance costs for self-employed 
individuals.
  Since 1986, Congress has allowed the self-employed a 25-percent 
deduction for their health care insurance costs. Almost every year, we 
have had to extend the deduction, but we failed to extend it last year 
when it expired on December 31, 1993. We were told that we would 
address this matter in the health care reform debate. And we did 
address it. In some bills, including mine and Senator Packwood's, we 
sought to allow up to 100 percent dedication phased in over a period of 
time. But, in the end, we did nothing. None of the health care reform 
bills had enough support to pass last year, and so, here we are today 
again looking at this issue.
  H.R. 831 seeks to make this deduction permanent. We don't want to 
leave the 3.2 million tax filers in 1994, hanging on the edge of a 
cliff every year. And we do not want to tell them that although 
corporations can deduct 100 percent of their health care insurance 
costs, small businesses cannot. We decided 9 years ago that in order to 
make the playing field more equitable, we should allow small businesses 
to deduct their health care insurance costs. But we did not give them 
100 percent, we gave them only 25 percent--one quarter of what 
corporations are allowed to deduct. Today, we seek to increase that 
amount permanently to 30 percent. And we must continue to fight for 
parity.
  In fact, many small businesses strongly believe that increasing the 
deductibility begins to solve the disparity between self-employed and 
incorporated businesses and will give even more individuals access to 
affordable health insurance. I agree when them. I have received many 
letters from various small business and agricultural associations 
supporting my efforts to increase the deduction even more than the 30 
percent in the committee bill. Letters from: The National Federation of 
Independent Business, the American Farm Bureau Federation, the National 
Restaurant Association, the National Association of Wheat Growers, the 
National Corn Growers Association, the American Soybean Association, 
the Small Business Legislative Council, the National Small Business 
Unified, the National Association of Home Builders, the Healthcare 
Equity Action League [HEAL], Communicating for Health Consumers, U.S. 
Chamber of Commerce, the National Association of Private Enterprise, 
and the Society of American Florists.
  I know that many in this Chamber share their belief--so much, in 
fact, that the minority leader and I have sent a letter to both the 
chairman of the Senate Finance Committee and the chairman of the House 
Ways and
 Means Committee to strongly consider raising the deductible percentage 
higher than 30 percent, but within the confines of the offsetting 
revenues.


                           employee deduction

  I also share the concerns of many of my colleagues over the many 
employees who pay their own health insurance, but do not get to deduct 
any amount. There is no doubt, that these people deserve fair and equal 
treatment as well. I am hopeful that when we return to health care 
reform we will address this issue.
  Many believe that the health care reform issue is dead, but it is 
not. We still have people without insurance. We still have people who 
are denied insurance because of existing illness. We still have people 
who cannot change their jobs in fear of losing health insurance. To me, 
and many of my colleagues, health care reform is still very much alive, 
and the issue of taxation of employees who pay for their own health 
insurance, will be addressed.


                          offsetting revenues

  In the Senate Finance Committee last week, under Chairman Packwood's 
leadership, we passed a bill that not only extended the deduction 
permanently, we raised the deductibility percentage to 30 percent. And 
we did so by repealing a Federal Communications Commission [FCC] 
program that I believe is not only ineffective, but costs the Federal 
Government billions of dollars. This program has gained notoriety in 
the newspapers in the recent months because one particular transaction 
could cost the Government in excess of $500 million. One company, 500 
million dollars.
  The FCC, the agency that administers this program, does not know how 
much the entire program has cost the Government. And neither does the 
Treasury Department. The program has been in existence for 17 years, 
and yet we have no idea how much this has cost the Government. One of 
my distinguished colleagues on the Finance Committee said it right, 
``If you are looking for the enemy, the enemy is us.'' And so, members 
of the Senate Finance Committee overwhelmingly repealed this program.


                   the fcc's tax certificate program

  Congress, in 1943, gave the FCC authority to grant tax deferrals to 
owners of broadcast facilities who were forced to sell their properties 
to break up monopolies during World War II. Congress' intent was to, 
and I quote, ``Alleviate the burden of taxpayers who had been forced to 
sell their radio stations under difficult wartime circumstances.''
  The FCC, in 1978, expanded the provision to give a tax preference to 
radio, television, and later cable broadcasters 
[[Page S4559]] who sold their properties to minority-owned firms. For 
this policy, the FCC defines minorities as including ``Blacks, 
Hispanics, American Indians, Alaska Natives, Asians and Pacific 
Islanders.''
  The greatest flaw in this program is that the economic benefit does 
not go to the minority buyer, the economic benefit goes to the seller. 
It is like a kickback. If you sell to me and not the other guy, I will 
give you a little extra something. And I will not be paying for it, the 
American taxpayer will. I do not understand it, and I do not understand 
why people would think this is benefiting
 minorities when the monetary gain is going to the seller.

  These are also million-dollar deals. These are tax breaks to 
millionaires. The average sales price for transactions in which tax 
certificates were granted is $3.5 million for radio, and $38 million 
for television. Although there is no data currently available for the 
cable industry, one of the transactions in the cable industry seeking 
to utilize the tax certificate, is $2.3 billion.


                             effective date

  Some have tried to say that this bill's effective date is 
retroactive. And that this bill is crafted to target one particular 
transaction--the Viacom transaction. I disagree.
  Chairman Archer of the House Ways and Means Committee issued a press 
release on January 17 of this year entitled, ``Archer Announces Review 
of FCC Tax Provision,'' putting all FCC tax certificate transactions on 
notice. It reads, and I quote:

       The Committee on Ways and Means will undertake this review 
     immediately to explore possible legislative changes to 
     section 1071, including the possibility of repeal. Any 
     changes to section 1072 may apply to transactions completed, 
     or certificates issued by the FCC, on or after today, January 
     17, 1995.

  Two days later, on January 19, representatives from Viacom, House 
Ways and Means Committee, and the Joint Tax Committee met. And Viacom 
was fully apprised of the situation and the possible consequences on 
their transaction.
  Nevertheless, the parties in the Viacom transaction signed an asset 
purchase agreement the following day. and even then I do not believe it 
was not a binding contract. The purchase agreement is contingent upon 
the FCC granting a tax certificate. They filed a tax certificate 
application with the FCC on February 3, with full knowledge that 
Congress would be acting to repeal the program. On February 6, 1995, 
H.R. 831 was introduced, and reported by the Ways and Means Committee 
on February 8. The bill passed the House on February 21.
  This transaction is not a small one. This a $2.3 billion transaction. 
the parties involved are sophisticated players in the mergers and 
acquisitions world. A world where players are accustomed to reacting 
quickly. It is clear to me that the parties of this transaction were 
given reasonable expectation that the FCC tax certificate program would 
be repealed. And it is clear to met that they decided to sign their 
agreement regardless. And, remember, they did not file for an FCC tax 
certificate until February 3. Their agreement continues to be 
contingent upon a tax certificate being granted.


turning tax breaks and loopholes for millionaires into health care for 
                          the ordinary citizen

  Let me be clear, if we do not pass this legislation today, then what 
we are doing is raising taxes for 3.2 million Americans. Make no 
mistake about it. If we do nothing today, then they will pay more in 
taxes this year than they did last year.
  What we are trying to do here today; what we will accomplish here 
today is taking a million dollar, unjustifiable tax break for 
millionaires, not minorities, and turn them into health care for 
ordinary Americans. Americans who really need it.
  Let me also remind everyone here that this bill passed the House of 
Representatives with an overhwelming majority vote of 388 to 44. I urge 
my colleagues to vote for this bill.


                          ____________________