[Congressional Record Volume 141, Number 60 (Friday, March 31, 1995)]
[Senate]
[Pages S4974-S4979]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SELF-EMPLOYED HEALTH INSURANCE ACT--CONFERENCE REPORT

  Mr. PACKWOOD. I now ask that the Chair lay before the Senate the 
conference report to accompany H.R. 831, the self-employed health care 
deduction.
  The PRESIDING OFFICER. Is there objection to proceeding to the 
report?
  Mr. KENNEDY. Reserving the right to object, I am just wondering--and 
I do not intend to object--I am just wondering. We had been involved in 
a debate on the rescission bill. Senator Daschle had introduced a 
measure which he had announced that he was going to introduce. And we 
had another amendment that was in the second degree and debate was 
taking place. Many of us had planned to talk and debate.
  Could the chairman of the Finance Committee indicate to those of us 
who were involved in that debate and discussion whether those measures 
now are being withdrawn and whether we will come back and address them 
at another time, just as a point of information so that we have some 
understanding what the matters are before the Senate?
  Many of us thought we were going to be proceeding with the 
rescissions bill. We were given that indication again last night by the 
majority leader. We came over this morning intending to debate it. Then 
we had an amendment in the second degree. And now we are going on to a 
different matter.
  I do not intend to object to moving to a different matter, although I 
would want to be able to speak to the conference report. I am just 
asking as a matter of information so that we have some understanding 
about where we are on the amendment of the Senator from South Dakota.
  Mr. PACKWOOD. It is our intention to simply lay them aside. We will 
come back to them as soon as we are done with the conference report. We 
had suggested, although it has not been cleared I think on your side 
yet, a half an hour time limit on the conference report, 15 minutes 
equally divided, so that we would be back to it quite soon.
  Mr. WELLSTONE addressed the Chair.
  Mr. KENNEDY. If I could continue, I understand then that the request 
is just to move to the conference report?
  Mr. PACKWOOD. That is correct.
  Mr. KENNEDY. I would indicate just as one Member, I know the 
importance and the timeliness of the matters which are included in the 
conference report and the importance of achieving that. But I do want 
to indicate that there is a matter that has been raised in the 
conference report that with regard to the special tax provisions for 
some of the wealthiest individuals in the country. I know the Senator 
is familiar with this, and I wish to indicate to the leader that I have 
every intention of submitting a sense-of-the-Senate resolution on this 
matter before we reach a final decision. I am more than glad to work 
out the details with the chairman of the Finance Committee or with the 
majority leader, but I wish to at least indicate at this time my 
intention of proposing such a sense-of-the-Senate resolution when the 
matter does come before the Senate and at an appropriate time after the 
chairman of the Finance Committee or the members of conference 
committee have had an opportunity to explain the conference report.
  Mr. PACKWOOD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. PACKWOOD. I ask for the yeas and nays on the conference report.
  Mr. WELLSTONE. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. It is not in order to object at this point.
  Is there objection to proceeding to the conference report?
  Without objection, it is so ordered.
  The Senator from Oregon.
  Mr. PACKWOOD. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The clerk will report the conference report by 
title.
  The assistant legislative clerk read as follows:

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     831) to amend the Internal Revenue Code of 1986 to 
     permanently extend the deduction for the health insurance 
     costs of self-employed individuals, to repeal the provision 
     permitting nonrecognition of gain on sales and exchanges 
     effectuating policies of the Federal Communications 
     Commission, and for other purposes, having met, after full 
     and free conference, have agreed to recommend and do 
     recommend to their respective Houses this report, signed by a 
     majority of the conferees.

  The PRESIDING OFFICER. Without objection, the Senate will proceed to 
the consideration of the conference report.
  (The conference report is printed in the House proceedings of the 
Record of March 29, 1995.)
  Mr. PACKWOOD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. PACKWOOD. I think the Senate is very familiar with this bill. We 
have debated it thoroughly on the Senate floor. We have debated it in 
committee.
  The bill will allow self-employed individuals to deduct 25 percent of 
the cost of health insurance premiums this year and 30 percent starting 
next year. This bill makes the deduction permanent. We would like to 
raise the deduction even more. But this is the first time we have ever 
made it permanent.
  The reason this is so timely is people need to know this to prepare 
their tax returns. The deadline for filing 1994 tax returns is now only 
2 weeks away.
  So I hope the Senate would not spend a lot of time on this bill. I 
think everyone understands the bill, and I would be prepared to vote on 
the conference report.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I was wondering if the chairman of the 
committee would be willing to describe exactly the circumstances that 
took place in the conference committee in relationship to what tax 
payments would be expected from expatriates. A story was included in 
today's Washington Post and in other newspapers about the tax break 
that has allowed billionaires to renounce their U.S. citizenship, leave 
the country, and escape taxes on their profits.
  The story reads:

       A Senate proposal to tax such wealthy expatriates was 
     dropped in a tax bill during a House-Senate conference 
     Tuesday night, at least partly because of the pressure from 
     lobbyists . . .

  I am wondering if the chairman of the committee could review for the 
membership exactly what took place in the conference in relationship to 
that particular measure, and if he could review with us what the 
considerations were and why a judgment was made in the conference to 
provide for the elimination of that particular provision which had been 
accepted and approved in the Senate.
  Mr. PACKWOOD. I would be happy to do that, Mr. President.
  What happened was this: We added this provision in the Senate Finance 
Committee without any hearings.
  From time to time, we pass things for which we do not know all the 
consequences. I do not think we know if this unfairly affects American 
citizens, or how it affect aliens or nonresidents that are living here.
  The House had on the floor a motion to instruct its conferees to not 
accept the expatriate tax provision. That instruction was accepted. So 
the House was proceeding as they were instructed.
  Chairman Archer and I agreed to have the Joint Tax Committee study 
the expatriate provision and report back to us by June 1. The Joint Tax 
Committee is instructed to study the 
[[Page S4975]] ramifications and implications and who is affected, and 
does it adversely affect American citizens vis-a-vis aliens or illegal 
immigrants or legal immigrants. The report is due by June 1. After we 
review the report, any legislation that we consider will have an 
effective date of February 6 of this year. This is the same date as the 
amendment that was offered in the Finance Committee. Everyone is on 
notice--if and when the expatriate legislation becomes law, it will be 
effective February 6, 1995.
  Mr. KENNEDY. There may be reasons for study of this particular 
provision by the Joint Tax Committee. But I fail to understand the 
compelling need for study when we are talking about, as I understand 
it--perhaps the Senator wants to explain exactly what is at risk here.
  As I understand it--and I think all of us were surprised when we read 
about it this morning--we are talking about the fact that individuals 
who are able to accumulate very substantial amounts of money, capital 
resources, would be able to, by renouncing their citizenship, escape 
what other citizens who did not renounce their citizenship would have 
to pay.
  I am trying to understand exactly what is involved here and who 
exactly is involved. Could the Senator explain?
  Mr. PACKWOOD. The Senator asks a very good question. At this point, 
we don't know who would be affected by the provision and who would not 
be. That is precisely the reason why it should not be considered today. 
The provision applies to citizens who renounce their citizenship. Maybe 
they have moved to another country for reasons that have nothing to do 
with tax avoidance purposes. They are subject to the tax. There is a 
possibility of double taxation. There is also the question of what 
happens to people who come to this country and never become citizens. 
They make a fortune here but they never become American citizens and 
they go back to their country of origin. Do they get a tax preferential 
treatment that an American citizen does not get?
  These are questions that ought to be answered and will be answered. 
If and when we pass a bill, that bill would be retroactive to February 
6. But it would be unwise to act when we do not fully understand the 
consequences.
  Mr. KENNEDY. Well, I say to the Senator, why was the provision 
accepted initially by the Finance Committee and why was it accepted 
here on the floor if there were all these questions about it? Evidently 
it was supported by the members of the Finance Committee. It was not 
challenged during the floor debate, at least not to my memory. We had a 
very short debate on the legislation, in any event.
  I am just wondering why the Finance Committee felt that this was a 
sufficient loophole that ought to be addressed and accepted the 
provision, and then in the conference committee the provision 
effectively was dropped.
  Mr. WELLSTONE. Will the Senator yield?
  Mr. KENNEDY. I will be glad to yield to the Senator from Minnesota in 
a moment.
  Mr. WELLSTONE. I wonder if I could ask the Senator to yield, and I 
wonder if the Senator from New Jersey might want to respond as well.
  Mr. KENNEDY. Could the Senator maybe explain to me what was the 
revenue gain expected from closing the loophole? I understand that the 
5-year revenue gain was $1.359 billion, that in the next 5 years it was 
$2.274 billion, and the total in 10 years, $3.633 billion; is that 
correct?
  Mr. PACKWOOD. The revenue estimates have jumped around. The 
administration estimated its proposal would raise $2.2 billion. Joint 
Tax estimated it would only raise $1.7 billion. The proposal that was 
included in the Finance Committee bill was estimated to raise $1.359 
billion. The $3.6 billion figure is a 10-year estimate of the Finance 
Committee proposal.
  We also asked Treasury how many people would be affected by the 
administration's proposal. They said, ``Well, between a dozen and two 
dozen.'' Now, Treasury is not sure about this number.
  This is the problem. We do not know who they are. We do not know if 
they are American citizens. We do not know if they are illegal 
immigrants or legal immigrants. We do not know if they are leaving for 
the purpose of marriage or other legitimate reasons or leaving not to 
pay taxes.
  I admit, I think we adopted this in haste, with no hearings, not 
fully understanding the consequences of the provision. I apologize for 
us having done it in this way.
  Mr. KENNEDY. I appreciate the Senator's response. I understand that 
tax measures are always complex and they are difficult. But, as I 
understand it, we are talking about somewhere between, as the Senator 
has mentioned, $1.4 and $3.6 billion. Your own estimate, as I 
understand it, about the number of expatriates each year is about 12.
  What is the estimated net worth of each of the 12 people? Could we 
get some idea about that?
  We had just been debating children's programs, education programs. 
The total value of the programs that we are trying to restore is less 
than $1.4 billion. Now we are talking about a dozen people who have 
made a great deal of money here in the United States--and no one has 
anything against them for making it in the United States--but these 
people are prepared to renounce their citizenship. They are prepared to 
reject what every working family in America is committed to--having to 
pay their taxes--by denying their citizenship and going someplace else.
  I commend the Finance Committee for addressing this issue earlier. 
But I must say that I find it exceedingly difficult to understand why 
in that conference, the provision closing that loophole was effectively 
dropped and the loophole failed to be closed.
  In particular, I think what this is saying very clearly is, you have 
one set of rules and regulations for the wealthiest individuals--in 
this instance the very wealthiest--who are prepared to turn their back 
on this country, and you have another set of rules for everyone else. 
We closed that loophole, and now we have opened it up again.
  Mr. President, I appreciate the Senator yielding.
  I intend, if the Senator would yield for the purposes of sending--I 
see the Senator seated.
  I ask for recognition, Mr. President.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I send to the desk a resolution. It is a 
resolution on tax avoidance by certain American citizens.

       It is the sense of the Senate that--
       (1) the Congress of the United States should act as quickly 
     as possible to amend the Internal Revenue Code to end the tax 
     avoidance by United States citizens who relinquish their 
     United States Citizenship; and
       (2) the effective date of such amendment to the Internal 
     Revenue Code should be February 6, 1995.

  I send that to the desk on behalf of myself and Senator Wellstone.
  The PRESIDING OFFICER. Is there objection?
  Mr. PACKWOOD. Parliamentary inquiry, Mr. President.
  On this conference report, is this in order?
  Mr. KENNEDY. I cannot hear the Senator.
  The PRESIDING OFFICER. It would take unanimous consent to take up the 
resolution at this point.
  Mr. PACKWOOD. I object.
  Mr. KENNEDY and Mr. MOYNIHAN addressed the Chair.
  Mr. KENNEDY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. Objection was heard.
  The clerk will call the roll to ascertain the presence of a quorum.
  The legislative clerk proceeded to call the roll.
  Mr. PACKWOOD. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  Mrs. BOXER. I object.
  The PRESIDING OFFICER. Objection is heard. The clerk will continue to 
call the roll.
  The legislative clerk continued to call the roll.
  Mr. KENNEDY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  Mr. PACKWOOD. I object.
  The PRESIDING OFFICER. Hearing objection, the clerk will continue to 
call the roll.
  The legislative clerk continued to call the roll.
   [[Page S4976]] Mr. DOLE. 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. DOLE. Mr. President, we will be filing cloture on the conference 
report momentarily. There will be a pro forma session tomorrow, a 
cloture vote on Monday.
  I think it is--I do not know how to describe it. So many self-
employed States like Minnesota, Massachusetts, Kansas, New York, 
Oregon, wherever--wait until you file tax returns. April 15 is very 
close.
  We are playing games. We are playing little games here. We have 
already said it will be effective the 6th of February. So we will do it 
the hard way. We will file a cloture motion.
  Mr. President, there are 3.2 million people waiting for two Senators 
to let them file their tax returns--3.2 million. They ought to be dealt 
with fairly.
  The only way I can think to do it is to file cloture. There will be 
no more votes today, and the cloture petition will be filed. Then we 
will go out.
  Mr. KENNEDY. Mr. President, I want to make it very, very clear that I 
was prepared to move toward a final resolution on this legislation for 
the reasons that have been outlined by the majority leader.
  I think it is a travesty for this body not to express itself in more 
than general statements and comments, and not to state its position 
overwhelmingly about the outrageous tax provisions that benefit not a 
small group of people but just a handful of very wealthy people who 
have renounced their citizenship here in the United States.
  The best estimates of revenue from this provision are $1.3 billion--
that happens to be the same amount that is included in the amendment of 
the Senator from South Dakota, in terms of funding.
  Now, the fact of the matter is the House Republicans had their way 
with this provision the last time they went to conference. I want to 
make sure that our conferees, when they go back after the unanimous 
vote of the Senate--and there is no reason that it should not be 
unanimous--understand our position. That is why I would urge that the 
Senate reach a final judgment on the conference report at a time set by 
the majority leader, but prior to that time that there be an 
opportunity for this Senate to express itself about this loophole, so 
that we can, Republican and Democrat alike, speak to that issue,
 and indicate that we are firmly in support of addressing that loophole 
in the way that my sense-of-the-Senate resolution suggests.

  I do not think that is asking a great deal. This provision that 
closes the loophole was good enough to be accepted by the Finance 
Committee and accepted by the U.S. Senate. All we are trying to do is 
make sure that this provision is going to prevail in the end. We are 
denied that opportunity because of the parliamentary situation--that 
the conferees of the House have adjourned.
  If there is any time when the rules ought to be adjusted it is in 
this kind of egregious situation. All our resolution says is that the 
Congress should act as quickly as possible to amend the Internal 
Revenue Code to end tax avoidance by U.S. citizens who relinquish their 
U.S. citizenship, and that the effective date of such an amendment to 
the Internal Revenue Code should be February 6, 1995.
  Let us have a unanimous vote on that, and let us have the vote on the 
conference report. That is what this is about. And we are prepared to 
do that at whatever time is convenient--on Monday next, at a time 
designated by the majority leader.
  That is not an unreasonable request, and I hope that will be the way 
we proceed because this issue is not going to go away.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I do not wish to speak at length but I 
want to make two points.
  The first is that the Finance Committee fully intends to close this 
loophole, if that is the way it is to be described, to collect these 
taxes that are being avoided. But we would wish to do so and we will do 
so as of the date the Treasury, in the budget, the executive branch, 
proposed doing so as part of the President's budget: February 6. But I 
would like to say something that may not be wholly welcome here. And 
the Senator from Oregon will recognize it.
  When we held hearings on this matter, professors of law and 
professors of international law came to us and they said: Have a little 
care in what you are doing. Prof. Robert F. Turner, who is the Charles 
H. Stockton Professor of International Law at the U.S. Naval War 
College, gave us a paper called, ``International Law and the Exit Tax. 
Does section 203 of the Tax Compliance Act of 1995 violate the right to 
immigrate, recognized in the U.N. Covenant on Civil and Political 
Rights and other U.S. and international instruments?''
  You may recall, Mr. President, that the U.S. Assistant Secretary 
Shattuck and the Assistant Attorney General have been in the United 
Nations just this week talking about our compliance with this law.
  The Senator from Oregon will recall the observation that human rights 
and legal rights are most to be attended to when the group involved is 
despised. That is the test. Nobody much likes a billionaire who 
renounces his or her citizenship for money. But if there are rights 
involved they are rights, and we ought to be careful how we proceed. 
That is the test, not whether these people are popular or whether they 
are not popular.
  We are going to proceed in that way. We are going to have a report. I 
offered this on behalf of the Democratic Members as a part of a general 
package, this provision. When it failed, as things do, in a committee 
divided, the Senator from New Jersey offered it as a freestanding 
provision, just to raise money for deficit reduction.
  It passed. It will pass again. I just wanted to say that, sir.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. PACKWOOD. Mr. President, my good friend from New York, I think he 
has yielded the floor, but I would like to congratulate him on what he 
said.
  And then recall--it is funny how time revolves--20 years ago on this 
Senate floor we were excoriating the Soviet Union for taxing their 
citizens who wanted to leave as a violation of the most fundamental 
human liberty. And they were practically confiscating the income of 
their people, mainly Jews, who wanted to leave because of repression. 
And we said that was terrible.
  We already have on the books now--it is existing law--a provision 
that says if an American citizen renounces his or her citizenship and 
leaves the country to avoid taxes, we can tax them for 10 years. That 
is the law now.
  What we did not know, I apologize to the Senate, when we acted in 
haste--I have made these mistakes before and I will probably make them 
again--when we acted in haste we probably did not understand the full 
consequences, or maybe just two or three. If a person comes to this 
country from Italy, from Poland, from Germany, from Hong Kong, and 
becomes a legal immigrant, works and is prosperous, and reaches a 
certain age and the tug of the old home country is strong and that 
person goes back home, since he or she has never become a U.S. citizen 
this bill does not touch that person. Those people are free to leave 
with all their millions or billions or whatever they have because they 
have never become U.S. citizens.
  Now you take exactly the same type of person who leaves Poland or 
Germany, comes here, becomes a citizen, and the tug of the old home 
country when they reach close to retirement is such that they leave--
they are taxed. We did not grasp that when we passed this. We did not 
know it. We did not know there was a statute on the books, when we 
passed this, that you are taxed for 10 years if you leave for tax 
reasons.
  What do you do about the thousands of Cubans, Cuba Libres who came 
here in the exodus of the 1960's to become American citizens, good 
citizens, in many cases prosperous citizens? And one day I think many 
of them would hope to return to a free Cuba. It is an understandable 
tug. They are now American citizens. They are not leaving to avoid 
taxes, they are leaving to go home. This bill would tax them. I do not 
think we intended that. We did not realize it.
  So all we are asking--I find it amazing this bill is being attacked 
and this provision is being attacked by the very 
[[Page S4977]] people who were attacking the Soviet Union for doing the 
same thing 20 years ago. We made a mistake. There is no harm in 
admitting that. Unfortunately, God has not endowed any of us with 
perfection, despite what some of us may think. And we need to review it 
and look at it and see where the errors are. I say again, for those 
people who now leave the country to avoid taxes, we can tax them for 10 
years.
  So I am disappointed that the self-employed this weekend, when they 
are now meeting with their accountants--let us face it, most people do 
their taxes a week or two prior to April 15. I see one of my young 
staffers nodding who used to be a practicing tax lawyer. He said yes, 
this is the 2 weeks. They are not going to know what we are going to 
do. That is unfortunate, because now we will not get to vote cloture on 
this until Monday. I hope we would pass this Monday night--but I guess 
there is nothing else we can do.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, I would like to ask unanimous consent that 
a full statement I have prepared be printed in the Record, and a draft 
of a proposed amendment be printed immediately after my remarks for the 
purposes of public notice.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. Mr. President, I would like to just make two points. I 
agree with the point that has just been made by the Senator from 
Oregon, that the matter as it was passed out of the Finance Committee 
and by the full Senate was deficient in that it did not reach those 
persons who have been permanent residents of the United States and who 
then leave the United States and are able to avoid the tax on the 
substantial increase in their wealth which they achieved while they 
were in the United States. It was my intention to offer an amendment to 
do that on the floor when this matter was presented several days ago. 
However there was a unanimous-consent request, based on the urgency of 
passage, that precluded any amendments to the legislation at that time 
and so, in deference to the urgency of passage, I deferred.
  I am filing in the Record the amendment that I would have offered so 
there can be public notice and comment on what I intend to propose at 
the appropriate time to close the loophole by extending this to 
permanent residents as well as citizens.
  The second point that I would like to make relates to a concern about 
how this matter was suggested to be handled within the conference 
report. That was that any additional income that would have been 
derived from this loophole would have been used to increase a deduction 
in the underlying bill.
  We have had on several occasions, including within the last 36 hours, 
statements by which the Senate has committed itself to the proposition 
that, if we reduce spending, the benefits of that reduced spending 
shall be used for deficit reduction. It is my feeling that we ought to 
adopt the same principle as it relates to closing tax loopholes. After 
closing the tax loophole, the primary purpose of those funds ought to 
be for deficit reduction, not to be added for another tax reduction on 
a bill that just happens to be coincident with the consideration of the 
closing of the tax loophole.
  So in some ways we have been saved from what I think would have been 
an inappropriate policy, whatever the merits of the specific proposal, 
inappropriate policy that funds saved from closing a tax loophole would 
be shifted to other purposes within the same matter before the 
conference committee. It is my hope that we will, as a further 
indication of the seriousness of our intention to reduce the Federal 
deficit, adopt the same principle for tax loophole closing as we have 
already done for spending reduction; that is, our priority is to reduce 
the deficit.
                       i. enact expatriation tax

  I must express disappointment that Congress has chosen to exclude 
from this bill a provision that would have imposed a tax on individuals 
who renounce their citizenship. Bolstering the Treasury's ability to 
exact Federal income tax from millionaires and billionaires who leave 
the country is long overdue.
  The proposed legislation would have brought the taxation of 
individuals who renounce their citizenship more in line with the way 
the Federal Government taxes Americans who remain in the United States. 
Americans who are fortunate enough to experience significant 
appreciation in the value of their property usually are taxed twice: A 
28-percent capital gains tax when the asset is sold and an estate tax 
of up to 55 percent upon death.
  Even if the Congress had enacted this expatriate tax, individuals 
leaving the country would be subject to only one tax--at a maximum rate 
of 39 percent.
  In short, the tax burden on departing millionaires would still be 
less than we currently impose on loyal American taxpayers.
                        ii. noncitizen residents

  In fact, the provision passed by the Senate did not go far enough. 
The tax that the Senate passed applied to citizens, but failed to 
include long-term residents who depart from the United States. 
Excluding long-term residents would result in the United States 
treating noncitizen residents more favorably than we treat American 
citizens. Such inequity cannot be justified.
  Therefore, Mr. President, I submit for the Record an amendment to the 
version of the expatriate tax passed by the Senate and dropped by the 
conference committee. The amendment would extend the tax to departing 
individuals who are lawful permanent residents and have been taxed as 
residents for at least 8 of the past 15 years.
  Equity dictates that such an individual be taxed on the appreciation 
of his or her assets. I submit the text of this amendment for the 
Record and invite my colleagues to review and analyze the proposal.
  There being no objection, the amendment was ordered to be printed in 
the Record, as follows:

       On page 13, strike lines 7 through 18, and insert:
       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market. If--
       ``(A) any United States citizen relinquishes his 
     citizenship during a taxable year, or
       ``(B) any long-term resident of the United States--
       ``(i) ceases to be a lawful permanent resident of the 
     United States for any portion of any taxable year, or
       ``(ii) ceases to be subject to tax as a resident of the 
     United States for any portion of any taxable year by 
     asserting the resident's right to be a resident of a foreign 
     country under the provisions of a treaty between the United 
     States and the foreign country,

     then, except as provided in subsection (f)(2), all property 
     held by such citizen or resident at the time immediately 
     before the relinquishment or cessation, whichever is 
     applicable, shall be treated as sold at such time for its 
     fair market value.
       ``(2) Recognition of gain or loss.--Notwithstanding any 
     other provision of this title, any gain or loss arising from 
     the sale under paragraph (1) shall be taken into account for 
     the taxable year. This paragraph shall not apply to amounts 
     excluded from gross income under part III of subchapter B.
       On page 14, line 3, insert ``domiciled in the United 
     States'' after ``die''.
       On page 14, line 17, insert ``or on the date of the 
     cessation described in clause (i) or (ii) of subsection 
     (a)(1)(B)'' after ``citizenship''.
       On page 15, strike lines 12 through 14, and insert:
       ``(e) Definitions.--For purposes of this section--
       ``(1) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       On page 15, line 15, strike ``(1)'' and insert ``(A)''.
       On page 15, line 20, strike ``(2)'' and insert ``(B)''.
       On page 16, line 3, strike ``(3)'' and insert ``(C)''.
       On page 16, line 6, strike ``(4)'' and insert ``(D)''.
       On page 16, line 8, strike ``Paragraph (1) or (2)'' and 
     insert ``Subparagraph (A) or (B)''.
       On page 16, between lines 12 and 13, insert:
       ``(2) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States and, as a 
     result of such status, has been subject to tax as a resident 
     in at least 8 taxable years during the period of 15 taxable 
     years ending with the taxable year during which the sale 
     under subsection (a)(1) is treated as occurring.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a)(1) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
       [[Page S4978]] On page 19, line 20, insert ``or the date of 
     the cessation described in clause (i) or (ii) of subsection 
     (a)(1)(B)'' after ``citizenship''.
       On page 20, line 4, insert ``or the date of the cessation 
     described in clause (i) or (ii) of subsection (a)(1)(B)'' 
     after ``citizenship''.
       On page 20, between lines 13 and 14, insert:
       ``(i) Election by Expatriating Naturalized Citizens and 
     Long-Term Residents.--Solely for purposes of determining gain 
     under this section--
       ``(1) In general.--At the election of an individual who was 
     a naturalized citizen of the United States or a resident not 
     a citizen of the United States, property--
       ``(A) which was held--
       ``(i) in the case of a naturalized citizen, on the earlier 
     of the date the individual first became a naturalized citizen 
     of the United States or the date the individual first became 
     subject to tax as a resident of the United States, or
       ``(ii) in the case of a resident who is not a citizen of 
     the United States, on the date the individual first became a 
     resident of the United States during the period of long-term 
     residency to which the treatment under subsection (a) 
     relates, and
       ``(B) which is treated as sold under subsection (a), shall 
     be treated as having a basis on such date of not less than 
     the fair market value of such property on such date.
       ``(2) Election.--Such an election shall apply only to the 
     property described in the election, and, once made, shall be 
     irrevocable.
       On page 20, line 14, strike ``(i)'' and insert ``(j)''.
       On page 21, line 5, insert ``(1)'' after ``(e)''.
       On page 21, strike lines 6 through 8, and insert:
       (c) Conforming Amendments.--
       (1) Section 877 of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new subsection:
       On page 21, line 11, insert ``(1)'' after ``(e)''.
       On page 21, between lines 12 and 13, insert:
       (2) Section 6851 of such Code is amended by striking 
     subsection (d) and by redesignating subsection (e) as 
     subsection (d).
                              iii. equity

  Mr. GRAHAM. I would remind my colleagues that we are not debating a 
tax on immigrants who come to the United States with little or no 
assets and who, through hard work, find a way to provide for their 
families.
  Neither are we talking about taxing each and every resident alien who 
succeeds in establishing a business or making profitable investments 
while here in the United States and later decides to return to his or 
her native country.
  This tax would apply only if the value of the individual's business 
or investments had increased by over $600,000. In other words, the 
first $600,000 in appreciation is fully exempted from the tax.
  The expatriate tax would apply only to the rich of the rich who made 
their fortune as a result of access to the enormous resources of this 
country.
  It is at least ironic, if not deplorable, that Congress is moving to 
protect millionaires who are fleeing the country while attacking 
programs benefiting America's poor children.
  I understand that the chairmen of the Finance and Ways and Means 
Committees have charged the Joint Tax Committee with reviewing the 
taxation of individuals leaving the country, with a report due by June 
1.
  I will respect that directive, but will urge reconsideration of this 
proposal at the earliest possible opportunity.


                         iv. deficit reduction

  The exclusion of the expatriate tax from the final version of the 
legislation dodges another serious issue that we must address.
  That issue is whether we are committed to reducing the Federal 
deficit, or whether we are just committed to talking about deficit 
reduction.
  The revenues generated from the tax were dedicated to deficit 
reduction.
  I will fight to see that the $1.4 billion this tax would raise will 
ultimately go to deficit reduction.
  In fact, I urge my fellow Senators today to make a commitment--that 
we will dedicate the revenues derived from closing tax loopholes--like 
the gaping one available to those rejecting the benefits and 
obligations of American citizenship--to deficit reduction.
  Mr. President, with those remarks, I look forward to voting for the 
legislation at the earliest possible moment.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER (Mr. Inhofe). The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I would like to thank my friend from 
Florida for making a very explicit point, which the chairman made, 
which is that, if inadvertently you omitted consideration of a whole 
possible class of potential taxpayers which we did not deal with, we 
ought to--in shorthand I think we refer to it as green card issue. The 
review that is going to come up and which will, whatever we do, be 
retroactive to February 6, whatever the budget may produce, may produce 
more revenue than we otherwise would have done in the bill before us. 
And I think the committee was unanimous that it should indeed go for 
deficit reduction, in the final vote on the amendment by the 
distinguished Senator from New Jersey--which stood alone--just not to 
deal with other matters but simply to reduce deficits.
  I yield the floor. I thank the Chair.
  Mr. BRADLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. BRADLEY. Mr. President, if I could, I would like to take a few 
minutes to talk about this proposal, since it was the amendment that I 
offered in the Finance Committee that was adopted, passed the U.S. 
Senate, and went to the conference committee.
  I think this provision, or something very close to it, will pass the 
U.S. Congress this year. And it will pass the Congress this year 
because I think that the arguments against it will not stand. The point 
has been made that this is an exit tax. It is not an exit tax. It is a 
tax on the accrued gains while someone was a U.S. citizen. When someone 
opts to leave to escape the estate tax that he or she would otherwise 
pay, we are saying, no; when you begin the process of renouncing your 
U.S. citizenship, you will be taxed. This is not a tax on little 
people. As every Senator who has spoken indicated, this is a tax on the 
very wealthy.
  The amendment that I offered specifically excluded any pensions, any 
real estate owned by the individual, and $600,000 in gain, which means 
that the person would have to have assets of about $5 million before 
they could even reach the threshold of being taxed.
  So, I believe that citizenship comes with certain responsibilities. 
Those responsibilities are to pay one's fair share of tax; that is, 
both income tax and, upon death, it includes estate tax.
  I regret that this was dropped in conference. But I do not have any 
doubt of the commitment of the distinguished Senator from Oregon to see 
that this is going to be passed this year. I certainly do, and I say 
the distinguished Senator from Oregon does as well. I believe that we 
will see this passed this year. We had a hearing. There was nothing in 
the hearing that made me believe that we would not pass this in some 
form. There might be a change here or there. It will be effective 
February 6.
  So the message is out to all those around Washington who might be 
looking for nice arrangements that there will be no change in this 
date. If you have begun your renunciation of citizenship on February 
20, do not expect the date to slip. It is February 6.
  So, Mr. President, I simply want to reassert my belief that this 
amendment will pass. I will offer it again. We will have a process to 
look at this. The distinguished Senator from New York, and I believe 
the Senator from Oregon, will also support this measure and it will 
pass and become law this year.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. DOLE. Mr. President, I would be happy to yield to the Senator 
from North Dakota very briefly, about 2 minutes, and then I will 
reclaim the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I very much appreciate the courtesy of the 
majority leader.
  I support the sense-of-the-Senate resolution offered by Senator 
Kennedy. I agree with the Senator from New Jersey that I believe that 
by the end of this year this will be law.
  I also want to say, however, that I hope this afternoon a method is 
developed by which we can pass the conference report on this matter. We 
have small business men and women, sole proprietorships, farmers all 
across this country who are now about 15 months past due and about 70 
percent short, even with this bill, of achieving what they ought to 
have; and, that is, 100 percent deductibility for health insurance. I 
think time is of the essence.
  While I support the sense-of-the-Senate resolution, I hope very much 
that it will not delay passage this afternoon of this piece of 
legislation. This piece 
[[Page S4979]] of legislation is essential for millions of small 
business people, and it is very, very time sensitive. I believe that we 
ought to move it. I hope that a method is found by which we can do that 
this afternoon.
  Let me say one more time that tax deductibility for health insurance 
for sole proprietors in this country is essential, and it is not just 
essential in this bill at 30 percent. We need to do more. The next step 
is to go to 100 percent.
  Mr. President, I appreciate the courtesy of the Senator from Kansas.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. DOLE. Is it possible now to pass the conference report by a voice 
vote?
  The PRESIDING OFFICER. Is there further debate on the conference 
report?
  Mr. DOLE. I ask that the yeas and nays be vitiated.
  The PRESIDING OFFICER. Is there objection?
  Mr. KENNEDY. Mr. President, I understand the request is to vitiate 
the yeas and nays. Am I correct?
  The PRESIDING OFFICER. That is correct.
  Is there objection?
  Without objection, it is so ordered.
  Mr. DOLE. The question is on the conference report?
  The PRESIDING OFFICER. The question is on the conference report.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, as I have stated earlier, I for one 
welcome the opportunity to set a time definite for the passage of the 
conference report so that everyone in this country will know as of now, 
this afternoon, that this conference report is going through and will 
be achieved.
  I mean, it is interesting in that we have been debating the 
rescissions. I was here last night. When the majority leader was 
talking about urging action on the rescissions, I did not hear that, 
well, we are going to take up the conference report, that there was 
such a compelling sense of urgency about it. But obviously there is a 
sense of urgency, and I am more than glad to enter into an agreement 
that we pass it at a time certain.
  I also believe that we should have the opportunity to put the Senate 
on record, hopefully unanimously, Republicans and Democrats alike, to 
say with regard to the provision--which passed the Senate--the 
provision that provides for tax payment from those wealthy individuals 
who decide to renounce their citizenship--$3.6 billion worth--that we 
are going on record to insist that this provision is going to become 
the law.
  Now, I have great respect for my colleagues and their desire to make 
sure that this provision becomes the law, and I know that they can be 
very persuasive in those conferences. But the fact is, we had the 
provision in this bill, the bill went to conference, and the 
Republicans in the House of Representatives had their way and the 
provision was dropped.
  The best way to indicate to the House conferees in the future that we 
are serious about this is to have a unanimous vote in the Senate. 
Therefore, I believe that that ought to be the procedure that is 
followed, that we should have an opportunity--hopefully it would be a 
unanimous vote--to say that the Senate is going on record in strong 
support of the provision that would have resulted in $3.6 billion in 
revenue, according to the Finance Committee--$3.6 billion.
  That provision has been dropped. I believe it was a mistake to drop 
it, and the Senate of the United States ought to go on record with a 
broad, overwhelming majority to say that we want it reinstated as 
outlined here, and that 100 Senators believe this to be so.
  And I just finally would say I think it is entirely appropriate to go 
on record at this particular time when we are debating rescissions. As 
soon as this issue is resolved, we will be talking in this Chamber 
about the amendment of the Senator from South Dakota which relates to 
education of children and to child care. The cost of the Senator's 
amendment is a third of this $3.6 billion cost, a third of this cost. I 
think it is entirely appropriate that we go on record at this time, Mr. 
President.
  There is no desire to delay. I was glad to stay here and am prepared 
to go ahead and see votes on the rescissions. I plan to be here. I am 
here this afternoon. I waited here yesterday to speak for the amendment 
of the Senator from South Dakota. I waited from 2 o'clock until 10 
o'clock last night, to be able to speak for it.
  We spoke very briefly on the Senator's amendment. Then we had an 
amendment that was put right on top of it which precluded us from 
having any further debate and discussion. Then this measure came right 
in. I was going to exit the floor at 3 minutes of 12 and then was told 
that this measure was going to come on in here and was going to be 
passed in a few moments, and I had to object to it, without having the 
opportunity to talk to the Democratic Members and others on that 
conference committee.
  That is not how you treat the institution, Mr. President. I am glad 
to cooperate, and I urge that we set a time definite for the vote and 
the final disposition of the conference report, and that prior to that 
time we have an opportunity to express the sense of the Senate--which I 
hope will be unanimous--in order to reaffirm the Senate's position on 
the provision that has been reported out favorably--virtually 
unanimously, Republican and Democrat alike--from the Finance Committee 
and accepted virtually unanimously by the Members of this body. If we 
can get that process set up, then I think that would be the best way to 
proceed.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. DOLE. I know the Senator from Massachusetts said he does not have 
any confidence in anybody on the Finance Committee, either party, so we 
are going to hold hostage all weekend millions of people out there who 
want to do their tax returns because we do not trust each other. There 
are 3.1 million filers and they live in all of our States. We have got 
them down now to 2 weeks. We are going to squeeze them now, take 3 days 
away from them. They are going to have to file amended returns, which 
is going to cost them a lot of money, but it is going to make somebody 
feel good in the Senate.
  That is why the American people are so frustrated when they look at 
Congress. No wonder it is only a 31-percent approval rating. After 
today, it will probably drop to 10. Every time we bring up a bill this 
session we have this turkey shoot. Everybody over on the other side 
figures out some little political amendment they can offer. And I have 
served notice on the White House today we are not bringing up any more 
bills the White House wants until we have some understanding on the 
legislation that we thought would go through here in a normal way. If 
the President does not care, that is good enough for me. If he does not 
want this legislation, we are not going to take it up, but neither will 
we take up legislation that he wants.

                          ____________________