[Congressional Record Volume 141, Number 63 (Wednesday, April 5, 1995)]
[House]
[Pages H4317-H4319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PARLIAMENTARY INQUIRIES
Mr. HEFNER. Parliamentary inquiry, Mr. Speaker.
The SPEAKER pro tempore. The gentleman from North Carolina will state
his parliamentary inquiry.
Mr. HEFNER. My parliamentary inquiry is I did not ever get the ruling
of the Parliamentarian, and my parliamentary inquiry is in the future
if we have the ruling of the Chair questioned or challenged, is it
going to become the practice for someone to move to table the motion
and we will never have a ruling on the ruling of the Chair as it
applies to House rules?
The SPEAKER pro tempore (Mr. Dreier). The Chair will respond to the
gentleman by saying first that it was not the Parliamentarian's ruling,
and the Chair ruled and the House just addressed the issue of that
ruling.
Mr. HEFNER. Further parliamentary inquiry, and I feel this is
justifiable.
The SPEAKER pro tempore. The gentleman from North Carolina is
recognized.
Mr. HEFNER. If there is no mechanism, if there is going to be no
mechanism to challenge a ruling of the Chair, if it can be superceded
by a motion to table, then the majority is going to rule, there will be
no chance to challenge the ruling of the Chair.
{time} 2310
The SPEAKER pro tempore (Mr. Dreier). The Chair wishes to first
respond to the parliamentary inquiry of the gentleman from North
Carolina by stating that the House has just ruled by a vote.
The gentleman from California is recognized for a parliamentary
inquiry.
Mr. THOMAS. Mr. Chairman, under the rules of the House, are there
procedural motions available to the body, and if moved, voted on, and
is the motion to table a procedural motion utilized by the former
majority over and over and over again?
(The letters referred to by Mr. Moran follow:)
U.S. Small Business Administration,
Washington, DC, April 3, 1995.
Hon. Zoe Lofgren,
House of Representatives,
Washington, DC.
Dear Representative: Given my statutory responsibility (15
USC Sec. 634b(4)) to determine the impact of the taxes on
small businesses and advise Congress, I have been asked to
analyze the impact on small businesses of the ``Contract With
America Tax Reform Act of 1995'' which is scheduled to come
before the House of Representatives this week for
consideration.
[[Page H4318]] Specifically, section 6301 of H.R. 1327, the
Tax Fairness and Deficit Reduction Act of 1995, creates a 50
percent capital gains exclusion for individuals but, in so
doing, repeals the special small business capital gains tax
incentive in the existing law (P.L. 103-66, Sec. 13113). This
will have the effect of raising the taxes of future investors
in qualifying, high growth, small businesses from the
previous maximum rate of 14 percent to the new rate of 19.8
percent. This may be the only category of taxpayer to have
its taxes raised under the capital gains provisions of the
proposal. One change from the original bill added in H.R.
1327 that small businesses will appreciate is a provision
which allows investors who have already purchased qualifying
stock to keep the lower rate they expected under previous
law.
Nevertheless, the repeal is troubling for small businesses
for two reasons. First, as a matter of even-handed tax
policy, it seems incongruous to raise the tax rates of those
who invest in the research, plant and equipment of a high-
risk, emerging growth company while rewarding non-productive
speculation in real estate or the stock market with
substantial tax reductions. This is particularly true where a
windfall of capital gains treatment is provided to some
investors for gains on property held previous to the
introduction of the across-the-board proposal where such
purchases were made with no expectation of a higher after-tax
return.
Second, there is persuasive evidence that emerging, high-
growth small businesses are the best choice for investment
incentives when measured by return-per-dollar of tax
expenditure. Yet historical data suggest that the across-the-
board capital gains proposal will not significantly help
these small businesses seeking investment dollars and
repealing the special tax preference will hurt.
Our estimate is that only 10% of business finance resources
currently go to small businesses and most of that is in the
form of bank loans and commercial mortgages--not long term or
``patient'' capital that is needed to finance research and
growth.
The across-the-board 50% reduction which would replace the
special small business capital gains incentive will do little
to improve the situation. Historical data, based on previous
across-the-board capital gains treatment, indicate that about
two-thirds of the capital gains benefit will flow to
appreciated property, such as real estate, and only about
one-third will go to corporate equity investment. Most of the
corporate equity investment, however, will reward gains
generated by the transfer of existing shares of stock in the
market which do not result in any new productive investment
for businesses. Based on this data and current levels of
venture funding, we estimate that less than one per cent of
the across-the-board capital gains benefits will flow to
venture capital that would help small emerging companies.
Our research, and research we have reviewed, indicates that
growing small businesses are greatly underfunded compared to
their contribution to our economy. Small businesses in
general provide 54% of all jobs and 50% of total output using
only 40% of total business assets. The lion's share of our
economy's job growth and innovation is generated by the type
of efficient, high-growth, high-tech small business that can
qualify for special capital gains treatment under current
law. The purposes of the incentive is to persuade
``mainstream'' investors to take the added risk of investing
in an emerging firm. Without such an incentive, the ability
of these businesses to attract equity investment may be
seriously impaired.
We conclude that the repeal of the special small business
capital gains incentive and the resultant increase of the
effective tax rate on qualifying small business investors
will make it more difficult for these small businesses to
compete in highly competitive capital markets. Since small,
high growth businesses generally develop the markets and
provide the jobs that help to secure our commercial
leadership in the future, the repeal may have an adverse
impact on our future economic growth.
I hope that this information is useful to you during the
debate. I would be happy to provide any statistics or
information that I have. Feel free to call me at 205-6533 or
FAX at 205-6928.
Sincerely,
Jere W. Glover,
Chief Counsel for Advocacy.
____
Department of the Treasury,
Washington, DC, April 5, 1995.
Hon. James P. Moran,
U.S. House of Representatives,
Washington, DC.
Dear Congressman Moran: In response to your request
regarding whether the capital gains and indexing provisions
of H.R. 9 would increase the tax rate on gains from eligible
small business stock, the Administration submitted written
testimony to the Committee on Small Business on February 22,
1995 which stated the following:
``* * * by extending the 50 percent exclusion to all
capital assets, H.R. 9 will eliminate the current preference
in Section 1202 for small business stock * * * and would
actually increase the tax rate on certain gains from
investments in eligible small businesses. The current maximum
tax rate for individuals on investment in small businesses
that qualify for the Section 1202 preference is 14 percent
(maximum capital gain rate of 28 percent times 50 percent
exclusion).\1\ H.R. 9 would eliminate the 28 percent maximum
tax rate on capital gains of individuals. As a result, H.R. 9
would impose a maximum tax rate of 19.8 percent (39.6 percent
maximum rate times 50 percent exclusion) on investments that
currently qualify for the 14 percent preferential rate under
Section 1202. A 14 percent rate in a 28 percent rate
environment is relatively attractive to investors in small
businesses, compared to a flat rate on all gains.''
\1\Because one-half of the excluded gain is treated as a
preference for AMT purposes, the actual rate could be higher
for certain taxpayers subject to the AMT, but would never
exceed 21 percent.
---------------------------------------------------------------------------
The Administration remains committed to this positions.
Please do not hesitate to contact me if you have any
questions on this or any other matter.
Sincerely,
Leslie B. Samuels,
Assistant Secretary (Tax Policy).
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
recorded vote
Mr. ENGEL. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 246,
noes 188, not voting 1, as follows:
[Roll No. 295]
AYES--246
Allard
Andrews
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bevill
Bilbray
Bilirakis
Bliley
Boehlert
Boehner
Bonilla
Bono
Brewster
Browder
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clement
Clinger
Coble
Coburn
Collins (GA)
Combest
Condit
Cooley
Cox
Cramer
Crane
Crapo
Cremeans
Cubin
Cunningham
Danner
Deal
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Gallegly
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Gingrich
Goodlatte
Goodling
Gordon
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hall (TX)
Hancock
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Knollenberg
Kolbe
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Lincoln
Linder
Lipinski
Livingston
LoBiondo
Longley
Lucas
Manton
Manzullo
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Montgomery
Moorhead
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Pallone
Parker
Paxon
Petri
Pombo
Portman
Pryce
Quillen
Quinn
Radanovich
Ramstad
Regula
Riggs
Roberts
Rohrabacher
Ros-Lehtinen
Rose
Roth
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tanner
Tate
Tauzin
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Torricelli
Traficant
Upton
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Wilson
Young (FL)
Zeliff
Zimmer
NOES--188
Abercrombie
Ackerman
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bishop
Blute
Bonior
Borski
Boucher
Brown (CA)
Brown (FL)
Brown (OH)
Bryant (TX)
Cardin
Chapman
Clay
Clayton
Clyburn
Coleman
Collins (IL)
Collins (MI)
Conyers
Costello
Coyne
Davis
de la Garza
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dingell
Dixon
Doggett
Dooley
Doyle
Durbin
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Gibbons
Gonzalez
Green
[[Page H4319]] Gutierrez
Hall (OH)
Hamilton
Harman
Hastings (FL)
Hefner
Hilliard
Hinchey
Holden
Houghton
Hoyer
Jackson-Lee
Jacobs
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
Klug
LaFalce
LaHood
Lantos
Levin
Lewis (GA)
Lofgren
Lowey
Luther
Maloney
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
McNulty
Meehan
Meek
Menendez
Mfume
Miller (CA)
Mineta
Minge
Mink
Moakley
Mollohan
Moran
Morella
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Pickett
Pomeroy
Porter
Poshard
Rahall
Rangel
Reed
Richardson
Rivers
Roemer
Rogers
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Schiff
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Slaughter
Spratt
Stark
Stenholm
Stokes
Studds
Stupak
Taylor (MS)
Tejeda
Thompson
Thornton
Thurman
Torres
Towns
Tucker
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Williams
Wise
Wolf
Woolsey
Wyden
Wynn
Yates
Young (AK)
NOT VOTING--1
Reynolds
{time} 2326
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________