[Congressional Record Volume 141, Number 92 (Wednesday, June 7, 1995)]
[Senate]
[Pages S7802-S7803]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                       BILLIONAIRES' TAX LOOPHOLE

  Mr. KENNEDY. Mr. President, the Joint Committee on Taxation has now 
completed its long awaited study on the billionaires' tax loophole, and 
their [[Page S7803]] report is a blatant attempt to save the loophole, 
rather than close it.
  On April 6, the Senate voted 96 to 4 to close this unjustified tax 
loophole for billionaires who renounce their American citizenship in 
order to avoid taxes on the wealth they have accumulated as Americans.
  As we all know, the Senate Finance Committee had tried to close the 
loophole as part of its action to restore the health care deduction for 
small businesses.
  The Finance Committee bill closed the billionaires' loophole, despite 
the fact that the revenue gained was not needed to pay for the health 
care deduction in the bill. In fact, the Finance Committee recommended 
that the revenues be used for deficit reduction.
  This is exactly the type of action necessary if we are serious about 
achieving a balanced budget.
  According to the revenue estimates at the time, closing the loophole 
would raise $3.6 billion over the next 10 years. Clearly, substantial 
revenues are at stake.
  Too often, we close tax loopholes only when we need to raise revenues 
to offset tax cuts. In this case, the Finance Committee closed this 
flagrant loophole as soon as it was brought to the Committee's 
attention and rightly so, because this loophole should be closed as 
soon as possible.
  The Senate bill did so, and all of us thought the issue was settled.
  Yet, when the legislation came back to us from the Senate-House 
conference, the loophole had reappeared, and this important tax reform 
had disappeared. This outrageous tax break for a few dozen or so of the 
wealthiest individuals in the country would remain open.
  The provision was dropped in conference because it was felt that 
technical issues needed to be addressed before Congress took action on 
the issue.
  But in the April 6 vote, the Senate went solidly on record to close 
the loophole as quickly as possible, and to make the effective date of 
such legislation February 6, 1995.
  This all happened, of course, at the same time our Republican 
colleagues in Congress have been proposing deep cuts in Medicare and 
education in order to pay for their new tax breaks for the rich.
  Now, the report of the Joint Tax Committee suggests that the real 
purpose of the delay was to try to find a way to save as much of the 
loophole as possible.
  I have several major concerns about the report
  First, the report now indicates that the revenue gain from closing 
the loophole may be only about half the amount estimated earlier--$1.9 
billion, instead of $3.6 billion. The amount is still significant, but 
far less than was expected.
  Second, the report suggests that it may be preferable simply to 
tinker with the existing law and improve IRS enforcement procedures, 
instead of enacting a new reform to close the loophole, as President 
Clinton has proposed.
  But the IRS has attempted to enforce the current law, and it has been 
found to be fatally flawed. To tinker with the current law is a thin-
veiled pretext to save the current loophole.
  The IRS has been able to identify only a handful of cases in which 
any tax was collected under the defective current law. And the total 
tax collected is less than $500,000.
  At the same time, we have tax lawyers quoted as saying: ``I talk to a 
new client interested in expatriating every week.''
  Third, the report allows an unacceptable window of opportunity to 
avoid the tax. Under this proposal, wealthy tax-evaders can still 
qualify for the loophole by simply having begun, not completed, the 
process of renouncing their citizenship by the February 6 date.
  When we debated this issue 2 months ago, there were suggestions that 
the effective date should be postponed to accommodate certain 
individuals in their tax avoidance schemes.
  In my view, we should close the loophole tight, not gerrymander the 
effective date to let some well-connected billionaires squeeze through.
  At a time when Republicans in Congress are cutting Medicare, 
education, and other essential programs in order to pay for tax cuts 
for the rich, they are also maneuvering to salvage this unjustified 
loophole for the super wealthy.
  I say, this loophole should be closed now, and it should be closed 
tight--no ifs, and, or buts. I intend to do all I can to see that it 
is.


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