[Congressional Record Volume 141, Number 98 (Thursday, June 15, 1995)]
[House]
[Pages H6033-H6036]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 CLOSING THE BILLIONAIRE'S TAX LOOPHOLE

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentlewoman from Connecticut [Ms. DeLauro] is recognized 
for 60 minutes as the designee of the minority leader.
  Ms. DeLAURO. Mr Speaker, I will not take an hour's worth of time, but 
just a few minutes. I have asked for the time today to discuss an 
important development in the Committee on Ways and Means this week.
  The committee took up the highly controversial expatriate loophole. 
This provision allows the super-rich of this Nation to dodge paying 
taxes by renouncing, they can actually renounce their U.S. citizenship.
  And this is not something that is just a figment of my imagination. 
It is a loophole that has allowed billionaires such as the Campbell 
Soup fortune heir, John Dorrance III, and Dart Container Corp. 
president, Kenneth Dart, to avoid taxes by renouncing their U.S. 
citizenship.
  Now, keep in mind that these are folks who made their fortunes in the 
United States on the backs of working men and women in this country. 
And they decide that they do not want to pay their taxes, so they 
renounce their citizenship and they go to live elsewhere. 
[[Page H6034]] 
  Republicans had promised that they would close this loophole that 
allows the super-rich to profit by turning their back on America. And 
on Tuesday, the Committee on Ways and Means passed a bill that the U.S. 
Treasury Department says contains many of the same problems and would 
be as unworkable as the current law is.
  So that, rather than close that expatriate loophole, the Republican 
legislation would simply open up a whole series of new loopholes for 
the superwealthy to be able to squeeze through.
  Here we celebrated Flag Day yesterday, Republicans, and at the same 
time you see the Republican leadership allowing billionaires to profit 
by turning their back on the flag.
  Democrats on the committee worked to close that loophole, but were 
rebuffed on a party-line vote. I might add there were several instances 
in the past when this, the closing of this loophole, was brought up.
  January 1995, the President submitted a budget to
   Congress including a proposal to close that tax loophole. In 
February 1995, there was an amendment by Congressman Jim McDermott to 
close the billionaire's loophole and to use the revenue to pay for 
health insurance deduction for those people who are self-employed and 
not covered employees. That was rejected by the Republicans.

  On February 21, 1995, House Republicans rejected an amendment by the 
Ways and Means ranking Democrat Sam Gibbons, and again Representative 
McDermott, to close the loophole. On March 24, the full Senate passed a 
bill which included the Senate Committee on Finance's provision to 
close that loophole.
  On March 28, 1995, once again, the House Republicans rejected a 
motion by the Ways and Means ranking Democrat, Sam Gibbons, to instruct 
the Senate to close that loophole.
  March 28, the Republican House-Senate conferees, they rejected the 
Senate's provision to close the billionaire's loophole. March 30, 1995, 
once again the House rejected the conference report which would have 
reinserted this expatriate provision.
  On April 3, once again Sam Gibbons introduced a bill to require the 
State Department to disclose the identity of those who renounce their 
U.S. citizenship. No action was taken on that.
  April 6, 1995, Ways and Means Chairman Archer rejected Mr. Gibbons' 
request for assistance in obtaining from the State Department the names 
of the billionaires who have expatriated and who have escaped paying 
taxes.
  May 2, 1995, again Ways and Means' ranking Democrat Sam Gibbons 
introduced legislation to close the loophole. No action was taken.
  May 25, 1995, Democrats introduced a resolution that would serve as a 
rule to ensure the floor consideration of the Gibbons bill. June 13, 
the Ways and Means Republicans rejected the Gibbons substitute and 
reported out this bill which, in fact, is a fig leaf which still allows 
the most wealthy people in this country to be able to export their 
wealth, tax free, to foreign countries before they renounce their U.S. 
citizenship.
  Leaving this escape hatch wide open truly is a shame in my view, 
because closing that billionaire's loophole is both the smart thing and 
the right thing to do. One estimate says that we could bring in over
 $3.6 billion to the Treasury over 10 years without raising a single 
penny in taxes.

  That is smart public policy in these days of such fiscal concern 
about what our budget is all about; what our deficit is all about in 
this country.
  More importantly, ending this kind of a billionaire tax loophole is 
the right thing to do. The superwealthy who make their fortunes in this 
country and then renounce their citizenship to avoid paying taxes, in 
my view, have betrayed the United States and it is time to end special 
favors to these billionaire tax evaders and make the super-rich pay 
their fair share.
  Working middle-class families pay their fair share every single year. 
And while they continue to come up with creative ways to protecting 
benefits for the super-rich, the Republican leadership are sticking it 
to the middle-class families on both ends.
  In their budget they talk about cutting student loans. They also talk 
about cutting Medicare for our grandparents. So that in my view again 
it is an outrage that the Republicans are refusing to stand up to these 
billionaire Benedict Arnolds who move their wealth offshore.
  And I am pleased to be able to come here this evening, this 
afternoon, and to make this statement. And it is my hope that we will 
be able to address this issue once again. And finally, in a bipartisan 
fashion, we will close a billionaire's loophole that does not do 
anything to serve the interests of the United States or the working 
people of the United States, but it allows those who have made a 
fortune in this country by the sweat of working people to take that 
money offshore and to use it for their own purposes; for what they want 
to do and not to increase the economic viability of the United States.
  I would like to ask my colleague, the gentleman from Kentucky [Mr. 
Ward], who has joined me, to add his thoughts to this issue.
  Mr. WARD. I appreciate that. And I appreciate the gentlewoman from 
Connecticut allowing me to participate in this with her this afternoon.
  In thinking about this issue I have been struck, as I am sure you 
have been, by the whole notion that somebody would do something as 
drastic and which represents such a commitment, as to give up their 
citizenship, to renounce their citizenship.
  And what I have tried to think about, what I have
   come to in my mind, and what occurs to me, can you imagine, you go 
to church and you are afterward outside in front chatting with your 
neighbors and friends and somebody says, ``Mike, I haven't seen you for 
a bit. Where have you been? I haven't seen you here.''

  And I can't imagine putting myself in the position of saying, ``Well, 
Bob, or Mary, I moved to the Bahamas.'' ``Moved to the Bahamas? Oh, 
really? Why?'' ``Because I wanted to avoid income taxes. I wanted to 
avoid U.S. taxes, so I have renounced my citizenship.''
  Can you imagine? And I put that question to the gentlewoman. Can you 
imagine saying to your friends and neighbors, for tax purposes, to save 
money, I have renounced my citizenship?
  Ms. DeLAURO. One, it is not something that I would do. I am not in a 
position to do that, nor would I do it. And I would be embarrassed. 
Really embarrassed.
  I think when the gentleman talks about this, I think of the number of 
people. I treasure my citizenship. I think most Americans do that. And 
I think about the people who want to come to the United States. They 
want to be here. They would like to be citizens of the United States. 
They would like to participate in the life of this country and its 
cultural life and its economic life.
  They would like to raise their families in this Nation. And we have 
people who have had all of the advantages and could truly contribute in 
a very fundamental way to the well-being of this country and they 
decide that, well, it is okay. If it deals with a tax advantage, I can 
blow it off. What does my U.S. citizenship mean? I can just blow it 
off.
  Mr. WARD. If I may, sometimes we all, when we are growing up, we 
think: What would my mom think of this? You tell the people that you 
meet in your neighborhood. That is one thing. But imagine telling your 
mom or dad or your kids that is the reason I have made this decision.
  I had the good fortune to serve overseas for the United States of 
America. And I saw there people who were dying to come to America. And 
if you look in the Caribbean, you have to look no farther than that, or 
the Rio Grande, to see people who are literally, literally dying in an 
attempt to come to America.
  So what we are faced with is this curious
   dichotomy of people on the one hand who are risking their lives, who 
are doing everything within their power economically, spiritually, 
everything within their power to become part of this wonderful thing we 
call America. While at the same time, people who have had a lifetime of 
benefiting from being in America, people who either by fortune of their 
birth or fortune of their skills and hard work have been successful in 
a way that only Americans seem to be able to be in the world, or 
certainly a large part of the [[Page H6035]] reason that people are 
able to succeed is because they are here in America where free 
enterprise does reign, which I support wholeheartedly.

                              {time}  1700

  I come from a completely business background. In the 20 years since I 
got out of college, 16 of those years were spent in private business, 
in private business working trying to get ahead, trying to be part of 
the American dream.
  To see folks who have had this benefit, who have come to a position 
in their lives where taxes are that big an issue, to see them jump 
through a loophole which has been intentionally left in the law, and we 
need, I guess, to speak to that for a minute so folks understand the 
history of this.
  This is not just some quirky loophole. This is something that has 
been intentionally left in the law so that maybe as few as a dozen or 
two dozen people in a year's time will take advantage of it. Surely 
they do, surely they take full advantage so that on the one hand they 
have this wonderful country, this wonderful set of opportunities of 
being an American, and on the other they make a financial decision to 
say, ``No, it is worth it to me financially to turn my back on my 
country.''
  I do not understand it.
  Ms. DeLAURO. I do not understand it either.
  My father came to this country as an immigrant. The greatest joy in 
his life was to be an American citizen, gave back to his community and 
still instilled that love of country and love of community in me, and 
one works hard. I admire people who succeed, but what you do is you try 
to give back in some way.
  As you pointed out, these are folks who are eminently able to be able 
to give back, and for a financial gain they would turn their back on 
the United States.
  And you talk about a history, what I find equally outrageous is that 
there have been a number of times over these past several months where 
there has been an attempt made to shut down this loophole, to close it 
by well-meaning people, by people and on both sides of the aisle, in 
some instances.
  Mr. WARD. Democrats and Republicans.
  Ms. DeLAURO. Who want to shut it down. It is wrong. And we have seen 
over and over again, month after month, that every time this comes up, 
those who are in the leadership, the Republican leadership in this 
House, have either taken no action or have rejected the opportunity to 
close the loophole.
  Mr. WARD. Well, of course, I would remind my friend from Connecticut 
these are the Republican leaders who are insisting that people earning 
$200,000 a year are middle income. So, obviously, they have got a 
little problem with their math and their understanding of the way this 
world works and the way this country operates, and maybe it is that tin 
ear, that tin ear that just causes people not to have a full 
understanding, that causes that same misunderstanding on this issue, 
because it is America, it is what we are lucky enough to be part of 
that has given this opportunity to these folks who have done so well.
  And remember, I think I can paraphrase it, but I cannot say it word 
for word from the Bible, ``But to whom much is given, much is 
expected.''
  Ms. DeLAURO. Much is expected, I agree. And I think about the working 
middle-class families who are out there who play by the rules, who do 
what is right, trying to educate their children, trying to pay that 
mortgage every month; if they have elderly parents who are on Social 
Security and Medicare, all of those things are in jeopardy at the 
moment, and we have been
 talking about that, and it is an issue for another time.

  But those are serious issues which working families are facing today: 
How are they going to get their kids to school? What happens if student 
loans go away? What happens if their parents are in a nursing home and 
Medicare is cut, which it is going to be cut?
  Mr. WARD. The sandwich families.
  Ms. DeLAURO. That is right, those people squeezed at both ends 
because of this Republican budget, and then you turn around and you 
find that this small group of folks who are billionaires are just going 
to take their money and run, if you will, and those folks who are 
struggling every day would not for 1 minute ever do that or think about 
doing that.
  Mr. WARD. To the contrary, to the contrary, those are the folks who 
are being careful to pay their full share. Those are folks who, we are 
folks, the way I have been brought up, the way my wife and our children 
and I have lived our lives, we do not think about getting a receipt 
when we are out for a family dinner because maybe we can write it off. 
We do not think about those little dodges. But those pale in 
comparison, just pale in comparison to the notion that people who, and 
I wonder about this, there was a movie one time, a fellow was offered 
an amount of money if he could spend so much within a certain time, 
within 24 or 48 hours or a week, and he was told, ``You can have $1 
billion if you can spend a million within a week. You cannot give it 
away, and you cannot invest it; you have to spend it.''
  Well, in thinking about that movie, I am thinking about these people. 
If they are billionaires--and they are, at least multi-multi-hundreds 
of millions is about the least this would have an impact on. What are 
they going to do with it? Are they going to be like these folks we just 
found another group of in Egypt who try to take it with them? Because 
we all know you cannot take it with you.
  Ms. DeLAURO. You cannot take it with you.
  Mr. WARD. So their goal, apparently, is to take it with them to the 
Bahamas or some other offshore no-tax location and leave behind, leave 
behind the very country, the very symbol of opportunity to succeed on 
this globe that we call America. It is just perplexing.
  Ms. DeLAURO. You know, I think in so many ways in
   terms of the debates and the conversations we have been having in 
recent months that this not closing this loophole down, quite frankly, 
is not out of character with what we are seeing from the Gingrich 
leadership here in the sense that when you are looking at the tax 
package and the budget, which 51 percent of the benefits go to people 
making over $100,000, when the bulk of the emphasis is on the special 
interests, the corporate special interests and their tax breaks are 
being paid for by cuts in Medicare, by cuts in student loans, by cuts 
in the student lunch program, which we saw. So that is another piece of 
this philosophy.

  Mr. WARD. This money does not come from nowhere, does it?
  Ms. DeLAURO. That is right.
  Mr. WARD. The money has to come from somewhere.
  Ms. DeLAURO. This is not, in essence, a free ride. You have got to be 
able to pay for these things.
  The other piece is, by eliminating the alternate minimum tax, that 
tax which was put in under Ronald Reagan, again for the richest 
corporations, that says, ``You have to pay your fair share. You pay at 
20 percent. You pay at 20 percent.''
  With elimination of that, it is a $17 billion windfall to the richest 
corporations in this Nation.
  But it is part of a pattern, and, again, I hold out, and I hope my 
colleague feels this way, that on this loophole issue that we will come 
to some sort of a bipartisan conclusion to eliminate it, to end it, and 
to put our emphasis on working families, on our veterans, on our 
seniors who have done so much for this country, and that we do not try 
to balance this budget on their backs, but take a look at where else we 
might start this process of a balanced budget.
  Mr. WARD. It is important in that vein to point out that we have a 
resolution that I am proud to have been the sponsor of. In fact, it is 
the first bill or resolution that I have sponsored as a Member of this 
body, having been elected just this year.
  That resolution would bring to the floor a bill that has been 
introduced by the ranking member of the Committee on Ways and Means, 
the gentleman from Florida [Mr. Gibbons], which will close that 
loophole.
  On that resolution, I am proud to say we have almost 100 cosponsors, 
almost 100 people, and I ran
 out of time to get more. I ran out of time to talk with folks, to 
visit with folks, to explain the issue before I was ready to put the 
bill in and move forward with it.

  But where is that resolution now? It is lying; it is lying in the 
Clerk's in [[Page H6036]] basket, figuratively speaking, because it is 
not being brought to the floor for a vote.
  All indications are it will not be brought to the floor for a vote, 
because it sets out to do what we need to do to deal with a billionaire 
expatriate tax loophole. We need to tell our neighbors, we need to tell 
our friends to talk to their Member of Congress, to ask them, Did you 
cosponsor Mike Ward's resolution? Did you cosponsor a resolution which 
will deal with this problem, which will give the opportunity for the 
full Congress to debate it, and if you did not, why not? And if it 
comes to the floor, how will you vote?
  That is what we need to make sure people ask their Member of Congress 
next time they see them.
  Ms. DeLAURO. I commend my colleague for the work that he has done on 
this issue, and I appreciate your taking the time and joining with you 
in this conversation, and I am sure there will be many more of them in 
the best interests of the working people of this country.


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