[Congressional Record Volume 141, Number 103 (Thursday, June 22, 1995)]
[Extensions of Remarks]
[Page E1318]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


              THE ENTERPRISE CAPITAL FORMATION ACT OF 1995

                                 ______


                         HON. ROBERT T. MATSUI

                             of california

                    in the house of representatives

                        Thursday, June 22, 1995
  Mr. MATSUI. Mr. Speaker, I am pleased to join my House colleague and 
fellow member of the Ways and Means Committee, Congressman Phil 
English, and my Senate colleagues, Senator Orrin Hatch and Senator Joe 
Lieberman, in their efforts to promote economic growth and job creation 
through capital gains incentives. Senators Hatch and Lieberman are 
introducing the Capital Formation Act of 1995. Hatch/Lieberman utilizes 
a two-tiered approach: broad capital gains relief and a second targeted 
capital gains provision. The House has already passed a broad-based 
capital gains provision earlier this year. The Matsui/English 
legislation is designed to be complimentary with the Hatch/Lieberman 
bill and with broad based capital gains passed by the House. 
Accordingly, it includes only the targeted capital gains provision.
  I have worked for many years to enact legislation which provides 
capital incentives for high-risk, high-growth firms. In 1993, I was 
able to work with Senator Bumpers to enact the Enterprise Capital 
Formation Act of 1993. Matsui/English is bipartisan legislation built 
on the 1993 legislation. It will be called the Enterprise Formation Act 
of 1995. Like the Hatch/Lieberman bill, the legislation will provide a 
75-percent exclusion for capital gains resulting from direct 
investments in the stock of a small company--defined as $100 million or 
less in aggregate capitalization--if the stock is held for 5 years or 
more.
  Biotech and high technology companies are particularly dependent upon 
direct equity investments to fund research and to grow. A targeted 
capital gains incentive is crucial for encouraging investors, including 
venture capital investors, to purchase the stock of these companies, 
thus putting their capital at risk with a long-term speculative 
investment. These small venture backed companies create high-skilled 
jobs, grow to create more jobs--at an average rate of 88 percent 
annually--and are aggressive exporters. According to one survey, their 
export sales grew by 171 percent annually. Finally, these companies are 
R&D intensive which means they are essential in keeping American 
workers and products on the cutting edge of innovation.


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