[Congressional Record Volume 141, Number 126 (Tuesday, August 1, 1995)]
[Senate]
[Pages S11107-S11109]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. GORTON:
  S. 1099. A bill to provide for a change in the exemption from the 
child labor provisions of the Fair Labor Standards Act of 1938 for 
minors between 16 and 18 years of age who engage in the operation of 
automobiles and trucks, and for other purposes; to the Committee on 
Labor and Human Resources


                        child labor legislation

  Mr. GORTON. Mr. President, few experiences are more valuable to young 
people than part-time and summer jobs. Jobs provide teenagers with both 
an income and an important lesson on what it's like to be in the work 
force. It is unfortunate, then, that the Federal Government--ever eager 
to encroach upon the lives of Americans--is denying young people the 
opportunity to work in at least one sector of our economy, car 
dealership.
  Let me explain. Last year, the U.S. Department of Labor started 
cracking down on dealerships that allowed their 16- and 17-year-old 
employees to drive cars for short distances, say, from one lot to 
another across the street, or to a nearby gas station. Why? Because of 
a provision in the Fair Labor Standards Act that allows for only 
incidental and occasional driving by teenage employees under 18. As 
interpreted by the Department of Labor, this provision effectively 
wipes out any teenage driving whatsoever.
  This provision in the Fair Labor Standards Act was intended to 
prevent employers from over-working young people and using then to 
drive heavy vehicles. But what we are talking about today, Mr. 
President, is not exploitation, but perfectly reasonable actions.
  The Department of Labor, for reasons which I cannot fathom, has 
imposed almost $200,000 worth of fines on dealerships throughout 
Washington State, even thought the dealerships did not require their 
16- and 17-year-old employees to drive often, or for a long time, but 
only in very limited circumstances. The result of these fines? Most car 
dealerships no longer hire people under 18 years of age, and hundreds 
of teenagers are prevented from getting good jobs.
  Mr. President, I cannot help but point out the irony of the Labor 
Department acting as a job-destroying entity. Matthew Bergman, a then-
17-year-old part-time dealership worker, said last year in the Seattle 
Times,

       I can have a legal state license that represents me in any 
     state in the country, but I can't drive three blocks in a 
     company car. It's a real bummer.

  A bummer indeed, Mr. President. But it doesn't have to be that way. I 
believe we can reasonably modify the Fair Labor Standards Act so that 
teenagers can drive cars as long as it is not a primary part of their 
jobs. The bill I introduce today will do just that. It will be better 
for car dealerships, and better for kids who want to work. I urge my 
colleagues to support this important legislation.
  Mr. President, I ask unanimous consent that the complete text of my 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1099

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORITY FOR MINORS TO OPERATE MOTOR VEHICLES.

       In the administration of the child labor provisions of the 
     Fair Labor Standards Act of 1938, the Secretary of Labor 
     shall issue a final rule not later than 1 year from date of 
     enactment of this Act to amend the exemption from the child 
     labor restrictions of such Act under section 570.52(b)(1) of 
     title 29, Code of Federal Regulation, for minors between 16 
     and 28 years of age who operate automobiles or trucks not 
     exceeding 6,000 pounds gross vehicle weight to eliminate the 
     requirement that such operation be only occasional and 
     incidental to the employment of a minor and to add the 
     requirement that such operation not be the primary duty of 
     the employment of a minor.
                                 ______

      By Mr. MOYNIHAN (for himself, Mr. Hatch, Mr. Baucus, Mr. 
        Bingaman, Mrs. Boxer, Mr. Breaux, Mr. Cochran, Mr. D'Amato, Mr. 
        Dodd, Mr. Grassley, Mr. Kyl, Ms. Moseley-Braun, Mr. Pryor, and 
        Mr. Simpson):
  S. 1100. A bill to amend the Internal Revenue Code of 1986 to provide 
for the deduction of partnership investment expenses under the minimum 
tax; to the Committee on Finance.


                            tax legislation

  Mr. MOYNIHAN. Mr. President, I am introducing a bill today to 
eliminate a serious tax impediment to venture capital investments. It 
would treat the investment expenses of individuals investing in 
partnerships the same for alternative minimum tax [AMT] purposes as 
they are currently treated for regular tax purposes. No longer would 
individuals who are subject to the AMT and invest in venture capital 
funds set up as partnerships face taxation on their gross earnings, 
rather than their net income after deduction of expenses. This 
provision was included in the Tax Fairness and Economic Growth Act of 
1992, H.R. 11, legislation that was passed by Congress but vetoed for 
reasons unrelated to this issue.
 
[[Page S11108]]

  Under current law, most investors are permitted to deduct the 
expenses of earning investment income so that they pay tax on the net 
income from an investment. Individual taxpayers not subject to the AMT 
are permitted to deduct investment expenses against investment income, 
to the extent that expenses exceed 2 percent of the taxpayer's adjusted 
gross income. Further, individuals who invest through mutual funds 
effectively get a deduction for all investment expenses without regard 
to the 2 percent floor applicable to direct investment. Corporate 
taxpayers are also entitled to a tax deduction for all investment 
expenses.
  In contrast to the general rule, the AMT as it applies to individuals 
denies them a deduction for any investment expenses, despite the fact 
that such expenses are legitimate costs of earning investment income. 
Denying the deduction for investment expenses is especially harsh when 
applied to individual partners in a venture capital partnership, 
because all of the partnership's expenses--for example, salaries, rent, 
legal and accounting services, and the costs of investigating and 
managing investment opportunities--are considered investment expenses 
that cannot be deducted under the AMT.
  The goal of the AMT is to properly measure a taxpayer's income, so 
that the tax is paid on economic income. There is no policy 
justification for preventing the deduction of legitimate expenses of 
earning investment income.
  The bill that I am introducing today would address the undesirable 
AMT policy in current law by treating individuals investing in 
partnerships and subject to the AMT the same as individuals under the 
regular income tax. Partners would be allowed to deduct partnership 
investment expenses against their partnership investment income, 
subject to the same 2 percent floor applied to other individual 
investors under the regular income tax.
  These proposed tax changes should increase the flow of funds to 
partnerships investing in new businesses by eliminating a substantial 
tax barrier that currently exists. The vast majority of venture capital 
funds are organized as partnerships. Further, this proposed legislation 
should improve the efficiency of capital markets by bringing the AMT 
rules for partnership investments into conformity with those applicable 
under the regular income tax rules, and closer to those applicable to 
investors in mutual funds.
  Mr. President, I ask unanimous consent that the text of the bill be 
placed in the Record.
                                S. 1100

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TREATMENT OF PARTNERSHIP INVESTMENT EXPENSES UNDER 
                   MINIMUM TAX.

       (a) General Rule.--Subparagraph (A) of section 56(b)(1) of 
     the Internal Revenue Code of 1986 (relating to limitation on 
     deductions) is amended to read as follows:
       ``(A) Disallowance of certain deductions.--
       ``(i) In general.--No deduction shall be allowed--
       ``(I) for any miscellaneous itemized deduction (as defined 
     in section 67(b)), or
       ``(II) for any taxes described in paragraph (1), (2), or 
     (3) of section 164(a).
       ``(ii) Treatment of partnership investment expenses.--
     Subclause (I) of clause (i) shall not apply to the taxpayer's 
     distributive share of the expenses described in section 212 
     of any partnership; except that the aggregate amount allowed 
     as a deduction by reason of this sentence shall not exceed 
     the lesser of (I) the aggregate adjusted investment income of 
     the taxpayer from partnerships, or (II) the excess of the 
     aggregate of the taxpayer's distributive shares of such 
     expenses over 2 percent of adjusted gross income. For 
     purposes of the preceding sentence, the term `adjusted 
     investment income' means investment income (as defined in 
     section 163(d)(4)(B) without regard to clause (ii)(II) or 
     clause (iii) reduced by investment interest (as defined in 
     section 163(d)(3)).
       ``(iii) Treatment of certain taxes.--Subclause (II) of 
     clause (i) shall not apply to any amount allowable in 
     computing adjusted gross income.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 3, 
     1994.

  Mr. HATCH. Mr. President, I am pleased to join with my distinguished 
colleague, Senator Moynihan, in introducing legislation to ease the 
burden of the alternative minimum tax [AMT] on investors. I commend 
Senator Moynihan and my other colleagues for the work they have done to 
help bring this bill to introduction in the Senate and to secure the 
strong bipartisan support that it enjoys.
  Mr. President, changes to this area of the tax law are long overdue. 
Congress has attempted to correct this problem several times within the 
past few years. In fact, this bill was passed in its exact present form 
by both houses of Congress in 1992 as part of H.R. 11. My colleagues 
will recall that H.R. 11 was vetoed by President Bush for reasons 
unrelated to this provision.
  Under current law, individuals who incur investment expenses may 
deduct them for regular tax purposes, subject to a 2-percent gross 
income floor. This includes expenses passed through to individuals from 
partnerships. While these legitimate investment expenses are deductible 
under the regular tax system, the alternative minimum tax system 
completely disallows their deductibility.
  In the case of venture capital partnerships, investment expenses are 
often quite substantial. These partnerships spend a great deal of time 
and resources exploring possibilities for new investments to make sure 
that the products and companies will be successful before committing 
venture capital funding. The expenses required to explore and begin 
such investments include hiring support staff, renting office space, 
obtaining computers and other equipment, hooking up utilities, and 
legal and accounting fees.
  Partners in these partnerships are generally successful and active 
businesspeople. Activities such as running other businesses, serving on 
boards of other companies, and investing heavily in other areas of the 
economy, often subjects their income to the alternative minimum tax. 
Even though their investment expenses from partnerships are completely 
legitimate, if the partners are subject to the AMT, these investment 
expenses are nondeductible and the partners, in effect, are punished 
for daring to invest.
  The fact that these men and women are successful business people in 
other areas of their lives is the only reasons that the AMT kicks in to 
punish their investment activity. Mr. President, don't we want 
successful people to be the ones developing the products of tomorrow? 
In our view, there is simply no justification for disallowing 
legitimate expenses for reasons not even related to the venture capital 
investments.
  Even the Treasury has acknowledged that the AMT's treatment of 
investment expenses is conceptually flawed. According to a recent 
report, this disparity in treatment results in the incorrect 
measurement of the economic income of investors subject to the AMT. The 
problem is not just conceptual. Real money, desperately needed by small 
businesses, is being diverted by a flawed tax policy.
  Investors are often simply unwilling to make investments in emerging 
businesses that not only carry the highest risks in the investment 
world, but also carry the highest possible tax rates.
  Mr. President, our bill will help stop the flow of capital away from 
entrepreneurial investments by allowing a partner in an investment 
partnership, filing as an individual, to deduct certain investment 
expenses for both regular tax and alternative minimum tax purposes. The 
strong disincentive to invest that the AMT has imposed on such 
partnerships would thus be eliminated.
  Mr. President, this bill is pro-economy and pro-jobs. Allowing the 
deductibility of investment expenses will enhance the critical role 
that private sector investment plays in advancing our Nation's growth 
and development goals. This bill will affect the economic growth and 
vitality of our Nation in such industries as health care, 
biotechnology, pharmaceuticals, and high technology.
  Small firms with venture capital support contribute significantly to 
the overall job growth of our economy. Such firms contribute greatly to 
the creation of jobs, and these are generally high quality jobs. In 
fact, 59 percent of the labor force in businesses created by venture 
capital are high-skill, high-wage workers such as engineers, 
scientists, and managers.
  With an average annual growth rate of 25 percent, venture capital 
financed firms outpace almost all other sectors of our economy. As we 
remove this burden of the AMT, millions of dollars in entrepreneurial 
capital will be attracted that can provide a vital source 

[[Page S11109]]
of funding for the jobs created by such start-up businesses.
  In my home State of Utah, venture capital has contributed an 
estimated $100 million dollars to high growth industries. In fact, 
several of Utah's medical device and computer software companies owe 
their very existence to the capital that these partnerships provide.
  Our bill would eliminate the AMT's financial impediment to the 
development of new, innovative products. Benefactors of this 
legislation include companies like Anefta, a Utah company which 
recently created the first pre-operating room anesthetic specifically 
designed for children. With the aid of a venture capital group, Anefta 
created an anesthetic in the form of a lollypop that hospitals across 
the country now give to children going into surgery.
  Mr. President, it is time to stop punishing those willing to invest 
in America's future, in companies like Anefta. We need to remove the 
burden of the AMT on the entrepreneurial sector of our economy. I urge 
my colleagues to join Senator Moynihan and myself in sponsoring this 
important legislation.
                                 ______

      By Mr. HATCH (for himself and Mr. Heflin) (by request):
  S. 1101. A bill to make improvements in the operation and 
administration of the Federal courts, and for other purposes; to the 
Committee on the Judiciary.


               the federal courts improvement act of 1995

  Mr. HATCH. Mr. President, at the request of the Administrative Office 
of the United States Courts, today I introduce the Federal Courts 
Improvement Act of 1995.
  The Administrative Office prepared this legislation, and I am pleased 
to introduce it on that office's behalf. While I have reservations 
about some provisions of the bill, I believe that, out of comity to the 
judicial branch, the Senate should have the judiciary's specific 
proposals on record so that we can give those suggestions a full and 
fair hearing.
  As for content, the bill is lengthy and includes both technical and 
substantive changes in the law. Some of its substantive changes do 
raise concern. For example, section 201 of the bill provides 
authorization for judicial branch reimbursement out of civil forfeiture 
funds for expenses incurred in connection with asset forfeiture 
proceedings. This might have a harmful effect on law enforcement and 
related programs, which currently receive reimbursement from civil 
forfeiture funds, and on other recipients of residual forfeiture funds.
  A number of provisions relax rules pertaining to senior judges. 
Section 401 of the bill, for instance, changes the service requirements 
governing when judges may take senior status. Under the current rule, 
the earliest time a judge may take senior status is at 65 years of age, 
with 15 or more years of service. Under the new provision, a judge 
would be permitted to take senior status as early as age 60, so long as 
that judge's combined age and years of service equal at least 80.
  Section 402 loosens requirements for senior judges' work 
certification to permit senior judges to obtain retroactive credit. 
Under that provision, a senior judge's work could be credited toward a 
prior year in which the judge did not complete the minimum work 
requirements. That would enable senior judges to remain eligible for 
salary increases for which they otherwise would not be qualified.
  I have some concern that those provisions would increase costs to the 
Federal Government. With judges taking senior status earlier, a greater 
number of active judges would have to be appointed to handle the heavy 
Federal court caseload. Enabling senior judges to maintain senior 
status without meeting the already reduced work requirements could 
increase salary costs unnecessarily.
  I mention these simply to highlight some concerns I have with this 
detailed and broad-ranging bill. The bill contains many other 
provisions that I hope to support. At this point, however, I must 
reserve my complete endorsement of it.
  Mr. HEFLIN. Mr. President, I am joining with my colleague Senator 
Orrin Hatch, chairman of the Judiciary Committee, to introduce at the 
request of the Administrative Office of the U.S. Courts the Federal 
Courts Improvement Act of 1995.
  This bill contains some proposals carried over from previous 
Congresses, but it also contains some new proposals which the Federal 
judiciary believes will enhance and improve its operation. Section 101 
would provide Federal authority for probation and pretrial service 
officers to carry firearms under rules prescribed by the Director of 
the Administrative Office of the Courts, if approved by the appropriate 
district court.
  Section 202 would increase the civil filing fee from $120 to $150.
  Section 304 would eliminate in-State plaintiff diversity 
jurisdiction.
  Section 309 would raise the jurisdictional amount in diversity cases 
from $50,000 to $75,000 and index such amount for inflation to be 
adjusted at the end of each year evenly divisible by five.
  Section 409 would authorize Federal judges to carry firearms for 
purposes of personal security.
  Section 410 would change the date of temporary judgeships created in 
the 101st Congress under Public Law 101-650. Under current law, the 5 
year term, after which new vacancies are not filled, began to run on 
the date of enactment of the public law. Under the proposed revision, 
the 5-year period would not begin until the confirmation date of the 
judge filling the temporary position.
  Section 504 repeals a provision in a continuing appropriation 
resolution that bars annual cost-of-living adjustments in pay for 
Federal judges except as specifically authorized by Congress.
  Section 603 would amend the Criminal Justice Act to delegate 
authority to the Judicial Conference to establish compensation rates 
and case compensation maximum amounts which are paid to attorneys who 
provide services under CJA.
  The foregoing are just some of the provisions of the legislation we 
are introducing by request today. I do not agree with each and every 
proposal in the bill we are introducing, and I reserve the right to 
look at each specific proposal on its merits. I am confident that the 
Judiciary Committee will give this bill careful consideration and look 
forward to working with my colleagues on the committee in the weeks 
ahead.


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