[Congressional Record Volume 141, Number 154 (Friday, September 29, 1995)]
[Extensions of Remarks]
[Page E1891]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 LEGITIMATE BUSINESS EXPENSE DEDUCTIONS

                                 ______


                            HON. SAM JOHNSON

                                of texas

                    in the house of representatives

                       Friday, September 29, 1995

  Mr. SAM JOHNSON of Texas. Mr. Speaker, today I am introducing 
legislation, along with my colleague Mr. Cardin, that would once again 
allow businesses to deduct the expenses they incur while responding to 
legislative proposals that can affect their businesses, their 
communities, and their livelihood. The bill would simply allow 
businesses to deduct legitimate business expenses incurred in 
contacting or working with their State representatives.
  In 1993, Congress approved the Budget Reconciliation Act of 1993 
which contained a provision that disallowed the deduction of certain 
business expenses against Federal corporate income taxes. The denial of 
deductibility of lobbying expenses was proposed as a means of 
curtailing the activities of special interests here in Washington. 
Those who advocated this provision made no claim that it was necessary 
to address any problem at the State level.
  Instead of solving a problem, the enactment of this provision has 
created a major problem at the State level. Most businesses, and 
especially small business owners, can't afford the time to visit 
personally with their State legislators to discuss the impact of 
legislation on their businesses. To make sure their voice is heard in 
the legislative process, they count on trade associations, to which 
they pay dues. Of course, the dues are generally deductible as an 
ordinary and customary expense of doing business.
  The problem under the 1993 change is that the portion of trade 
association dues attributable to lobbying activities by the trade 
association is no longer deductible. This creates a major record-
keeping headache for the association and the small business owner.
  The original proposal before the Congress 2 years ago would have 
applied to local governments as well as State and Federal government. 
Fortunately, before it was adopted, it was amended to exclude local 
government from its coverage. That was a significant improvement. The 
bill Congressman Cardin and I introduced today will further mitigate 
the adverse impact of the proposal by exempting State legislatures as 
well.
  As a former State legislator, I know well the value of the input of 
businesses in the deliberations of State legislatures. With small 
staffs and limited resources, State legislatures make important use of 
information provided by local economic interests in considering policy 
proposals. Additionally, State Governors frequently appoint ``Blue 
Ribbon Commissions'' and other advisory groups to recommend legislative 
solutions to problems. These advisory bodies depend on input from 
members of the business, professional, and agricultural communities who 
are knowledgeable about circumstances within the State. The record-
keeping requirements and tax penalties associated with the lobbying tax 
discourages this important participation.
   Mr. Speaker, we ought not to be making it harder for Americans to 
participate in the decision-making process in their State capitols. The 
denial of a deduction of a legitimate business expense incurred to 
lobby at the State level is an unwarranted intrusion of the Federal 
Government on the activity of State governments. At a time when we are 
attempting to return many responsibilities to the State level, it makes 
no sense for us to impose obstacles on the ability of State 
legislatures to gather the information they will need to do their jobs. 
I would ask our colleagues to join us in restoring this deduction at 
the State level.

                          ____________________