[Congressional Record Volume 142, Number 117 (Friday, August 2, 1996)]
[Senate]
[Pages S9535-S9541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   SMALL BUSINESS JOB PROTECTION ACT

  Mr. ROTH. Mr. President, parliamentary inquiry. Under the unanimous 
consent agreement, following the vote, we were supposed to complete the 
debate on the health legislation and then proceed to the legislation on 
the minimum wage and small business taxes. We are anxious to move ahead 
on the small business tax legislation.
  What is necessary to get us on that?
  The PRESIDING OFFICER. The Senator is correct. By a previous consent 
agreement, debate on the conference report to the Small Business Job 
Protection Act, H.R. 3448, is the pending business. The Senator from 
Delaware has 60 minutes under his control, the Senator from New York 
has 60 minutes under his control, and the Senator from Massachusetts, 
Mr. Kennedy, has 30 minutes under his control.
  Who yields time?
  Mr. ROTH. I yield myself such time as I may take, and I will be very 
brief.
  It is my understanding that there are no requests for time on the 
minority side. Is that correct?
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  Mr. MOYNIHAN. That is correct. My distinguished chairman, as always, 
has so stated the facts. But there is a small semantic issue here. Some 
call this the small business relief act; others on this side call it 
the minimum wage bill. But

[[Page S9536]]

we will not resolve that tonight, nor need we.

  Mr. ROTH. Could I ask the distinguished ranking member whether or not 
his side is willing to yield all time?
  Mr. MOYNIHAN. If I may speak directly to the Senator--I ask unanimous 
consent to do--exactly.
  Mr. ROTH. So I think both sides are willing to yield back----
  Mr. MOYNIHAN. I cannot speak for the Senator from Massachusetts, who 
is not present.
  That is the case.
  Mr. ROTH. Could I ask, would it be possible to check that with the 
staff?
  Mr. MOYNIHAN. I have just so done and am informed that is the case.
  I see the Senator from Kansas is present, however.
  Mrs. KASSEBAUM. Mr. President, I was going to speak, after the 
chairman and ranking member finish speaking, on a component I believe 
was important to consider along with the minimum wage and the welfare 
reform legislation.
  Mr. ROTH. Mr. President, this has certainly been a busy month. I 
appreciate not only the perseverance of my colleagues, but also the 
willingness of the many valiant staff members who have been working 
around the clock--both here and on the House side.
  This Congress began with great promise, and I'm pleased to say that 
we are drawing near conclusion with great accomplishment. With the 
passage of this small business legislation Americans everywhere will 
have tools necessary for increased opportunity, greater achievement, 
and more certain security. This is important. It's important for our 
future, for the well-being of American families, and for the strength 
of our communities.
  And what a departure this is from the past--from the old philosophies 
that ran this city. It was then that Washington seemed to have only 
three criteria when it came to American businesses: if they moved, tax 
them; if they kept moving, regulate them; if they stopped moving, 
subsidize them.
  I believe this legislation demonstrates that those days are over. 
This legislation demonstrates that this Congress understands that 
opportunity for Americans, security for our families, is directly tied 
to the strength of small business.
  There are 22 million small business owners who provide paychecks for 
6 out of 10 Americans. These risk takers provide more than half of our 
economy's output, and what we're demonstrating with this legislation is 
that this Congress is ready and willing to help create an environment 
where there can be greater growth, opportunity, and jobs--and 
environment where these small businessmen and women can hire, expand, 
and modernize.
  Among the many important provisions offered in this legislation, 
first and foremost is an increase in the amount of equipment eligible 
for expensing. We raise the current law level of $17,500 per year to 
$25,000 per year, beginning in 1997 and fully phased in by the year 
2003.
  Next, we include a package of subchapter S corporation reforms that 
will permit more shareholders in S corporations, the use of S 
corporations for estate planning purposes, and increased flexibility 
for subchapter S corporation business use.
  We also include a package of pension simplification provisions. An 
important element of this package is a new pension plan directed to 
small business, known as SIMPLE. The SIMPLE plan developed by Senator 
Dole will enable small business owners to set up pensions with less 
record keeping and guaranteed benefits to their employees. 
Additionally, tax exempt organizations, as well as State and local 
governments, will be able to offer section 401k pension plans.
  One provision in this legislation that I'm particularly proud of is 
the new spousal IRA. This will permit homemakers to contribute up to 
$2,000 per year to an IRA, the same amount as their spouse. This 
represents an increase of $1,750 over current law, and will go a long 
way toward creating self-reliance and retirement security for American 
families.
  Among other important changes offered by this legislation is a 6-
month delay in the effective date for electronic filing of taxes for 
small business. In other words, small businesses will be provided more 
time to become familiar with, and prepare for, the electronic filing 
program that was part of NAFTA.
  These, Mr. President, are some of the major provisions of the Small 
Business Job Protection Act of 1996. In addition to these important 
changes, we offer a package of extensions of expiring tax provisions.
  These include an extension of the tax-free treatment of employer 
provided education expenses. Other important extensions cover the 
research and development tax credit, the orphan drug tax credit, and a 
new work opportunity tax credit. Along with these were extend tax 
deductible contributions of appreciated stock to certain charities, the 
section 29 tax credit for alternative fuels produced from biomass and 
coal facilities, and a moratorium on the collection of diesel tax paid 
by recreational boaters at marinas.
  Another very important provision in this legislation--one that is not 
so much associated with strong businesses as it is with strong families 
and a strong America--is the new credit for adoption expenses. This tax 
credit will provide $6,000 for special needs adoptions and $5,000 for 
other adoptions. This, Mr. President, will go a long way to helping 
loving parents provide homes for children who will now be raised in 
families.
  Mr. President, these are only a few of the many components of this 
important legislation. One final change, I would like to mention is 
that extension of the generalized system of preferences trade program, 
otherwise known as GSP. This extension will run through May 31, 1997, 
and will help our exporters better compete in the global economy.
  It's important to note that this conference agreement is a bipartisan 
effort--a bipartisan effort that is fully paid for. It contains 
incentives that will go a long way toward creating an environment for 
growth, job creation, economic security, and real opportunity for 
Americans. With the changes we propose in this legislation, small 
business men and women will have greater incentives and resources to 
move our economy forward.
  As I've said many times, taxation and regulation have profound 
influences on the ability of nations to create jobs. What we do with 
this legislation is take some of the burden off the backs of American 
small business men and women. My hope is that this is only a beginning.
  Mr. President, as we complete action on the H.R. 3448, the Small 
Business Job Protection Act of 1996, I would like to take this 
opportunity to thank the many staff members who worked long and hard on 
this bill.
  Senate Finance Committee majority staff--Lindy Paull, Frank Polk, 
Mark Prater, Dough Fisher, Brig Gulya, Sam Olchyk, Tom Roesser, 
Rosemary Becchi, Lori Peterson, Erik Autor, and Jeremy Preiss.
  Senate Finance Committee minority staff--Mark Patterson, Jon 
Talisman, Patti McClanahan, Maury Passman, and Debbie Lamb.
  Senator Lott's staff--Annette Guarisco and Susan Connell.
  Senator Daschle's staff--Larry Stein, Alexandra Deane Thornton, and 
Leslie Kramerich.
  House of Representatives Ways and Means majority staff--Phil Moseley, 
Chris Smith, Jim Clark, Donna Steele Flynn, Paul Auster, Tim Hanford, 
John Harrington, Norah Moseley, Mac McKenney, Thelma Askey, and 
Meredith Broadbent.
  House of Representatives Ways and Means minority staff--Janice Mays, 
John Buckley, Mildeen Worrell, Kathleen O'Connell, Beth Vance, Bruce 
Wilson, and Maryjane Wignot.
  Joint Committee on Taxation staff--Ken Kies, Mary Schmitt, Carolyn 
Smith, Joe Mikrut, Cecily Rock, Ben Hartley, Mel Thomas, Harold Hirsch, 
Barry Wold, Steve Arkin, Tom Barthold, Tom Bowne, Barbara Angus, Brian 
Graff, Leon Klud, Judy Owens, Laurie Mathews, Alysa McDaniel, Joe Nega, 
Angela Yu, and a special thanks to Bernie Schmitt and his excellent 
estimating staff who worked long into the night on several occasions.
  Mr. MOYNIHAN. An increase in the minimum wage is long overdue, and 
this legislation should be sent to the President before the August 
recess. The value of the minimum wage has eroded due to inflation since 
it was last increased in 1989.

[[Page S9537]]

  It is true that an increase in the minimum wage will reduce demand 
for labor somewhat, although not significantly in my view. But if you 
are looking for a painless time to increase the minimum wage, it is 
now. The current economic expansion is in its 66th month. Unemployment 
is down to 5.4 percent. The Washington Post recently reported that 
labor shortages have developed around the country, so much so that some 
fast-food franchises are paying substantial signing bonuses to new 
employees.
  In response to concerns of some on the other side that the minimum 
wage increase will cause hardship to small businesses, the Finance 
Committee took up the small business tax package last month. We worked 
on a bipartisan basis to craft a small business relief bill all 
Senators could support. It was approved unanimously by the Finance 
Committee on June 12, 1996. The bill passed the Senate with broad 
bipartisan support by a vote of 74 to 24 on July 9, 1996.
  Unfortunately, many of the provisions that lent bipartisan support to 
the small business tax title of the bill in the Senate were dropped in 
conference. I will briefly mention two matters of particular 
importance: the tax exemption for employer-provided educational 
assistance, and the phaseout of the long-standing tax incentives for 
Puerto Rico codified in section 936 of the Internal Revenue Code.
  The conference agreement inexplicably limits prospective extension of 
the exclusion for employer-provided educational assistance to 
undergraduate education. Only undergraduate education is covered 
prospectively here, whereas both undergraduate and graduate education 
were extended through 1997 in the Senate bill.
  This provision is one of the most successful education programs the 
Federal Government sponsors. It encourages employees to upgrade their 
skills and thereby maintain and improve their productivity throughout 
their careers.
  Roughly a million persons a year are assisted by their employers with 
higher education expenses on a tax-free basis, a quarter of them at the 
graduate level. Both employers and employees benefit. Many of our most 
successful companies know the benefits of sending valuable employees to 
school to learn a new field, or a field that has developed since that 
person had his or her education. Employers understand the opportunities 
for bringing a promising young person, or middle management person, to 
higher levels of productivity, and pay them more in the process. This 
is an elegant piece of unobtrusive social policy.
  Second, addressing the special tax rules for Puerto Rico is a 
difficult subject, but the Senate approach was acceptable to the 
elected officials in Puerto Rico, and should have been adopted by the 
conference. The conference agreement fails to provide a continuing 
economic incentive for investment in Puerto Rico after 10 years. Puerto 
Rico still has significant economic problems, such as high unemployment 
rates and low median incomes. The island's unemployment rate is almost 
14 percent. While this rate is the lowest in 20 years, we are still 
talking about an economy in which unemployment has routinely 
approached, and exceeded, 20 percent in the last two decades. It is 
also an economy in which the median income of the American citizens who 
live there is about $6,200, or half that of Mississippi, our poorest 
State.
  Section 936 of the Tax Code has been in existence for 60 years, and 
nearly all have come to recognize that it is time to move to the next 
stage. However, we have a profound responsibility to that possession, 
which we obtained just short of 100 years ago in the aftermath of the 
Spanish-American War.
  Under the Senate provision, adopted at the urging of this Senator, 
a permanent, although reduced, wage-based credit for jobs located in 
Puerto Rico would have remained for existing employers. This would have 
preserved a limited measure of Federal support for Puerto Rico after 
the remainder of the section 936 incentives are gone after 10 years. It 
was the least that should be done, given that the people of Puerto 
Rico--citizens of the United States--are being asked to pay for half or 
more of these tax cuts for small business, none of which will benefit 
Puerto Rico.

  Understanding the responsibility we have to this island and its 
people, I hope that at a later time, as early in the next Congress as 
possible, we will return to this issue and adequately address our 
obligations to Puerto Rico. We must work together to provide effective 
economic incentives for new investment in Puerto Rico to provide new 
jobs and job security for Puerto Rican workers. The people of Puerto 
Rico--who are not represented in Congress--have the right to be 
respected and to have their interests advanced.
  Thus, while I am disappointed by the resolution of the conference on 
the small business tax package, I will vote for the conference report 
because of the importance of the increase in the minimum wage. I will 
continue to pursue the issues that were not resolved to my satisfaction 
in the conference report.
  Mr. ROTH. I will yield such time as the distinguished Senator from 
Kansas desires.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mrs. KASSEBAUM. Mr. President, I certainly thank the chairman of the 
Finance Committee, Senator Roth. I appreciate his help and leadership 
on health insurance reform, and certainly as he worked with small 
business tax relief as a part of the minimum wage package.
  I supported the conference report, Mr. President, on small business 
tax relief which includes, of course, an increase in the minimum wage. 
However, I have strong reservations about raising the minimum wage 
because I have believed that in many instances with small businesses, 
particularly the mom and pop operations, it will mean some loss of jobs 
or, indeed, reduced hours. But we will have to see.
  I supported the conference report overall because I believe the 
detrimental effects of the minimum wage increase will be offset by many 
of the small business tax relief provisions. However, as this minimum 
wage increase moves closer to becoming law, along with health care and 
welfare reform, I believe it is important to point out that there is 
still a gaping hole in our efforts to assist workers and improve their 
economic security. Congress has yet to act on the legislation to reform 
our job training system, which is, I would suggest, in drastic need of 
repair.
  I listened with great interest to the debate that took place 
yesterday on welfare reform where Senator after Senator pointed out the 
importance of training to bring welfare recipients into the work force. 
As we debated the minimum wage bill through its passage and briefly the 
conference report, we heard the argument that this increase is needed 
to raise the living standards of those who are at the bottom of the 
economic ladder. Yet we all know that the only way to improve the long-
term prospects of those at the bottom of the pay scale is to equip them 
with the skills and education that will allow them to compete and move 
upward in today's changing workplace. It is ever more competitive, ever 
more demanding of new skills and, unfortunately, the training 
infrastructure that we have now in place is woefully inadequate. In 
fact, it is nothing less, I would suggest, than a national disgrace.
  I will not take up the time of the Senate at this point to discuss 
the scores of reports documenting with overwhelming evidence why the 
current system is broken and must be fixed. I would just like to 
mention one of the latest GAO reports outlining the failure of current 
Federal programs.
  The General Accounting Office compared control groups with 
participants in JTPA titles II-A and II-C, both programs for the 
economically disadvantaged, the very people we are trying to help with 
the minimum wage. Amazingly, the report found that there were no 
statistically significant differences over time between the earnings of 
both groups. This was one in which they were assisting the economically 
disadvantaged and others where there had been no program offered.
  In other words, the Federal training these disadvantaged participants 
received did nothing to improve their income. It had no effect. This is 
nothing short of a fraud on the American taxpayer and, more 
importantly, a cruel hoax on the disadvantaged who think they are 
getting help but end up no better off. I remain astounded that we 
should want to continue funding these ineffective programs.

[[Page S9538]]

  I am particularly disappointed with the Secretary of Labor, who 
supports this increase in the minimum wage but is also responsible for 
these job training programs which he knows are in a state of disarray. 
He has done little to advance legislation to reform job training even 
though bills passed both Houses with wide bipartisan margins. For 3\1/
2\ years now, the Secretary has stressed the critical importance of 
training for the closing of the wage gap for those at the bottom. We 
have talked often about this. He has been supportive of early efforts. 
Yet he has done nothing to really try to improve our Federal job 
training system.

  Even before the ink was dry, the Secretary recommended that the 
President veto the job training conference report. Secretary Reich's 
main concern with the job training reform bill seems to be lack of 
accountability. But, according to the National Journal article:

       When pressed, (Secretary) Reich acknowledged that his real 
     problem with accountability concerns the legislation's 
     failure to require participation of mayors in local boards 
     and federal approval of state workforce development plans.

  In other words, his concerns are largely political. He wants to 
preserve the Federal Government's control, the status quo, and business 
as usual. This is not going to solve the problem.
  We have such an opportunity to really try to be more innovative and 
try to bring to the fore something that will reinforce what we are 
seeking to do with welfare reform and the minimum wage legislation. 
When it comes to job training, I suggest the status quo is 
unacceptable. We must move forward this year with comprehensive job 
training reform. After months and months of negotiations, and 
compromises made on all sides, we now have a conference agreement that 
will bring real reform to a broken system, consolidating duplicative 
programs over some 80 programs. They will be combined and much 
duplication removed, giving the States the flexibility needed to design 
the programs that fit their States, whether it be Kansas, Iowa, New 
Hampshire, New York or California, and focus the resources there where 
there is the greatest need--whether it would be in vocational education 
or a job services initiative.
  The job training conference report will encourage real partnership 
between educators, job trainers and the business community. And it will 
focus accountability on real results. If we are truly concerned about 
raising living standards, raising the minimum wage is only half the 
answer. Proponents of the minimum wage have argued that you cannot 
support a family on $4.25 an hour, and that is certainly correct. You 
cannot support a family on $5.15 an hour either. Education and training 
are also needed to improve one's living standards, and right now we are 
wasting billions of dollars on dozens of ineffective programs that are 
just not delivering to those who need help the most. I personally 
cannot believe there is anything more important we could do to really 
enhance those who, we have argued for months, most need assistance, 
than by being willing to address this issue.
  I want to put my colleagues on notice that I will do everything I can 
to ensure the job training conference report comes to a vote this year 
and goes to the President.
  The Senator from Nebraska, Senator Kerrey, and I have asked Senator 
Lott and Senator Daschle to bring this conference report up the week 
that we return from recess. I tend to believe most of us are now asking 
the majority leader to consider legislation the week we return. But I 
am hopeful our request will be met. I will continue to push this 
conference report because I believe it is too important--and the status 
quo is unacceptable--not only to the American taxpayer but, more 
important, to those who desperately need and want training education as 
well.
  I yield the floor.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I am happy that the Senate is finally 
taking up the conference report on the Small Business Job Protection 
Act. The House has already overwhelmingly passed this measure in a vote 
of 354 to 72. Finally, we are making laws instead of rhetoric about tax 
relief.
  Finally, American families and entrepreneurs can get a break from the 
tax man.
  As a member of the Finance Committee, I am proud of my part in moving 
this legislation through the Finance Committee and through the bill's 
conference committee.
  This bill is good, sound bi-partisan work. In my belief, great credit 
also goes to Finance Chairman Roth for his leadership of the committee. 
To ensure that his efforts will not go unnoticed, I want to remind all 
Senators that Chairman Roth completed work on three separate conference 
reports this week. This is no small accomplishment, and I extend my 
gratitude to my friend from Delaware.
  For my State of Iowa, this conference report on the small business 
tax bill makes some vital improvements. Particularly, I want to point 
out the provisions enabling new loans for first time farmers. I hope 
that this legislation will save the future of agriculture.


                      Loans for First Time Farmers

  I introduced this Aggie Bond legislation with Senators Pressler, 
Baucus, and Moseley-Braun. It improves the program that allows tax-
exempt bonds to finance discount rate loans for beginning farmers.
  Loans for beginning farmers are important because of the changing 
scene in agriculture and the inability of young farmers to get started 
in farming. Of particular importance are the statistics of the average 
age of farmers. In Iowa, our farmers average in their late fifties. In 
5 to 6 years, we will have 25 percent of our farmers retiring.
  The U.S. Department of Agriculture has announced that my State of 
Iowa has 2,000 less farms today than it did only a year ago. Four other 
States also lost 2,000 farms each. The largest decreases were in the 
States of Ohio, Alabama, Georgia, and Indiana. Clearly, farming States 
are still feeling the effects of the agricultural recession of the 
1980's.
  Young people are discouraged about becoming farmers because they 
cannot afford to get started. Many want to continue the family farm 
when their parents retire and cannot.
  This Aggie Bond legislation helps by lifting the present restriction 
that disallows the bonds from being used to finance family to family 
transactions. In other words, under present law, a young person cannot 
get a good loan to continue the family farm. This legislation fixes 
that problem. I am very proud to be an agent of this important change.


                  Contributions in Aid of Construction

  Mr. President, this Conference Report also includes another unrelated 
important change for families trying to buy a home.
  The provision is called Contributions in Aid of Construction. It 
repeals an indirect tax that has been imposed on families building 
homes since the 1986 Tax Act.
  It will save families up to $2,000 off the price of a new home. 
Current law requires that water utilities pass a ``gross up'' tax onto 
a family that wants to buy a home. The ``gross up'' tax can increase 
the cost of extending water services to a new home by 70 percent. This 
conference report repeals this unfair ``gross up'' tax. It will foster 
home ownership where it is currently out of reach.
  Repealing the ``gross up'' tax is an outstanding addition to this 
Small Business Job Protection Act. I am pleased to have introduced the 
original bill.


                         Pension Simplification

  Mr. President, I want to point out that the pension simplification 
provisions in this bill represent a major step forward. Not much has 
been said about these provisions in the commentary about what we are 
accomplishing here this week.
  But I think you can argue that these pension simplification 
provisions could represent one of the major accomplishments of this 
week of many substantial legislative accomplishments.
  Their enactment should ultimately result in more pension plans being 
created, particularly by smaller businesses. Since it is that segment 
of the business community that has the greatest difficulty in offering 
pensions to their employees, enactment of these provisions could result 
in a major increase in pension coverage.
  Ultimately, that means more savings and more income for retirees.

[[Page S9539]]

  We included in the bill a number of provisions which will help 
clarify the treatment of church pension plans.
  We included last year in the Finance Committee's portions of the 
Balanced Budget Act a Pryor-Grassley bill designed to deal with many of 
the problems the church plans were having with the rules pertaining to 
highly compensated employees and to nondiscrimination.
  Ultimately, those provisions were dropped from the legislation on the 
grounds that they did not meet the requirements of the Byrd Rule.
  The legislation that we are considering today will go a long way 
toward taking care of the most serious of the problems faced by the 
church plans.
  Mr. President, these simplification provisions have been on our 
Congressional agenda for several years. I understand that President 
Clinton has indicated support for pension simplification provisions. It 
is high time they were enacted.
  Finally, I just want to stress again the importance that today we are 
making laws instead of rhetoric about tax relief. Families and small 
businesses not only need it, they deserve it. I encourage all of my 
colleagues to support this conference report.
  Mr. CONRAD. Mr. President, I strongly support the legislation before 
us today. I am pleased that Members from both sides of the aisle rolled 
up their sleeves and got the job done in a bipartisan way. In 
particular, the ranking member, Patrick Moynihan, has done a fine job.
  The positives of this legislation are many:
  It benefits working families by raising the minimum wage which now 
hovers near a 40-year low.
  It benefits orphaned and abandoned children seeking adoption by 
providing a tax credit to families for adoption expenses.
  This bill provides many tax benefits to small businesses encouraging 
investment and growth.
  And, finally, it simplifies dozens of pension provisions for small 
businesses and working families, thereby, increasing pension savings.
  Tens of millions of American workers will benefit from the increase 
in the minimum wage and from the tax incentives for small businesses, 
and we have helped them by working out our differences and allowing 
this measure to move forward.
  The current minimum wage is near a 40-year low in purchasing power, 
and amounts to an annual income of only $8,800. Clearly, a family is 
not going to make it on $8,800 a year. Workers deserve a living wage 
for their labor, and this raise in the minimum wage is well earned by 
those workers. In 1995, 42,000 workers in my State of North Dakota 
received under $5.15 per hour for their work. This bill is an important 
and timely raise for them.
  The minimum wage increase will also help families move off welfare 
and into jobs. Welfare reform will not work until jobs that pay a 
decent, living wage are available. This raise increases the chances of 
the poorest Americans staying off welfare. It goes hand-in-hand with 
our efforts to reform the welfare system.
  I appreciate the recognition the conference committee gave to 
orphaned children who are older, handicapped, or have other special 
needs. Families which adopt these children will be allowed a $6,000 tax 
credit for adoption expenses. Families adopting nonspecial needs 
children will be allowed a $5,000 credit.
  We have an obligation to not only protect abused, neglected, and 
abandoned children, but we have a responsibility to help these 
vulnerable children find nurturing and stable families to adopt them.
  The adoption tax credit is a good first step to help place children 
waiting to be adopted. Many stable and nurturing families may not have 
the resources to pay adoption expenses and other expenses such as 
building ramps and modifying a home to make it accessible for an 
adoptive child with special needs. This will help.

  I am also very pleased with the provisions benefiting small and 
startup businesses. First, the increase in expensing of investment for 
small businesses by nearly 45 percent--from $17,500 to $25,000--will 
help thousands of small businesses in my State and around the Nation. I 
am pleased that this bill permanently extends that benefit to horse 
ranchers as well.
  Second, the modifications of the law relating to subchapter S 
corporations will stimulate investment and growth of thousands of small 
businesses. The legislation expands the number of owners allowed from 
35 to 75 and provides other benefits to S corporations.
  Third, the pension simplification provisions will help millions of 
Americans working for small businesses provide for their retirement. 
Anyone who has ever waded through the morass that we call pension law 
will understand how important these simplifications are to small 
business owners. Owners of small businesses are too busy running their 
businesses and providing jobs to have to deal with the virtually 
incomprehensible language of the Tax Code and of the Internal Revenue 
Service's rules and regulations. This pension simplification is a 
significant step forward. We need to make more.
  One of the most important pension reforms will allow a family to 
provide for the retirement of a spouse who chooses to stay home. 
Spousal individual retirement accounts of up to $2,000 per year for 
qualifying families for the spouse that chooses to stay at home to take 
care of children ends the discrimination against families in which one 
parent works at home. The work of raising children is the most 
important job in our society.
  Fourth, the extension of certain expiring tax provisions will provide 
incentives for investment in technology, for hiring hard-to-place 
workers, for producing clean fuels from low-rank coals and lignite, and 
for developing orphan drugs.
  The rapid development and commercialization of new technologies is 
particularly important to the incomes of working people. High-
technology provides better jobs at better pay for millions of Americans 
and helps keep this Nation competitive in the international 
marketplace. Additionally, the incentives to develop new technologies 
to turn our abundant coal resources into environmentally friendly fuels 
is critical if we are ever to make progress toward energy independence.
  With regard to technology development, I am particularly disappointed 
that we did not continue the R&E tax credit uninterrupted. Our high-
technology companies deserve a consistent and supportive tax policy 
from their government. It is my hope we can revisit this issue next 
year.
  The revenue offsets have been greatly improved from the initial House 
package, although I continue to have serious reservations about some of 
them. Dropping the tax on court awarded damages for pain and suffering 
is a major improvement. Court-awarded damages for pain and suffering 
are meant to make the plaintiff whole and should not be considered 
income.
  Concerning employee stock ownership plans, I believe that it may be a 
mistake to take away a portion of the tax benefits used by ESOP's. 
Employee stock ownership plans are a way for working families to buy a 
piece of America and to provide for their retirement needs.
  I am also concerned that we are extending the airport and airway 
trust fund excise tax without a serious review of all the issues. While 
the extension is only for 6 months--until December 1996--it keeps in 
place a system designed prior to airline deregulation. That leftover 
tax clearly discriminates against smaller communities which tend to 
have high airline ticket prices. In addition, it makes little sense 
that one passenger will pay two to three times more taxes on the same 
flight as his or her seat-mate. The burden each passenger places on the 
FAA is the same. While some argue that the excise tax discourages 
wasteful airline spending since costs plus the tax must be passed on, 
this current tax also raises by ten percent the cost of every safety 
measure the airline undertakes.
  Finally, I again want to compliment those who worked in a bipartisan 
fashion to achieve a result. Frankly, there are probably few Members on 
either side of the aisle that support every provision in this bill, but 
together, this package advances the Nation's interests. If enacted into 
law, it will have a positive effect on working families, small 
businesses, and adoptive families and their children. I recommend that 
it pass.
  Ms. MOSELEY-BRAUN. Mr. President, I want to take this opportunity,

[[Page S9540]]

as we are about to vote on an extension of the Generalized System of 
Preferences, to raise a subject that is of great concern to all soybean 
growing States, including my State of Illinois, which is second only to 
Iowa in the production of soybeans. A number of countries, including 
Brazil and Argentina, employ a tax system that works to distort trade. 
It is designed to create an unfair competitive advantage for the 
processed agricultural exports of these countries at the expense of our 
exporters.
  Let me briefly describe how this practice, known as a differential 
export tax scheme, or DET, works. Using soybeans as an example, under a 
DET system, a much higher export tax is imposed on raw soybeans than on 
processed soybean products, such as soybean meal and oil. This serves 
to restrain exports of raw soybeans, giving a foreign country's 
domestic oilseed processors a captive market, in effect, for raw 
soybeans at a price that is depressed below world market prices. 
Because these processors have artificially lower raw material costs, 
their costs of production are substantially less than those of U.S. 
oilseed processors. As a result of this government interference, those 
foreign oilseed processors are receiving an indirect subsidy that 
clearly violates the spirit of free and fair trade, and, if provided as 
a direct export subsidy, would be subject to World Trade Organization 
rules.
  U.S. processors are placed at a terrible competitive disadvantage as 
a result of this practice: They not only must continue to pay the world 
price for raw soybeans, they are forced to sell their processed soybean 
products at world prices that are suppressed to the level of the DET-
supported export prices. This DET-induced downward pressure on world 
price levels for these products has severely reduced revenues for the 
U.S. soybean processing industry. In addition, countries that rely on 
this trade-distorting practice have dramatically displaced U.S.-
processed soybean sales in world markets.
  I understand that efforts may be underway in some of these countries 
to end these tax schemes. I believe, however, unless we see some 
demonstrable progress by these countries in the coming months, the 
Senate Finance Committee should undertake a close review of this issue 
as part of its trade agenda in the next Congress.
  Mr. DODD. Mr. President, more than 6 months ago, President Clinton 
came before the Congress and called for a modest increase in America's 
minimum wage--from $4.25 to $5.15 an hour.
  And for the past nearly 6 months, 12 million Americans woke up every 
morning, went to work each day and continued to earn a meager $34 a 
day--waiting for this Congress to uphold its responsibility to working 
Americans and raise the minimum wage.
  Today, their wait is finally over.
  Today, working Americans are finally getting a break.
  Americans who were being asked to live on $8,500 a year are receiving 
a much-needed helping hand from the U.S. Congress.
  Due to this legislation, minimum wage workers will see an additional 
$1,800 in their paychecks by the end of the year.
  Raising the minimum wage will allow millions of America's working 
families to pay for 7 months of groceries, 1 year of health care costs, 
or more than a year's tuition at a 2-year college.
  And today, the nearly one in five minimum wage workers who currently 
live in poverty will now have a genuine opportunity to make a better 
life for their children.
  My only regret is that it took so long to reach this moment. Over the 
past 6\1/2\ months, my colleagues across the aisle used every possible 
tool to block this legislation.
  They claimed that raising the minimum wage would cost jobs--even 
though study after study shows this to be a fallacious argument.
  They raised erroneous economic arguments--even though 101 economists 
endorsed an increase in the minimum wage.
  They proposed amendments that would have excluded 10 million minimum 
wage recipients from the bill's benefits.
  But, in the end, the obstructionist efforts of my Republican 
colleagues were overwhelmed by the voices of the American people, 
calling for a minimum wage increase.
  For the more than two-thirds of minimum wage workers above the age of 
21; for the 4 in 10 who are the sole wage earner for their families; 
and for all the Americans trying to make ends meet and put food on the 
table, this vote represents a genuine victory and a first step to a 
better future.
  Throughout America, millions of working families are struggling to 
get by and the votes today on the minimum wage and Kassebaum-Kennedy 
health insurance bill make that process just a little bit easier.
  It is something we can all take great pride in and I urge all my 
colleagues to join me in voting on behalf of this bill.
  Mr. GRASSLEY. Mr. President, as Chairman of the International Trade 
Subcommittee of the Senate Finance Committee, I want to point out a 
provision in the Small Business Job Protection Act relating to trade 
that I strongly support. That is the extension of the Generalized 
System of Preferences [GSP]. This extension is long overdue.
  The GSP is important for many reasons. From a foreign relations 
standpoint, it allows the United States to assist the economy of 
developing countries without the use of direct foreign aid. But it also 
is of great benefit to American businesses. That is why it is most 
appropriate that the extension of the GSP be included in the Small 
Business Job Protection Act. Many American small businesses import raw 
materials or other products. The expiration of the GSP has forced these 
companies to pay a duty, or a tax, on some of these products. That's 
what a duty is: an additional tax.
  By extending the GSP retroactively, these companies will not be 
required to pay this tax. This tax is significant and can cost U.S. 
businesses hundreds of millions of dollars. In fact in 1995, American 
businesses saved $650 million due to the GSP. I wonder how many good, 
high-paying jobs will be created by cutting taxes by $650 million? So, 
Mr. President, it is very important that the GSP be extended and it is 
very appropriate that the Senate consider it as part of this bill.
  It is essential to remember, however, that since its inception in the 
Trade Act of 1974, the GSP program has provided for the exemption of 
``articles which the President determines to be import-sensitive.'' 
This is a very important directive and critical to our most import-
impacted producing industries. A clear example of an import sensitive 
article which should not be subject to GSP and, thus, not subject to 
the annual petitions of foreign producers that can be filed under this 
program, is ceramic tile.

  It is well documented that the U.S. ceramic tile market repeatedly 
has been recognized as extremely import-sensitive. During the past 30 
years, this U.S. industry had to defend itself against a variety of 
unfair and illegal import practices carried out by some of our closest 
trading partners. Imports already dominate the U.S. ceramic tile market 
and have done so for the last decade. They currently provide 
approximately 60 percent of the largest and most important glazed tile 
sector according to 1995 year-end Government figures.
  Moreover, one of the guiding principles of the GSP program has been 
reciprocal market access. Currently, GSP eligible beneficiary countries 
supply almost one-fourth of the U.S. ceramic tile imports, and they are 
rapidly increasing their sales and market shares. U.S. ceramic tile 
manufacturers, however, are still denied access to many of these 
foreign markets.
  Also, previous abuses of the GSP eligible status with regard to some 
ceramic tile product lines have been well documented. In 1979, the USTR 
rejected various petitions for duty-free treatment of ceramic tile from 
certain GSP beneficiary countries. With the acquiescence of the U.S. 
industry, however, the USTR at that time created a duty-free exception 
for the then minuscule category of irregular edged specialty mosaic 
tile. Immediately thereafter, I am told that foreign manufacturers from 
major GSP beneficiary countries either shifted their production to 
specialty mosaic tile or simply identified their existing products as 
specialty mosaic tile on custom invoices and stopped paying duties on 
these products. These actions flooded the U.S.

[[Page S9541]]

market with duty-free ceramic tiles that apparently had been 
superficially restyled or mislabeled.
  In light of these factors, the U.S. industry has been recognized by 
successive Congresses and administrations as import-sensitive dating 
back to the Dillon and Kennedy Rounds of the General Agreement on 
Tariffs and Trade (GATT). Yet during this same period, the American 
ceramic tile industry has been forced to defend itself from over a 
dozen petitions filed by various designated GSP-eligible countries 
seeking duty-free treatment for their ceramic tile sent into this 
market.
  The domestic ceramic tile industry has been fortunate, to date, 
because both the USTR and the International Trade Commission have 
recognized the import-sensitivity of the U.S. market and have denied 
these repeated petitions. If, however, just one petitioning nation ever 
succeeds in gaining GSP benefits for ceramic tile, then all GSP 
beneficiary countries will be entitled to similar treatment. This could 
eliminate many American tile jobs and devastate the domestic industry. 
Therefore, it is my strong belief that a proven import sensitive and 
already import-dominated product, such as ceramic tile, should not 
continually be subjected to defending against repeated duty-free 
petitions, but should be exempted from the GSP program.
  Mr. President, I would like to address one final trade issue. It is 
not a part of this bill but it does relate to GSP, because the problem 
I will discuss is a result of an inequitable tax policy put in place by 
some countries that are major beneficiaries of the GSP program. This 
tax policy, known as a differential export tax scheme or DET, is used 
to confer an unfair competitive advantage for these countries' exports 
of agricultural products, particularly soybean meal and oil, to the 
detriment of U.S. producers, processors, and exporters.
  Mr. President, I'll briefly describe how this differential export tax 
scheme operates. Under a DET system, exports of a raw commodity, in 
this case soybeans, are taxed at a higher rate than exports of the 
processed derivatives of that commodity, soybean meal and oil. Since 
this increased tax discourages the export of soybeans, the oilseed 
crushers in those countries are able to purchase soybeans from their 
domestic growers at prices well below the world market prices paid by 
U.S. oilseed crushers. Because they pay a lower cost for their raw 
materials, these foreign crushers are then able to undercut U.S. 
processors in the world market for processed soybean products.

  For example, the State of Rio Grande do Sul in Brazil recently 
changed its tax structure so that a tax of 13 percent is levied on all 
exports of raw soybeans, while the export tax on soybean meal and oil 
is only 5 percent. At current market values, this gives the Brazilian 
crushers an additional crushing margin of about $22 per ton. This is 
essentially an indirect subsidy for these crushers and significantly 
distorts free trade. I assume this practice would be subject to World 
Trade Organization rules if the subsidy were provided as a direct 
export subsidy.
  The consequence of this type of practice is a drastic loss in the 
U.S. share of world export markets for processed soybean products, and 
artificial downward pressure on world price levels for these same 
products. This is not acceptable. As you know Mr. President, Iowa is, 
in any given year, either the first or second leading soybean producing 
state in the nation. This is a distinction we share with our neighbors 
in Illinois. So this unfair trade practice is of great concern to Iowa 
farmers and processors, and those in other states as well.
  I understand that progress is being made on resolving this issue, but 
more work must be done. In the case of Brazil, it is my understanding 
that the Brazilian federal government strongly supports reform of this 
DET system, and in fact is considering the complete elimination of all 
taxes levied upon exports of agricultural products, both raw and 
processed. In the coming weeks and months, I will be closely watching 
how Brazil, Argentina, and other countries reform these practices. 
However, I am serving notice today that if these practices are allowed 
to continue, I will consider pursuing appropriate legislative or 
administrative measures to counter them.
  Mr. President, I yield the floor.

                          ____________________