[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Page E52]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 INTRODUCTION OF TARGETED TAX CUT BILLS

                                 ______
                                 

                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                        Tuesday, January 7, 1997

  Mr. POMEROY. Mr. Speaker, today I introduce a trio of targeted tax 
cut bills designed to help working families meet their most pressing 
financial challenges. The centerpiece of an agenda to advance the 
economic security of North Dakota's middle and working income families, 
these measures will make it easier for workers to afford health care 
and education and to set money aside for retirement.
  The first measure I introduce today, The Self-Employed Health 
Affordability Act of 1997, continues my long dedication to providing 
full deductibility of health insurance costs for self-employed 
individuals. On the first day of the last Congress, I introduced a bill 
to give the self-employed a full 100 percent deduction for these costs. 
Eighty-two of my House colleagues became co-sponsors of my bill, and 
this bipartisan coalition fought successfully to include an increased 
self-employed deduction as part of the health insurance legislation 
passed by Congress last summer. Under this so-called Kennedy-Kassebaum 
law, the self-employed deduction will slowly increase to 80 percent by 
the year 2006. While this was progress, it does not bring sufficient 
relief to the hard-working farm and small business families which must 
pay their own health insurance premiums. The bill I introduced today 
will immediately increase the self-employed deduction to a full 100 
percent, making the increasing cost of health insurance more affordable 
and keeping these families healthy.
  Mr. Speaker, the second of the targeted tax cut bills I introduce 
today is The Education and Training Affordability Act of 1997. This 
legislation will allow a tax deduction of up to $5,000 a year for 
higher education and job training expenses for middle-income families. 
The deduction will be fully available to individuals earning less than 
$60,000 and households earning less than $80,000, and will phase out 
for individuals at $75,000 and for households at $95,000.
  Unfortunately, college costs are moving beyond middle-class reach. 
Many families are forced to incur greater and greater debt to finance 
their children's higher education and some must forego higher education 
altogether. The Education and Training Affordability Act will help 
combat these trends, providing a needed tax savings and helping parents 
afford the cost of a college education for their children. Under this 
bill, a family of five earning $60,000 with three children in North 
Dakota's state universities will save $1,400 per year.
  The Education and Training Affordability Act will also make job 
training more affordable. It's clear that the best-paying jobs will 
increasingly go to those workers with advanced training beyond high 
school. Employees willing to continually update their skills are the 
ones who will be able to take full advantage of the opportunities in 
today's rapidly changing economy. The Education and Training 
Affordability Act will help workers seize these new opportunities by 
making vocational, technical and other job training programs more 
affordable. For example, a worker earning $28,000 and enrolled full-
time at Interstate Business College in Fargo would save $1,400 on his 
or her tax bill.

  Mr. Speaker, the final bill in my trio of targeted tax cuts is the 
IRA Savings Opportunity Act of 1997. This legislation will help working 
families overcome what can be the extreme difficulty of setting aside 
money for retirement given all the other expenses families face. In 
doing so, it will help us take a step forward in meeting our emerging 
retirement savings crisis. As a nation, we are simply not saving enough 
to ensure a financially secure retirement. The personal savings rate 
has fallen from a level of more than 7 percent during much of this 
century to barely more than 3 percent today. Indeed, only one in three 
baby-boomers is saving enough to guarantee an adequate income in 
retirement.
  The IRA Savings Opportunity Act gives working families expanded new 
opportunities to start and contribute to an individual retirement 
account (IRA). THe bill has three provisions, each designed to expand 
savings opportunities in a different way. First, for those at modest 
income levels who often find it most difficult to save, the bill 
provides a tax credit equal to 20 percent of the amount contributed to 
an IRA. This credit will reduce tax liability for individuals earning 
less than $35,000 and households earning less than $50,000 while 
providing a meaningful incentive to save for retirement.
  Second, the IRA Savings Opportunity Act will allow those without 
access to a workplace retirement plan to contribute additional dollars 
to their IRA. Retirement security in our economy is premised on a 
three-legged stool of (1) employer pension, (2) Social Security, and 
(3) personal savings. Yet many workers--farmers, those who work for 
small businesses--do not have access to a retirement plan in the 
workplace. And many large employers are discontinuing their pension 
plans, leaving workers without a retirement vehicle at their place at 
work. These employees thus lack the important employer pension leg of 
the retirement security stool. THe IRA Savings Opportunity Act 
addresses this problem by strengthening the personal savings leg. The 
bill will allow middle-income workers without workplace plans to 
contribute an additional $2,000 to their IRA, bringing the total annual 
amount that can be contributed to $4,000. While the additional $2,000 
contribution is not tax deductible, these funds will accumulate tax-
free, providing a significant advantage over other savings vehicles 
such as mutual funds.
  Finally, the IRA Savings Opportunity Act will help to strengthen the 
personal savings leg of the stool for those who are fortunate enough to 
have access to a retirement plan at the workplace. By doubling the 
income ceilings below which workers can deduct their IRA contributions, 
the IRA Savings Opportunity Act once again makes the tax advantages of 
IRAs available to all middle-class Americans. Remedying the vast 
reduction in IRA participation caused by the 1986 tax reform law, the 
IRA Savings Opportunity Act will allow individuals earning up to 
$70,000 and households earning up to $100,000 to deduct their IRA 
contributions from their taxes, up to a maximum of $2,000. This 
restored deduction will provide meaningful tax relief for middle-income 
families, and will encourage the personal savings which must be a 
critical part of everyone's retirement savings strategy.
  Mr. Speaker, one strength of the tax relief measures I introduce 
today is that they target the relief at families' most pressing 
economic challenges--the high cost of health care and education and the 
difficulty of saving for retirement. They also target the tax relief at 
middle and working income families in order to limit the cost and not 
require unsustainable cuts in programs on which our seniors, children 
and working families rely. This doubly targeted approach means that the 
revenue loss to the federal treasury from my proposals is modest, on 
the order of $40-50 billion. As with the proposals others will make for 
tax relief, my targeted tax cuts can only be enacted as part of a 
budget agreement that includes the necessary spending cuts to reach 
balance by 2002. From my position on the Budget Committee, I will be 
working to ensure that targeted tax relief in the context of a balanced 
budget is accomplished.
  Mr. Speaker, I look forward to working hard in the coming weeks and 
months to advance these three targeted tax cut bills. With passage of 
these measures, Congress can provide needed tax relief to middle and 
working income families and can help them secure the foundations of 
economic security--health care, education and training, and a secure 
retirement.

                          ____________________