[Congressional Record Volume 143, Number 59 (Thursday, May 8, 1997)]
[Senate]
[Pages S4234-S4238]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LAUTENBERG (for himself, Mrs. Boxer, and Mr. Kerry):
  S. 723. A bill to increase the safety of the American people by 
preventing dangerous military firearms in the control of foreign 
governments from being imported into the United States, and for other 
purposes; to the Committee on Foreign Relations.


                   THE ANTI-GUN INVASION ACT OF 1997

 Mr. LAUTENBERG. Mr. President, today Senators Boxer and Kerry 
and I are introducing legislation to ensure that millions of lethal 
American-manufactured military weapons will not be imported into this 
country. Representatives Patrick Kennedy and Maloney are introducing 
companion legislation in the House of Representatives.
  The bill we are introducing repeals a loophole in the law that could 
allow U.S. military weapons that were provided to foreign countries to 
be sold back to gun dealers in this country. The loophole permits the 
import of so-called ``curios or relics'' --weapons considered to have 
historic value or which are more than 50 years old.

[[Page S4235]]

 About 2.5 million American-manufactured military weapons that the U.S. 
Government gave away, sold, or were taken as spoils of war by foreign 
governments are at issue. This includes 1.2 million M-1 carbines, which 
are easily converted to fully automatic weapons. Though these weapons 
are older, they are lethal. I don't want them flooding America's 
streets. And I don't want foreign governments making a windfall by 
selling them to commercial gun dealers.
  As some of my colleagues may know, the term ``curios or relics'' was 
originally used in the Gun Control Act of 1968 to make it easier for 
licensed collectors to buy curios or relics weapons from outside his or 
her State of residence. The Treasury Department came up with a 
definition and list of ``curios or relics'' for this purpose. At that 
time, importation of surplus military weapons--whether of United States 
or foreign origin--was prohibited, and the curios or relics list had 
nothing to do with importing weapons.
  Nearly 20 years later, in 1984, a law was passed that expanded the 
scope of the curios or relics list in ways never foreseen at the time 
the list was first created. The modified law said that guns that were 
on the curios or relics list could not just be sold interstate within 
this country, but could be imported as well.
  However, the Arms Export Control Act still prohibited the importation 
of U.S. military weapons that had been furnished to foreign 
governments. Although a 1987 amendment to that Act authorized the 
importation of U.S.-origin military weapons on the curios or relics 
list as well, only one import license has been granted under the curios 
or relics exception. Since that isolated incident, every 
administration--Reagan, Bush, and Clinton--has adopted a policy 
established by the Reagan administration and based on the Arms Export 
Control Act of denying these kinds of import licenses.
  Though the Clinton administration and the past two Republican 
administrations have opposed importing these lethal weapons, the NRA 
supports importing them and it has allies on the Hill. Last year, an 
effort was made in the Commerce, Justice, State Appropriations bill to 
force the State Department to allow these weapons to be imported for 
any reason. That effort was killed as part of the negotiations on the 
catchall appropriations bill that was signed into law on September 30.
  The provision included in the Senate version of the C, J, S 
appropriations bill last year, section 621, would have prohibited any 
agency of the Government--notwithstanding any other provision of law--
from using appropriated funds to deny an application for a permit to 
import previously exported United States-origin military firearms, 
parts, or ammunition that are considered to be curios or relics. The 
provision would have forced the State Department to allow large numbers 
of U.S. military firearms that are currently in the possession of 
foreign governments to enter the United States commercially. Because so 
many of those firearms can be easily converted to automatic weapons, it 
would have undermined efforts to reduce gun violence in this country. 
In addition, it could have provided a windfall for foreign governments 
at the expense of the taxpayer.

  Certainly the dangers posed by many guns on the curios or relics 
list--in particular the M-1 carbine, which is easily converted into an 
automatic weapon--are an important reason for preventing imports of 
those guns. It is the main reason I am proposing legislation to clarify 
the law to prevent imports in the future. But the provisions of the 
Arms Export Control Act that limit the imports are not merely 
technical. They support a principle, included in the Arms Export 
Control Act, that is basic to the integrity of our foreign military 
assistance program: No foreign government should be allowed to do 
anything with weapons we have given them that we ourselves would not do 
with them. For example, the Department of Defense does not transfer 
weapons to a country that is our enemy; no foreign government should be 
allowed to use U.S.-supplied weapons in that way. The Department of 
Defense does not sell its excess guns directly to commercial dealers in 
the United States, and foreign governments should not be able to do so 
either.
  As recently as 1994, the General Services Administration Federal 
weapons task force reviewed U.S. policy for the disposal of firearms 
and confirmed a longstanding Government policy against selling or 
transferring excess weapons out of Government channels. The Federal 
Government has made a decision that it should not be an arms merchant. 
The Federal regulations that emerged from that task force review are 
clear. They say surplus firearms may be sold only for scrap after total 
destruction by crushing, cutting, breaking, or deforming to be 
performed in a manner to ensure that the firearms are rendered 
completely inoperative and to preclude their being made operative. 
These are sound regulations. The Department of Defense does not sell 
its guns to private arms dealers. Under the Arms Export Control Act, we 
should not allow foreign governments to sell 2.5 million U.S. military 
weapons to private arms dealers either.
  Flooding the market with these curios and relics would only make it 
harder for law enforcement to do its job. The Bureau of Alcohol, 
Tobacco, and Firearms has already seen an increase in M-1 carbines that 
have been converted to fully automatic machine guns due to the 
availability and relatively low cost of the weapons. The more military 
weapons there are in this country, the more likely they are to fall 
into criminal hands. Surplus military weapons are usually cheap, and, 
if a government sells its whole stockpile, plentiful. A sudden increase 
in supply of M-1 garands and carbines and M-1911 pistols would drive 
down the price, making them less attractive to the collector and more 
attractive to the criminal.
  In fact, the administration opposed last year's provision, in part, 
because of the increased availability of low-cost weapons for criminals 
that invariably would have resulted. According to the administration, 
``The criminal element thrives on low-cost firearms that are 
concealable, or capable of accepting large-capacity magazines, or 
capable of being easily converted to fully automatic fire. Thus, such 
weapons would be particularly enticing to the criminal element. In 
short, the net effect of the proposal would be to thwart the 
administration's efforts to deny criminals the availability of 
inexpensive, but highly-lethal, imported firearms.''
  We know that the M-1 carbine has already been used to kill at least 6 
police officers. Another 3 were killed with M-1911 pistols. As recently 
as this January, two sheriff's deputies, James Lehmann, Jr. and Michael 
P. Haugen, were killed with an M-1 carbine while responding to a 
domestic violence call in Cabazon, CA. In October 1994, in Gilford, NH, 
Sgt. James Noyes of the State Police Special Weapons and Tactics Unit 
was killed in the line of duty with an M-1 carbine. In December 1992, 
two Richmond, CA police officers were killed with an M-1 carbine. In 
just one State, Pennsylvania, at least 10 people were killed using 
U.S.-origin military weapons during a recent 5-year period. To those 
who would argue that ``curios and relics'' are not used in crimes, I 
would say talk to the families of these victims.

  American-manufactured weapons were sold to foreign governments--often 
at a discount rate subsidized by the U.S. taxpayer--because we believed 
it was in our foreign policy interest to strengthen and assist our 
allies. We did not intend to enable foreign governments to make a 
profit by turning around and selling them back to commercial gun 
dealers in the U.S. We certainly did not help our allies so they could 
turn around and flood America's streets with lethal guns.
  We also did not provide weapons to foreign governments so they could 
reap a financial windfall at the expense of the taxpayer. Although the 
law could allow the United States Government to receive the net 
proceeds of any sales made by foreign governments of defense articles 
it received on a grant basis, the provision in the appropriations bill 
last year would have forced the administration--notwithstanding any 
other law --to approve the import license, even if a foreign government 
would not agree to provide proceeds of the sale. As such, it would 
undermine our government's ability to require foreign governments to 
return proceeds to the United States and could result in a windfall for 
foreign governments.

[[Page S4236]]

  Even more, some countries like Vietnam, which hold a significant 
quantity of spoils of war weapons, including ``curios or relics,'' 
could sell those ``spoils of war'' to U.S. importers at a financial 
gain. And, the Government of Iran, which received more than 25,000 M-
1911 pistols from the United States Government in the early 1970's, 
could qualify to export weapons to the United States at a financial 
gain as well.
  Allowing more than 2 million U.S.-origin military weapons to enter 
the United States would profit a limited number of arms importers. But 
it is not in the interest of the American people. I don't believe 
private gun dealers should have the ability to import these weapons 
from foreign governments. These weapons are not designed for hunting or 
shooting competitions. They are designed for war. Our own Department of 
Defense does not sell these weapons on the commercial market for 
profit. Why should we allow foreign countries to do so?
  Mr. President, this bill would confirm the policy against importing 
these lethal weapons by removing the ``curios or relics" exception from 
the Arms Export Control Act. Under this legislation, U.S. military 
weapons that the U.S. Government has provided to foreign countries 
could not be imported to the United States for sale in the United 
States by gun dealers. If a foreign government had no use for surplus 
American military weapons, those weapons could be returned to the Armed 
Forces of the United States or its allies, transferred to State or 
local law enforcement agencies in the United States, or destroyed. The 
legislation also asks the Treasury Department to provide a study on the 
importation of foreign-manufactured surplus military weapons.
  Mr. President, I ask unanimous consent that a copy of this 
legislation appear in the Record, and I urge my colleagues to support 
this legislation.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 723

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Anti-Gun Invasion Act of 
     1997''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Since 1950, the United States Government has furnished 
     to foreign governments at least 2,500,000 military firearms 
     that are considered to be ``curios or relics'' under the Gun 
     Control Act of 1968.
       (2) These firearms include more than 1,200,000 M-1 Carbine 
     rifles and 250,000 M1911 pistols of United States manufacture 
     that have been furnished to foreign governments under United 
     States foreign military assistance grant, loan, or sales 
     programs.
       (4) Criminals tend to use low-cost firearms that are 
     concealable, capable of accepting large-capacity magazines, 
     or are capable of being easily converted to fully automatic 
     fire.
       (5) An M-1 Carbine can be converted easily to a fully 
     automatic weapon by disassembling the weapon and reassembling 
     the weapon with a few additional parts.
       (6) An M1911 or M1911A pistol is easily concealable.
       (7) At least 9 police officers have been murdered in the 
     United States using M-1 Carbines or M1911 pistols in the past 
     7 years.
       (8) The importation of large numbers of ``curio or relic'' 
     weapons would lower their cost, make them more readily 
     available to criminals, and constitute a threat to public 
     safety and to law enforcement officers.
       (9) The importation of these ``curios or relics'' weapons 
     could result in a financial windfall for foreign governments.
       (10) In order to ensure that these weapons are never 
     permitted to be imported into the United States, a provision 
     of the Arms Export Control Act must be deleted.

     SEC. 3. REMOVAL OF EXEMPTION FROM PROHIBITION ON IMPORTS OF 
                   CERTAIN FIREARMS AND AMMUNITION.

       (a) Removal of Exemption.--Section 38(b)(1) of the Arms 
     Export Control Act (22 U.S.C. 2778(b)(1)) is amended by 
     striking subparagraph (B), as added by section 8142(a) of the 
     Department of Defense Appropriations Act, 1988 (contained in 
     Public Law 100-202).
       (b) Savings Provision.--The amendment made by subsection 
     (a) shall not affect any license issued before the date of 
     the enactment of this Act.

     SEC. 4. REPORT ON IMPORTS OF FOREIGN-MADE SURPLUS MILITARY 
                   FIREARMS THAT ARE CURIOS OR RELICS

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary of the Treasury, acting through the Bureau 
     of Alcohol, Tobacco and Firearms, shall submit a report to 
     Congress on the scope and effect of the importation of 
     foreign-made surplus military firearms under section 925(e) 
     of title 18, United States Code. The report shall contain the 
     following:
       (1) Current importation.--A list of types and models of 
     military firearms currently being imported into the United 
     States as ``curios or relics'' under section 925(e) of title 
     18, United States Code, which would otherwise be barred from 
     importation as surplus military firearms under section 
     925(d)(3) of that title.
       (2) Importation during preceding 5 years.--A list of the 
     number of each type and model listed under paragraph (1) that 
     has been imported into the United States during the 5 years 
     preceding the date of submission of the report.
       (3) Ease of conversion.--A description of the ease with 
     which each type and model listed under paragraph (1) may be 
     converted to a semi-automatic assault weapon as defined in 
     section 921(a)(30)(B) of that title or to a fully automatic 
     weapon.
       (4) Involvement in criminal activities.--Statistics that 
     may be relevant to the use for criminal activities of each 
     type and model of weapons listed in paragraph (1), 
     including--
       (A) statistics involving the use of the weapons in 
     homicides of law enforcement officials; and
       (B) the number of firearm traces by the Bureau of Alcohol, 
     Tobacco and Firearms that involved those weapons.
       (5) Comprehensive evaluation.--A comprehensive evaluation 
     of the scope of imports under section 925(e) of that title 
     and the use of such weapons in crimes in the United 
     States.
       By Mr. NICKLES (for himself, Mr. Rockefeller, Mr. Lott, Mr. 
     Breaux, Mr. Hatch, Ms. Mosley-Braun, Mr. Murkowski, Mr. 
     D'Amato, Mr. Gramm, Mr. Mack, Mr. Lieberman, Mr. Cochran, Mr. 
     Brownback, Mr. Enzi and Mr. Hutchinson):

  S. 724. A bill to amend the Internal Revenue Code of 1986 to provide 
corporate alternative minimum tax reform; to the Committee on Finance.


             THE ALTERNATIVE MINIMUM TAX REFORM ACT OF 1997

  Mr. NICKLES. Mr. President, today I join my colleague from West 
Virginia, Senator Rockefeller, to introduce legislation to reform the 
Alternative Minimum Tax, or AMT. We are joined in this effort by 13 of 
our colleagues, including a total of 10 Finance Committee members.
  Congress created the AMT in 1986 to prevent businesses from using tax 
loopholes, such as the investment tax credit or safe harbor leasing, to 
pay little or no tax. The use of these tax preferences sometimes 
resulted in companies reporting healthy ``book'' income to their 
shareholders but little taxable income to the government.
  Therefore, to create a perception of fairness, Congress created the 
AMT. The AMT requires taxpayers to calculate their taxes once under 
regular tax rules, and again under AMT rules which deny accelerated 
depreciation, net operating losses, foreign tax credits, and other 
deductions and credits. The taxpayer then pays the higher amount, and 
the difference between their AMT tax and their regular tax is credited 
to offset future regular tax liability if it eventually falls below 
their AMT tax liability.
  Unfortunately, Mr. President, in the real world the AMT has reached 
far beyond its original purpose. As it is currently structured, the AMT 
is a massive, complicated, parallel tax code which places huge burdens 
on capital intensive companies. Corporations must now plan for and 
comply with two tax codes instead of one. Further, the elimination of 
accelerated depreciation increases the cost of investment and makes 
U.S. businesses uncompetitive with foreign companies.
  It makes little sense, Mr. President, to allow a reasonable business 
deduction under one tax code, and then take it away through another tax 
code. Perhaps there are some bureaucrats who believe regular tax 
depreciation is too generous and should be curtailed, but the AMT is an 
extremely complicated and convoluted way to accomplish that goal.
  The legislation I am introducing today would correct this problem by 
allowing businesses to use the same depreciation system for AMT 
purposes as they use for regular tax purposes. This one simple reform 
removes the disincentive to invest in job-producing assets and greatly 
simplifies compliance and reporting. In fact, this reform was first 
suggested by President Clinton in 1993.
  Further, my bill helps AMT taxpayers recover their AMT credits in a 
more reasonable timeframe than under current law. Many capital-
intensive businesses have become chronic AMT taxpayers, a situation 
that was not contemplated when the AMT was created. These companies 
continue to pay AMT year after year with no relief in

[[Page S4237]]

sight, and as a matter of function they accumulate millions in unused 
AMT credits. These credits are a tax on future, unearned revenues which 
may never materialize, and because of the time-value of money their 
value to the taxpayer decreases every year.
  Since Congress did not intend for the AMT to become a permanent tax 
system for certain taxpayers, my bill would allow chronic AMT taxpayers 
to use AMT credits which are 5-years-old or older to offset up to 50 
percent of their current-year tentative minimum tax. This provision 
will help chronic AMT taxpayers dig their way out of the AMT and allow 
them to recoup at least a portion of these accelerated tax payments in 
a reasonable manner and time-frame.
  Mr. President, as the Senate begins working out the details of the 
recent bipartisan budget accord and the resulting tax bill, I hope we 
will not forget the importance of savings and investment. In that 
regard, there are few tax code changes we could make which are more 
important than eliminating the investment disincentives created by the 
AMT.
  Does my legislation fix all of the AMT's problems? No, it does not. 
This bill specifically addresses the depreciation adjustment, but there 
are many other AMT adjustments, preferences, and limitations which are 
unchanged. Some of these, such as the 90-percent net operating loss 
limitation and the foreign tax credit limitation, are very damaging to 
business profitability and competitiveness. I hope all these issues 
will be examined when the Senate Finance Committee considers AMT 
reform.
  Mr. President, I ask unanimous consent that there appear in the 
Record a list of the original cosponsors of this legislation, as well 
as statements of support by the U.S. Chamber of Commerce and the 
National Association of Manufacturers. I encourage my colleagues to 
join Senator Rockefeller and me in this important initiative.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     Alternative Minimum Tax Reform Act Cosponsors, 105th Congress

                (15 total, 10 from Committee on Finance)

       Sponsor: Nickles.
       Cosponsors: Rockefeller, Lott, Breaux, Hatch, Moseley-
     Braun, Murkowski, D'Amato, Gramm, Mack, Lieberman, Cochran, 
     Brownback, Enzi, and Hutchinson.
                                  ____

                                        Chamber of Commerce of the


                                     United States of America,

                                      Washington, DC, May 8, 1997.
     Hon. Don Nickles,
     Assistant Majority Leader, U.S. Senate, Washington, DC.
       Dear Senator Nickles: The U.S. Chamber of Commerce--the 
     world's largest business federation representing an 
     underlying membership of more than three million businesses 
     and organizations of every size, sector, and region--supports 
     your legislation to reform the Alternative Minimum Tax (AMT).
       The current AMT system unfairly penalizes businesses that 
     invest heavily in plant, machinery, equipment and other 
     assets. The AMT significantly increases the cost of capital 
     and discourages investment in productivity-enhancing assets 
     by negating many of the capital formation incentives provided 
     under the regular tax system, most notably accelerated 
     depreciation. To make matters worse, many capital-intensive 
     businesses have been perpetually trapped in the AMT system, 
     and unable to utilize their suspended AMT credits. 
     Furthermore, the AMT is extremely complex, burdensome and 
     expensive to comply with.
       Your legislation addresses many of the problems of the 
     current AMT and its passage will spur capital investment, 
     help businesses to sustain long-term grown and create jobs. 
     Recent analysis by Data Resources, Inc. demonstrates that 
     your reform bill will result in an increase in GDP of 1.6 
     percent, the creation of 100,000 new jobs each year, and an 
     increase in worker productivity of about 1.6 percent.
       Thank you for introducing this important legislation, and 
     we look forward to working with you for its passage.
           Sincerely,
     R. Bruce Josten.
                                  ____


           Statement of National Association of Manufacturers


  nam calls the alternative minimum tax the ``anti-manfacturing tax''

                Urges Support of AMT Reform Legislation

       Washington, DC., May 8, 1997.--Calling the alternative 
     minimum tax (AMT) a disincentive for capital investment and 
     job creation, the National Association of Manufacturers urged 
     lawmakers to support AMT reform legislation introduced today 
     by Senators Don Nickles (R-OK) and John D. Rockfeller (D-WV).
       ``The alternative minimum tax is a fundamentally flawed, 
     counter-productive tax that stifles the creation of high-
     skilled, high-paying manufacturing jobs,'' said Gil Thurm, 
     vice president taxation and economic policy, in support of 
     the reform bill. ``It's little wonder that many believe that 
     AMT really stands for `Anti-Manufacturing Tax.' ''
       The legislation substantially reforms the AMT to allow 
     businesses to use the same depreciation rules for AMT 
     purposes as they use for their regular tax depreciation 
     rules. It also allows AMT taxpayers to recover their existing 
     tax credits quicker than under current law.
       ``No other industrialized country imposes such a penalty 
     tax on investment made by capital intensive companies. 
     Furthermore, when businesses report little or no profit, they 
     are still frequently required to pay the AMT,'' said Thurm.
       ``Substantially reforming the alternative minimum tax will 
     result in greater economic growth by creating thousands of 
     new jobs, stronger growth in GDP, increased productivity and 
     improved cash flow, especially for those companies that have 
     been penalized the most under the AMT,'' according to Thurm.
       The NAM continues to lead a coalition of more than 100 
     companies and associations in support of complete repeal of 
     the AMT. However, absent complete repeal, the AMT Coalition 
     for Economic Growth supports substantive AMT reform.

 Mr. ROCKEFELLER. Mr. President, I am pleased to join my Senate 
Finance Committee colleague, Senator Nickles, in introducing an 
Alternative Minimum Tax [AMT] reform bill. Our bill will: first, allow 
businesses to use the same depreciation system for AMT as they do under 
regular tax, and second, permit businesses to use their AMT credits 
more easily than under current law. It will help make it easier for 
U.S. businesses to compete and reduce the unintended inequity of 
current law.
  For several years, I have looked for an opportunity to fix the 
problems that AMT creates especially for capital intensive industries. 
Two years ago, I introduced my own bill to reform the aspects of AMT 
that I believe are most detrimental to businesses for which AMT is 
frequently their method of tax payment. Unfortunately, with the 
controversies and difficulties that made it impossible to enact a 
budget plan in the last Congress, there was no ability to move that 
effort forward.
  This year, I am pleased to work with Senator Nickles to make the AMT 
fairer. I hope this means we have a real chance of working together in 
a bipartisan manner to compel Congress, the Finance Committee in 
particular, to figure out a way to deal with some of the unintended 
consequences of AMT as part of this year's budget deal. I think 
previous efforts at AMT reform have failed in the part because it is 
very tough to focus on the merits of certain corporate tax changes. 
That remains true today in the context of a larger budget agreement, 
but if we keep our perspective, I think AMT reform will win support on 
its merits and Congress can responsibly find a way to finance it.
  I am well aware of the fact that as we introduce this legislation, 
there is no specific provision for AMT relief in the budget deal which 
the President and Congressional leadership have struck in outline form. 
As I have noted, the constraints of balancing the budget will require 
us to carefully examine how much AMT relief is practical this year, as 
part of an agreement to balance the budget over the next 5 years. I 
understand that very well, as does Senator Nickles. I think that means 
we will have to zero in on the aspects of AMT relief that are most 
doable this year--and which can be financed without harming other 
priorities. I am prepared to do that and recognize that it also means 
the scope of the AMT bill we submit today will have to be tailored 
accordingly. That does not mean that we should put off AMT relief for 
another day, it just means we will have to be honest about what is 
critical to do and what portions of this bill will have to remain on 
the to-do list. I say all this because it is important to understand 
the context for our introducing this relief bill now, and as the budget 
agreement places some high hurdles on what can realistically be 
accomplished.
  I also would like to say that it is my strong belief that the 
excruciating specifics of the budget agreement which relate to matters 
under the jurisdiction of the Finance Committee are best left to the 
expertise on that Committee. The Finance Committee serves an extremely 
important role in the legislative process. That role cannot and

[[Page S4238]]

should not be supplanted by private negotiations between the 
administration and congressional leadership--however worthwhile the 
overall purpose. Reaching consensus on the approach to balancing the 
budget and protecting priorities of the administration and both sides 
of the aisle in congressional leadership provides the Finance Committee 
with the framework for its detailed work. The Finance Committee will 
soon have to work its will within the appropriate parameters of its 
reconciliation instructions. When that happens, I think the committee 
must address AMT relief, and I intend to work to build support for it 
as we wend our way through the committee process.
  Let me return to the substance of the bill we submit for our 
colleagues' consideration today. First, I want to make it absolutely 
clear--this bill does not repeal AMT. AMT has created during the 1986 
Tax Reform Act in response to the problem raised when companies would 
report profits to stockholders and yet claim losses to the IRS. 
However, in an effort to simplify the code depreciation under AMT was 
treated as an adjustment--which amounts to an increase in income. This 
penalizes low-profit, capital intensive companies, like steel 
companies. Compared to other countries, after 5 years, a U.S. 
steelmaker under AMT recovers only 37 percent of its investment in a 
new plant and equipment. The recovery of investment in other countries 
is much higher--for example, in Japan it's 58 percent, in Germany 
companies recover 81 percent, Korea is 90 percent, and in Brazil it's 
100 percent.
  The problem is not unique to the steel industry though. Other 
capital-intensive industries that also have long-lived assets lose 
under the current AMT. The chemical industry has 9\1/2\ years to 
depreciate under the AMT, as opposed to 5 years under the regular tax. 
And for paper, they have 13 years to depreciate under the AMT, as 
opposed to 7 years under the regular tax. We need to fix the AMT so 
that industries with very high capital costs which they cannot recover 
for years are not put at such a disadvantage.

  Today's AMT discourages investment in new plants and equipment, while 
under our regular tax system depreciation investments are encouraged. 
The need to improve our tax system to make it fairer to capital 
intensive industries is clear--fixing the AMT is one way to do that.
  U.S. companies have to be able to compete in an increasingly 
competitive global market--that's almost an adage. It's what our trade 
laws and agreements seek to ensure. We'll never be able to sufficiently 
promote U.S. exports if we don't being to equalize the effects of our 
tax laws on American companies as well.
  This bill would eliminate depreciation as an adjustment under AMT--
treating AMT taxpayers the same as those companies that pay under our 
regular tax system. It would also allow tax payers who have not used 
their accumulated minimum tax credits which are at least 5 years old to 
use those credits to offset up to 50 percent of their current year AMT 
liability--with a provision to ensure that taxpayers could not reduce 
their current payment below their regular tax liability for that year.
  AMT has become the standard method of tax payment for many of our 
Nation's capital intensive industries and it is not working the way 
Congress initially intended. It's time to fix it.
  The bill Senator Nickles and I submit for your consideration today 
will fix the AMT so it works the way I believe Congress originally 
intended. It will have the consequence of improving the competitiveness 
of American business. It is time to stop talking about AMT and do 
something that figures out how to address this real problem. I urge my 
colleagues to cosponsor this legislation and work with me and my 
Finance Committee colleagues to find a way to act on this important 
issue in this year's budget bill.
                                 ______