[Congressional Record Volume 143, Number 108 (Monday, July 28, 1997)]
[House]
[Pages H5854-H5857]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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CLARIFYING STATE AUTHORITY TO TAX COMPENSATION PAID TO CERTAIN
EMPLOYEES
Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1953) to clarify State authority to tax compensation paid to
certain employees.
The Clerk read as follows:
H.R. 1953
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. LIMITATION ON STATE AUTHORITY TO TAX COMPENSATION
PAID TO INDIVIDUALS PERFORMING SERVICES AT FORT
CAMPBELL, KENTUCKY.
(a) In General.--Chapter 4 of title 4, United States Code,
is amended by adding at the end the following:
``Sec. 115. Limitation on State authority to tax compensation
paid to individual performing services at Fort Campbell,
Kentucky
``Pay and compensation paid to an individual for personal
services at Fort Campbell, Kentucky, shall be subject to
taxation by the State or any political subdivision thereof of
which such employee is a resident.''.
(b) Conforming Amendment.--The table of sections for
chapter 4 of title 4, United States Code, is amended by
adding at the end the following:
``115. Limitation on State authority to tax compensation paid to
individuals performing services at Fort Campbell,
Kentucky.''.
(c) Effective Date.--The amendments made by this section
shall apply to pay and compensation paid after the date of
the enactment of this Act.
SEC. 2. CLARIFICATION OF STATE AUTHORITY TO TAX COMPENSATION
PAID TO CERTAIN FEDERAL EMPLOYEES.
(a) In General.--Section 111 of title 4, United States
Code, is amended--
(1) by inserting ``(a) General Rule.--'' before ``The
United States'' the first place it appears, and
(2) by adding at the end the following:
``(b) Treatment of Certain Federal Employees Employed at
Federal Hydroelectric Facilities Located on the Columbia
River.--Pay or compensation paid by the United States for
personal services as an employee of the United States at a
hydroelectric facility--
``(1) which is owned by the United States,
``(2) which is located on the Columbia River, and
``(3) portions of which are within the States of Oregon and
Washington,
shall be subject to taxation by the State or any political
subdivision thereof of which such employee is a resident.
``(c) Treatment of Certain Federal Employees Employed at
Federal Hydroelectric Facilities Located on the Missouri
River.--Pay or compensation paid by the United States for
personal services as an employee of the United States at a
hydroelectric facility--
``(1) which is owned by the United States,
``(2) which is located on the Missouri River, and
``(3) portions of which are within the States of South
Dakota and Nebraska,
[[Page H5855]]
shall be subject to taxation by the State or any political
subdivision thereof of which such employee is a resident.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to pay and compensation paid after the date of
the enactment of this Act.
The SPEAKER pro tempore [Mr. Goodlatte]. Pursuant to the rule, the
gentleman from Pennsylvania [Mr. Gekas] and the gentlewoman from
California [Ms. Lofgren] each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania [Mr. Gekas].
General Leave
Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days to revise and extend their remarks on the bill
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania [Mr. Gekas]?
There was no objection.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I urge adoption of this piece of legislation. For
several years now, we heard of this very unique, very peculiar
situation that exists where, on borders between two States, there
happens to be a facility in which residents and nonresidents alike,
each from one of the States, happen to work in that facility. Some of
the States are taxing nonresidents on income taxes where nonresidents
in their own State might not have to pay that kind of tax. So this has
caused a kind of conflict.
We are grateful to the Members of the House from the various States
which were affected to give us insight and to give testimony at the
hearings that we have held on this very touchy subject. The border
between Oregon and Washington comes into play, as my colleagues will
hear from the representatives from that area; the border between
Tennessee and Kentucky, as well, where Fort Campbell is located. Of
late, we had a similar situation arise, which was brought to our
attention, between South Dakota and Nebraska.
So my colleagues will hear how this has affected the people who live
and work in those areas. We believe that the legislation that is before
us cures this very unfortunate situation and allows the nonresidents,
as it were, in these six States to have a sense of certainty about to
whom they have to pay taxes and where to file, et cetera.
Mr. Speaker, I reserve the balance of my time.
Ms. LOFGREN. Mr. Speaker, I yield myself such time as I may consume
and I rise in support of the motion to suspend the rules and adopt H.R.
1953.
(Ms. Lofgren asked and was given permission to revise and extend her
remarks.)
Ms. LOFGREN. Mr. Speaker, many responsibilities have devolved to the
States in the last several years. At the same time, there has been less
assistance from the Federal Government. State governments must deal
with each of these new challenges while balancing their budgets every
year.
Congress should only, with the greatest reluctance, interfere with
the prerogative of States to tax economic activity within their
borders. The three cases before us, however, present unique, narrowly
defined instances in which the equities clearly argue for some relief
for the very small number of workers affected. In fact, the very small
number of individuals involved here probably have something to do with
the fact they have been unable to find relief in the appropriate
source, State governments.
In each case, a small number of workers enter a Federal facility from
their home States. Because these facilities are bisected by State
boundaries, their work takes them over the State line and brings them
under the taxing authority of the neighboring State. As a result, they
must pay income taxes to that neighboring State, even though they never
actually use the roads or other State services.
Finally, unlike most States, the two neighboring States lack
reciprocal tax agreements to give residents the ability not to be taxed
by their home State on income taxed in the neighboring State. These are
highly unusual cases. They are not simply cases of people working in
neighboring States who do not want to pay taxes to that State.
The combination of these many unusual circumstances: The failure of
the States to work out an equitable reciprocity agreement, along with
the fact that these workers can be said to have worked in the
neighboring State only in the narrowest and most technical sense, makes
this legislation merited.
This legislation is in line with the very few previous instances in
which Congress has taken similar actions. We are exercising a Federal
power that must be used only with the greatest of care; and I believe
this legislation does that, and I urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I might consume
just to remark that the gentleman from New York, who is the ranking
member on the subcommittee in charge of these proceedings, was very
helpful from an insight that he has drawn as a member of the New York
State Legislature, so that he was able to present to us a certain facet
of this type of legislation which he has helped to craft in the
language here to help us provide the proper vehicle for what we are
attempting to do here.
Mr. Speaker, I yield to the gentleman from Tennessee [Mr. Bryant]
such time as he may consume. The gentleman has been very helpful right
from the beginning, and his perseverance is in no small measure
responsible for the appearance of this bill on the floor here today.
Mr. BRYANT. Mr. Speaker, I thank the chairman from Pennsylvania [Mr.
Gekas] for yielding me the time.
While I fully support all the provisions in this legislation, I want
to speak for just a moment on the section which would prevent the State
of Kentucky from unfairly taxing the workers who live in Tennessee but
who work on the Kentucky side of Fort Campbell. This is a unique
situation.
Fort Campbell is the only military installation which is located in
two States. In fact, over 80 percent of the base is located in
Tennessee, and it might interest my colleagues to know that the only
reason we call this base Fort Campbell, KY, is that the post office is
on the Kentucky side.
Because of its location, if a Tennessee resident working on the base
is assigned to work on the Kentucky side, she must pay Kentucky State
income taxes. Reciprocal agreements between two States normally would
prevent this double taxation. However, because Tennessee does not
impose an income tax on its State residents, a reciprocal agreement
does not exist between Tennessee and Kentucky.
Mr. Speaker, passage of this legislation will not set a precedent for
Federal preemption of State income tax laws because of the uniqueness
of this case and the other two cases. Because this is a military
installation, everyday benefits that would normally be provided by
Kentucky in return for these taxes paid by Tennesseans are actually
provided by either the State of Tennessee or by the military.
For example, a person who has been assigned to work on the Kentucky
side of the post does not ever have to use a Kentucky road, since these
roads have been paid for by the military and the post can be entered
from the Tennessee side. The same is true in the case of fire and
police protection.
This is an issue of fairness for the 2,200 Tennessee residents who
are seeing their annual income reduced simply because they were
assigned to work in a section of the base which is located in Kentucky.
Mr. Speaker, I also want to take a moment at this time to thank my
colleagues on the subcommittee, the gentleman from Pennsylvania [Mr.
Gekas], the chairman, and the gentleman from New York [Mr. Nadler], the
ranking member, for working with me on this issue.
Consideration of this legislation on the House floor represents a
real victory for those who have worked so hard on the issue. For the
last 10 years, legislation to correct this inequity has been introduced
in the House, only to die at the end of each session of Congress due to
inaction. This effort was first begun by then-Representative and now-
Governor Don Sundquist, a friend of mine. And I am happy to have an
opportunity to carry on this fight with him.
Ms. LOFGREN. Mr. Speaker, I would just further add that, in the last
Congress, this issue was discussed on the
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floor of the House and there was a great deal of distress and
opposition from various State officials that is not presented today.
This change is worth emphasizing because this is a very narrow
exception that is not a precedent for telecommuting or anything broader
than the very narrow circumstances that face us here today. I think we
have done a good job of moving this forward. I commend the chairman.
Mr. Speaker, I have no other speakers, and I yield back the balance
of my time.
Mr. GEKAS. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from Washington, Mrs. Linda Smith, who herself has been
instrumental in keeping this committee focused on the special problem
that she and the other Members have faced on that border between Oregon
and Washington.
Mrs. LINDA SMITH of Washington. Mr. Speaker, sometimes we have a law
that seems insignificant because it only affects a few people. But this
particular day, it is very important to many people in Washington and
Oregon, especially those that live in Washington, because for many
years, they have been told there are not enough of them for Congress to
pay attention. So I would like to commend the gentleman from
Pennsylvania [Mr. Gekas], the chairman, for caring about justice for
the few.
What has happened over the years is we have what is called a no man's
land in Washington State and Oregon called a very wide river. It has
many dams on it, and Federal employees work on that river. Over the
years, one of the States, the State of Oregon, has decided that there
is an imaginary line in the middle of the river and that they will have
folks that get up each morning and pack their lunch and go to work
never ever going to the State of Oregon, living in Washington, keep
track of the hours as they go throughout the day, the hours that they
walk onto the side of the river that Oregon has decided is their land.
This has become a bone of contention over the years.
And I often hear taxation without representation. We hear this often.
But really, sometimes people use it because they do not want to pay
their share or they do not want to pay for services. These folks never
drive on an Oregon road. They are never protected by Oregon law. There
is never a fire engine that comes to protect their home. There is no
service. There is nothing, except they walk across a Federal project
part of the way through the day and then usually are required to pay
about 10 percent tax on 50 percent of their income, without ever
getting any service.
So today what we have is just common sense, but it is also justice
for the few. And that is what America is about. We protect the rights
of each individual. And the right to not have taxation without
representation is just something we know is American.
So today I thank the chairman again and all the other Members,
especially the gentleman from Washington [Mr. Hastings], who I am sure
is on a plane coming home, if he is like so many Members, he is coming
back here today because he has diligently brought it to the Chair,
brought it to the committee, brought it to the limelight. And he has
several of those dams, as I do, on the Columbia River, and his folks
need to understand that he has been a bulldog on this. Even though it
was only a few people, the gentleman from Washington [Mr. Hastings] has
cared deeply about the few.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume to
allow the Record to reflect what the gentlewoman from Washington, Mrs.
Linda Smith, has said that the gentleman from Washington [Mr. Hastings]
too has been important in the promulgation of the legislation which is
now before us. And he, I believe it was almost 2 years ago, was the
first who brought this matter to our attention. And here we are today
in full fruition of the solution of the problem that he brought then to
the floor.
We now turn to another border, South Dakota and Nebraska.
Mr. Speaker, I yield such time as he may consume to the gentleman
from South Dakota [Mr. Thune] to explain how that has occurred and how
that was added to our legislation, because it reflected so much of the
similarity between it and the other States in question.
Mr. THUNE. Mr. Speaker, I thank the gentleman from Pennsylvania [Mr.
Gekas], the chairman, for yielding and for working with us on this
important issue. This is something that is a very commonsense bill. It
helps South Dakota families.
In fact, one of the things in South Dakota that we pride ourselves on
is the fact that we are a low-tax State, and we like to attract
economic development and people to come to our State because we have a
low-tax environment. This is something that I think addresses an issue
which works against that very principle.
In fact, in this particular case, this bill will save 35 families in
my State of South Dakota $1,000 a year. These are people that live in
South Dakota but work on a Federal project outside the taxing authority
of Nebraska and South Dakota.
South Dakota residents work at Gavins Point, which is a Federal
project on the Missouri River. They do not need Nebraska roads,
facilities, goods, or services to access their worksite. In fact, these
35 families receive no benefits whatsoever for the tax dollars that
they pay to the State of Nebraska. They cannot vote down there, and
they cannot use Nebraska services.
We just heard previously from other speakers an important principle
on which this country was founded, and that is the principle that you
should not have taxation without representation. That is an inequity
that has certainly cost the families of my State of South Dakota a
substantial amount of tax revenues over the years.
So we are very pleased that the chairman and other Members of this
body are willing to work with us to address this inequity and bring
some fairness to the respective tax laws that we have.
I would just simply close by saying that those of us that live in
South Dakota like the State of Nebraska. Many of us are Nebraska
Cornhusker fans, but we would rather live in South Dakota. And that is
where we want to live and pay taxes. And since we do not have a State
income tax, it does have a significant economic impact on these
families. And this bill addresses that. So I thank the chairman for
working with us on this.
Mr. HASTINGS of Washington. Mr. Speaker, I rise in strong support of
H.R. 1953, a bill to tax more fairly workers at Federal facilities
which border two States. This bill incorporates legislation I
introduced earlier in this Congress to end the double taxation of Army
Corps of Engineers employees working on dams across the Columbia River
between Washington and Oregon.
Mr. Speaker, these Federal employees are currently being forced to
pay income taxes to a State in which they do not work, live, vote, or
receive benefits. For example: These workers can enter their dams from
Washington State and need not use Oregon bridges or roads; workers
paying taxes to Oregon have been denied Oregon unemployment benefits
when they are laid off; they and their children are denied in-State
tuition at Oregon universities; and they do not qualify for in-State
fees for fishing and hunting licenses. Nor are they eligible for
Oregon's comparatively inexpensive vehicle registration fees.
In short, these citizens never receive a single benefit from the
taxes they are compelled to pay to the State of Oregon.
Beside the burden of paying taxes to two States, these workers must
also bear the administrative burden of recording the percentage of
their work day spent on each half of the dam. This is an unreasonable
burden on these employees, who must frequently walk back and forth
across their dams to carry out routine tasks. Furthermore, this costs
the American taxpayers who must pay these Federal employees to track
their time and movements when they might otherwise be doing the actual
work for which they were hired.
H.R. 1953 would settle this problem in a manner consistent with
previous legislation. In the Amtrak Act of 1990, Congress determined
that railway employees who frequently cross State lines should only be
required to pay income taxes to their State of legal residence. In the
104th Congress we passed the source tax bill which stipulated that
pension benefits should be taxes only in the recipient's State of legal
residence. In both cases, Congress intervened to clarify an interstate
tax issue.
The administration has stated that congressional action is needed.
The Human Resources Department of the Army Corps of Engineers in
Portland has informed their employees that: ``Congressional action will
be required if we are to get this situation fixed.'' You may recall
that the House debated this
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issue last fall. Since that time hearings have been held, and we have
worked with the Oregon delegation to address the concerns expressed
earlier about this situation.
Mr. Speaker, I would like to commend the excellent work of Mr. Gekas,
the chairman of the Subcommittee on Commercial and Administrative Law--
together with Mr. Nadler, the ranking minority member of the
subcommittee--in introducing H.R. 1953. Following hearings on this
issue in April of this year, Mr. Gekas prepared a bill which addresses
double-taxed workers in Washington, Tennessee, and South Dakota, while
preserving the right of States to collect taxes within their borders.
This is an excellent bill, and deserving of all of our support.
I urge my colleagues to support this bipartisan, commonsense measure
which protects working people and their families from unfair taxation.
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Mr. GEKAS. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
The SPEAKER pro tempore (Mr. Goodlatte). The question is on the
motion offered by the gentleman from Pennsylvania [Mr. Gekas] that the
House suspend the rules and pass the bill, H.R. 1953.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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