[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]




                              {time}  1600
    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

[[Page H5856]]

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

[[Page H5857]]

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.

                              {time}  1615

  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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