[Congressional Record Volume 143, Number 114 (Wednesday, September 3, 1997)]
[Senate]
[Pages S8723-S8724]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MOYNIHAN (for himself, Mr. D'Amato and Mr. Graham):
  S. 1142. A bill to repeal the provision in the Taxpayer Relief Act of 
1997 relating to the termination of certain exceptions from rules 
relating to exempt organizations which provide commercial-type 
insurance; to the Committee on Finance.


   LEGISLATION REPEALING CERTAIN PROVISION OF THE TAXPAYER RELIEF ACT

  Mr. MOYNIHAN. Mr. President, I rise today to introduce legislation 
that would repeal an irrational provision of the Taxpayer Relief Act of 
1997. I refer to section 1042 of that act, which took away the tax 
exempt status of TIAA-CREF, the Teacher's Insurance Annuity Association 
College Retirement Equities Fund. The legislation I am introducing 
today, with Senators D'Amato

[[Page S8724]]

and Graham of Florida as original cosponsors, would simply strike 
section 1042 and restore the tax exemption that TIAA-CREF has been 
afforded since its establishment by Andrew Carnegie in 1918. Repeal of 
section 1042 would also serve to restore the tax exemption for Mutual 
of America, which has served as a pension administrator for social 
welfare organizations for over 50 years and was similarly tax-exempt 
until August 5, 1997, when the President signed the tax bill.
  TIAA-CREF is a 2-million member retirement system that serves 6,100 
American colleges, universities, teaching hospitals, museums, 
libraries, and other nonprofit educational and research institutions. 
TIAA was incorporated under the laws of the State of New York in 1937 
to ``forward the cause of education and promote the welfare of the 
teaching profession.'' Let me repeat--to ``forward the cause of 
education and promote the welfare of the teaching profession.'' The law 
further states that the purpose of TIAA--this is the New York Statute--
is ``to aid and strengthen non-proprietary and non-profit-making 
colleges, universities, and other institutions engaged primarily in 
research.'' And it has done just that, in an exemplary manner. It has 
long been recognized as a model of such programs.
  Mr. President, by charter and New York law, TIAA-CREF's pension 
assets are exclusively and irrevocably dedicated to providing 
retirement benefits to covered employees. Its funds are essentially 
equivalent to a multiple employer pension trust for colleges and 
universities. Like other pension trusts, TIAA-CREF should not be taxed.
  As a somewhat unanticipated result of TIAA-CREF's creation, it 
brought to American higher education portability of pensions. You did 
not have to start out in one institution and after a certain point stay 
there the rest of your life because you had to have some retirement 
benefit. This is of great value to our educational system for the 
simple reason that it enables a young person at, say, a 2-year college 
or a local college, who shows great promise, does good work, to end up 
at Chicago or Stanford or Duke, because they can move. This is part of 
the agility of American higher education. There is no reason to tax 
this. Earlier in the summer, the Finance Committee had said don't tax 
it, and the full Senate agreed. But somehow or other, the conference 
agreement provided otherwise. This was a mistake, and it wants to be 
corrected.
  The repeal of TIAA-CREF's 79-year-old tax exemption will cost the 
average retiree who receives a $12,000 annual pension about $600 in 
income, unless we act. Librarians are not highly paid. A $12,000 
pension would be quite normal. A $600 reduction would be 5 percent 
right away. Future retirees currently accumulating benefits are likely 
to face reductions of 10 to 15 percent.
  Why make the lives of librarians and assistant professors and 
teachers in community colleges harder? We have an opportunity to undo 
this before the law takes effect in 1998. Why don't we? The Finance 
Committee said no to it. During the conference deliberations on the tax 
bill, nearly half the Members of the Senate, and dozens of Members of 
the House, signed letters asking the conferees to stand against 
repealing this tax exemption.
  Now it is September. Members of Congress have had a month-long 
opportunity to visit with and hear from the academic community. I am 
hopeful we can act on this legislation and restore TIAA-CREF and Mutual 
of America to their appropriate status as tax-exempt organizations 
before Congress adjourns for the year.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1142

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

     SECTION. 1. REPEAL OF PROVISION RELATING TO THE TERMINATION 
                   OF CERTAIN EXCEPTIONS.

       (a) In General.--Section 1042 of the Taxpayer Relief Act of 
     1997 (Public Law 105-34) is repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall take effect as if included in the enactment of the 
     Taxpayer Relief Act of 1997 (Public Law 105-34).
                                 ______