[Congressional Record Volume 144, Number 85 (Thursday, June 25, 1998)]
[House]
[Pages H5304-H5307]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    WAIVING POINTS OF ORDER AGAINST CONFERENCE REPORT ON H.R. 2676, 
     INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998

  Mr. DREIER. Madam Speaker, by direction of the Committee on Rules, I 
call up House Resolution 490 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 490

       Resolved, That upon adoption of this resolution it shall be 
     in order to consider the conference report to accompany the 
     bill (H.R. 2676) to amend the Internal Revenue Code of 1986 
     to restructure and reform the Internal Revenue Service, and 
     for other purposes. All points of order against the 
     conference report and against its consideration are waived. 
     The conference report shall be considered as read.

  The SPEAKER pro tempore. The gentleman from California (Mr. Dreier) 
is recognized for 1 hour.
  Mr. DREIER. Madam Speaker, for the purpose of debate only, I yield 
the customary 30 minutes to my very good friend, the gentleman from 
Dayton, OH (Mr. Hall), pending which I yield myself such time as I may 
consume. During consideration of this resolution, all time yielded is 
for the purpose of debate only.
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks and include extraneous material).
  Mr. DREIER. Madam Speaker, this rule is needed to waive points of 
order against the conference report on H.R. 2676, the IRS Restructuring 
and Reform Act. This legislation is the culmination of years of 
dedicated effort and hard work by my colleague from Cincinnati, OH (Mr. 
Portman) and the chairman of the Committee on Ways and Means the 
gentleman from Texas (Mr. Archer).
  Before outlining the historic nature of the conference report this 
rule would make in order, I first want to applaud the gentleman from 
Texas for his tenacity in overcoming the Clinton administration's 
opposition to bringing some badly needed sanity to the tax code. I am 
referring, of course, to the provision to roll back the absurd 18-month 
capital gains holding period that the President insisted on in the 
Taxpayer Relief Act of 1997. That extra holding period turned the 
Schedule D form into the Rubik's Cube of tax forms, frustrating 
millions of families with unnecessary recordkeeping and complexity and 
also making it difficult for honest taxpayers to comply with the law.

                              {time}  1045

  Thanks to the inclusion, Madam Speaker, of the Archer rollback 
provision in this conference report, millions of American families will 
no longer have to endure endless hours of mindless calculations to 
complete that Schedule D.
  But there are other benefits to the rollback as well.
  Notwithstanding the static revenue estimate provided by the Joint 
Committee on Taxation, the Federal Government and State governments 
will see an increase in revenues from the effect of investors unlocking 
what heretofore has been unproductive capital. The unlocking effect 
from the reduction in the capital gains tax rate to 20 percent is 
primarily responsible for this year's budget surplus. Also, as our 
economy is further buffeted by the effects of the Asian economic 
crisis, streamlining the capital gains holding period will boost 
investment, capital formation and economic growth. And I will say 
parenthetically that I am very pleased that the Speaker has introduced 
legislation to take that top rate down to 15 percent. Nearly 170 of my 
colleagues, Democrats and Republicans alike, joined in the first 
session of the 105th Congress to get it to 14 percent.
  So, we are headed in the right direction.
  As I mentioned, this is a historic bill that will bring about the 
first comprehensive reform of the IRS in four decades. It will make the 
IRS more user friendly by, among other things, establishing an 
independent governing board and shifting the burden of proof from the 
taxpayer to the IRS in disputes that reach Tax Court. These reforms 
will make the IRS more accountable to the American people. They will 
enhance the fairness of the tax collection process by giving the 
taxpayer the benefit of the doubt when he or she has cooperated with 
the IRS and has documented evidence of compliance.
  These reforms will not solve the more intractable problems brought on 
by a complicated and inefficient Tax Code. The solutions to those 
broader problems require comprehensive reform of the Internal Revenue 
Code itself, which I hope the House will address next year. But the 
reforms contained in H.R. 2676 will go a long way toward protecting the 
right of taxpayers, making the IRS more accountable and restoring 
public confidence in the way the IRS enforces our tax laws.
  Madam Speaker, I urge my colleagues to support both the rule and the 
conference report.
  Madam Speaker, I reserve the balance of my time.
  Mr. HALL of Ohio. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, I want to thank my colleague from California (Mr. 
Dreier) for yielding me the time.
  As my colleague described, this is a rule for consideration of the 
conference report on H.R. 2676. This is a bill to restructure the 
Internal Revenue Service. The rule waives all points of order against 
the conference report. This bill will transform the agency into a more 
customer-service-oriented operation that resolves taxpayers' problems 
right away instead of letting problems drag on.
  I want to point out to my colleagues that the IRS has already taken 
steps to

[[Page H5305]]

improve service in advance of this bill. For example, it has expanded 
telephone assistance, it has instituted nationwide problem-solving 
days, it strengthened the Office of the Taxpayer Advocate and has 
increased accountability for IRS management.
  The legislation also directs the IRS commissioner to simplify the 
current complicated IRS structure and replace it with a new 
organization that will better serve taxpayers. This is a goal which is 
shared by the commissioner.
  I regret that the conferees inserted provisions in the conference 
report that do not belong and, in my opinion, are unwise.
  I am particularly concerned about the provision that changes the name 
of ``most-favored-nation'' trading status to ``normal trade'' 
relations. This name change is more than just symbolism. It is a 
prelude to a fundamental shift in the way we set our trading policies.
  Madam Speaker, most-favored-nation trading status is earned by our 
trading partners. It is a reward for nations that have policies we can 
support. It can be denied to countries that do not conform, do not 
conform to our high standards such as those with a record of extreme 
human rights violations.
  Changing the name is part of an effort to reduce the use of trade 
status as a tool of diplomacy especially to combat human rights abuses. 
If we change the name to ``normal trade'' relations, the implication is 
that all countries are entitled to this status.
  The term ``most-favored-nation'' goes back to the 18th century. It 
has been used throughout the history of the United States and by our 
trading partners. It has worked well and should not be changed.
  When the Committee on Rules considered the rule, I offered a motion 
to delete this section. Despite some support I received in the 
committee, and I appreciate that support, my amendment did fail.
  I will not oppose the rule and risk delaying the legislation which is 
important to the American people. However, I remain opposed to the MFN 
provision in the manner in which it is being forced upon the House.
  Madam Speaker, I reserve the balance of my time.
  Mr. DREIER. Madam Speaker, I have no requests for time, and I reserve 
the balance of my time.
  Mr. HALL of Ohio. Madam Speaker, I yield 3 minutes to the gentlewoman 
from California (Ms. Pelosi).
  Ms. PELOSI. Madam Speaker, I thank the gentleman from Ohio (Mr. Hall) 
for yielding this time to me. I rise, unfortunately, I rise in 
opposition to the rule on a bill that I had hoped to come to the floor 
to support today, and I do say I regretfully oppose this rule for the 
following reason:
  There has been a good deal of debate about trade with China in this 
Congress. But I really did not think we would be having any today as 
the President starts his trip. I have myself refrained from speaking on 
this floor about that issue, as I say, while our President is in China. 
But then I found out that the Committee on Ways and Means had sneaked 
this provision into this bill. When I had spoken to members of the 
committee, they said, ``No, it's not in there; I've read the entire 
bill, it's not in there.'' But upon further investigation it was 
learned that changing the name of ``most favored nation'' status to 
``normal trade'' status was put into this bill.
  I can understand why my colleagues would not want to face up to this, 
because it is not right, and they must be ashamed of what they are 
doing or else they would let this decision be faced by this Congress 
standing on its own in the full light of day. But, my colleagues, you 
can call it whatever we want. It is not a rose, so I will not say a 
rose by any other name is still a rose because it is more like a thorn, 
a thorn in the side of the American worker.
  I have here the chart about the trade deficits with the People's 
Republic of China, and if I continued this chart to 1998, my colleagues 
would see that in the years of the Clinton administration alone, by the 
end of 1998, the trade deficit with China will be about a quarter of a 
trillion dollars. That is not million with an M, billion with a B, it 
is TR, trillion dollars, and that trade deficit continues to grow.
  Our colleagues boast that China buys nearly $13 billion from us, and 
that that number has increased. At the same time, the Chinese exports 
to the United States have grown to $62 billion for 1997, will be close 
to $80 billion for 1998, resulting in a trade deficit projected for 
1998 of about over $63 billion.
  In addition to the high tariffs which block access to most products 
made in America to the Chinese market, China has engaged in other 
nontariff barriers to our products. Let us talk about the tariffs for a 
moment. And do not take my word for it. This is the Foreign Trade 
Barriers Report of the U.S. Trade Representative's Office. It is the 
1998 National Trade Estimate Report, and in it the trade rep says China 
restricts imports through a variety of means including high tariffs and 
taxes, nontariff measures and limitations on which enterprises can 
import, and other barriers. For example, China has used prohibitively 
high tariffs which in late 1997 still reached as high as 100 percent on 
some motor vehicles.
  In the interests of time I will not read all of that, but just to 
conclude on that point, I say that these nominal high tariff rates to 
which China adds applicable value-added taxes on some goods, 
consumption taxes contribute to inefficiencies in China's economy pose 
a major threat to U.S. commercial opportunities.
  I would not be opposed to most favored-nation-status for China if 
China extended it to the United States. In addition, in terms of 
service barriers, while China has promised to liberalize access, 
restrictive investment laws, lack of transparency and arbitrary 
application of regulations and laws limit U.S. service imports, exports 
and investments in China. My colleagues can read for themselves more 
and more about that in here.
  Since Tiananmen Square in 1998, the trade deficit has soared from $3 
billion at that time to a projected $63 billion for 1998. It is 
important for our colleagues to note that because of these high tariffs 
most products made in America do not have access to the Chinese market. 
Indeed, less than 2 percent of our exports are allowed into the Chinese 
market, while we import nearly over 35 percent of Chinese exports into 
our market.
  The list goes on and on about lack of market access, violation of 
intellectual property which continues (ask the software industry), 
technology transfer, production transfer, transshipment of textile 
goods, and the use of forced labor for export. The trade violations 
alone would be enough to say that this is not, call it what we want, a 
normal trade relationship, and then when we consider the leverage that 
we would have with this huge trade deficit to improve the human rights 
situation in China and to stop the proliferation of weapons of mass 
destruction, my colleagues can see that we are wasting an opportunity.
  Speaking of the President's trip, one of the commentators said, 
``Well, when the President goes there, we will see that there's more in 
China than repression.'' Well, as long as repression is there, we 
should use every tool at our disposal to make sure that it does not 
exist. If we are true to who we are as Americans, the central core 
value of promoting democratic values should be central. It should be 
not only on the table, it should be the table on which other concerns 
rest.
  And so I say with regret, ``Shame, shame, shame that the Committee on 
Ways and Means with the Committee on Rules is sneaking this in so that 
Members are forced to vote for something in the dark in the interests 
of passing a bigger law.''
  Mr. DREIER. Madam Speaker, I yield myself such time as I might 
consume to respond to the statement of my very good friend from 
California (Ms. Pelosi).
  For starters, this was not secretively stuck into this measure. It 
has been, discussed frankly for years. There are many people who for a 
long period of time have said, ``Why don't we have truth in 
advertising? Why is it that we call something that is not in fact a 
favored nation status what it is: normal trade relations?''
  So for years people have been advocating this, and over the last 
several weeks a number of individuals have said, ``Gosh, as we proceed 
with the debate on the traditional MFN issue which will be coming up 
most likely the week of July 20, a number of people, Democrats and 
Republicans alike, said, ``Why don't we find an opportunity to finally 
establish normal

[[Page H5306]]

trade relations and call them exactly what they are?' ''.
  There are five countries that do not enjoy what is now considered to 
be a so-called most-favored-nation trading status. They are 
Afghanistan, Cuba, Laos, North Korea and Vietnam. It is basically the 
rest of the world has this kind of status, and we believe very strongly 
that it is important for us to do what we can to get our Western values 
into China.
  Now my friend from San Francisco very correctly talked about the 
imbalance of trade with the People's Republic of China that exists, and 
she is right, there is an imbalance of trade. But there are two points 
that I would like to make as it relates to that. First and foremost, 
she falls into that trap of the neo-mercantilist view of trade, that 
the only benefit for trade is exports; not recognizing that the 
standard of living in the United States of America is as high as it is 
because the world has access to our consumer market.
  And the second point that I think is very important that needs to be 
made here is the fact that as we have observed job shifts, they have 
taken place within the Pacific Rim. It is not this flow of U.S. jobs 
that have been going to China, as some would have us believe, but it 
has been the shift of jobs from Singapore, Taiwan, Hong Kong, South 
Korea and other countries within the Pacific Rim.
  As we have seen those shifts take place, what has happened?

                              {time}  1100

  We have been able to see the cost of products coming into the United 
States and going to the other parts of the world come at a lower level. 
So it seems to me all we are providing here is truth in advertising by 
changing this from ``MFN'' to ``normal trade relations.'' It is the 
right thing to do. Even opponents of MFN in the past have told me, 
``Why don't you call it exactly what it is?''
  So we are doing the right thing here, and I urge my colleagues to 
support both the rule and the conference report when we proceed with 
it.
  Madam Speaker, I reserve the balance of my time.
  Mr. HALL of Ohio. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, I would respond to my friend, the gentleman from 
California (Mr. Dreier), in that I too am opposed to the changing of 
the name to normal trade relations from most-favored-nation, because I 
do not really think it is a normal trade situation.
  I think it is a privilege to trade with this country. It is what this 
country is all about. It is what we stand for. We stand for fairness, 
we stand for fighting oppression. We stand for not only loving other 
people, but we also stand for displeasure when a country does something 
that is very much what we think is not only against the interests of 
our country, but against the interests of all people.
  For years, even from the 18th century, we have spoken out about most-
favored-nation. That is a name that is beyond symbolism. It carries the 
name of the United States. It means our country and what we stand for. 
It is a connotation that is good and it is right.
  I remember when the gentleman from Virginia (Mr. Wolf) and the 
gentleman from New Jersey (Mr. Smith) and myself went to Romania 
several years ago. The people in Romania, especially the people that 
had been oppressed, would press upon us as we spoke in churches and 
different places, and they would press notes all over us, put them in 
our pockets, and when we got back to our hotel at night, we would have 
50, 60 notes of people telling us about torture and oppression, to 
please do something about it. Even then, under the old regime of 
Romania, people understood what most-favored-nation status was all 
about.
  When we came back, the gentleman from Virginia (Mr. Wolf), the 
gentleman from New Jersey (Mr. Smith) and myself sponsored legislation 
to take most-favored-nation away from Romania because it was not normal 
trade relations. It was something that is very special.
  It took us three years to fight that, and we fought it on the floor. 
We finally succeeded, and a year later, a year later, the country's 
power, the country's government did fall. I cannot say it was as a 
result of us taking most-favored-nation away, but I think it helped 
because it enabled us in this country to speak out towards oppression, 
whether it be religious, political, economic, whatever it would be.
  Most-favored-nation is something we have had for years in this 
country, and it is something that both people that are in favor and 
people that are not in favor, dissidents all over the world have come 
to understand what it means. It is not normal. It is a privilege, and 
we want to defend it. We believe in it, and that is why we are very 
much against this change in the name.
  Mr. DREIER. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I would simply say that my colleague, the gentleman 
from Ohio (Mr. Hall), and I obviously share the exact same goal. It is 
very clear that those of us who believe in the power of markets want to 
deal with the horrendous repression that exists in China and other 
parts of the world. It is just that we believe passionately that 
western values are best epitomized with the movement of free markets, 
and we believe that the best way to undermine political repression is 
to get those things in there. In fact, I have concluded and said here 
time and time again that trade promotes private enterprise, which 
creates wealth, which improves living standards, which undermines 
political repression.
  So I would just like the record to show, Madam Speaker, that the 
gentleman from Ohio (Mr. Hall) and I share the exact same goals. We 
obviously are approaching them in a slightly different way.
  Madam Speaker, I yield 2 minutes to the gentleman from San Diego, 
California (Mr. Bilbray), my very good friend, who is an expert on tax 
issues and is very pleased with a provision that has been incorporated 
in this conference report dealing with the effective date on the Tax 
Code.
  Mr. BILBRAY. Madam Speaker, I have to make an editorial note that 
this issue of what is a most-favored-nation status reminds me of the 
rest of the ``Washington speak''. This is the city where you can have a 
7.5 percent increase and they call it a cut; call something a balanced 
budget that the rest of America would not call a balanced budget; and 
now we talk about most-favored-nation relationship, and it is a 
misnomer.
  It is not about China or anything else. I think we need to talk about 
is Washington going to start speaking plain English like the rest of 
us? The most-favored-nation status to America happens to be Canada and 
Mexico. That is a fact of life. Some people may not like it, some of us 
are concerned about it, but I think the issue here about do we speak 
plain English when we start talking about our business in this body, I 
think there is a good argument of saying we should do it across the 
board, not just with the trade issue.
  But getting back to home, let us talk about something near and dear 
to Americans here in the United States, and that is our tax structure, 
our Tax Code.
  Madam Speaker, I happen to own a tax business and have owned a family 
tax business for a while now. My wife runs our tax business. I just got 
off the phone with the young lady who runs my business, my wife, and 
her comment was this. ``When you start talking taxes, you start talking 
thresholds, will you please try to make it as simple as possible?''
  Why do Americans across this country have to go to people like my 
wife to be able to get their taxes done? It is because Washington keeps 
making it more complicated.
  I want to praise this bill because it finally is getting back to the 
basics. Let us start with January 1 as being the beginning of the year. 
What a radical concept. Finally we are getting a message across that 
maybe Washington should start living by the rules that everybody else 
lives by, and one of them is January 1 should be the beginning of the 
time for our tax year, as much as possible.
  I praise this bill and I want to reflect the praise that my wife 
sends to this Congress, of keep it simple when you can. Let us make it 
January 1, the beginning of the year. I want to thank the Congress for 
doing that.
  Also, let us say this is the beginning of doing other things, of 
making the entire Tax Code simpler.

[[Page H5307]]

  Mr. HALL of Ohio. Madam Speaker, I yield 2 minutes to the gentlewoman 
from California (Mrs. Capps).
  Mrs. CAPPS. Madam Speaker, I thank the gentleman for yielding me 
time.
  Madam Speaker, I rise to support this rule and this bill which will 
finally bring reform to the Internal Revenue System.
  In my recent campaign I spoke about taxes with thousands of residents 
of the central coast of California. They told me three things: First, 
get the IRS off the backs of innocent taxpayers; second, simplify the 
Tax Code; and, third, please let us keep a little more of our hard-
earned money in our pockets.
  This important bill does all three. No longer will American taxpayers 
be considered guilty until proven innocent. The capital gains tax has 
been simplified, which will bring welcome relief to everyone who has 
struggled with this complicated new Schedule D form, and the capital 
gains provision will allow working families to use more of their 
investment income for important needs like retirement or college 
education.
  This is a good bill. It is long overdue. I urge my colleagues to 
support the IRS Restructuring and Reform Act.
  Mr. DREIER. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I rise simply to associate myself with the very 
eloquent words of my very dear friend, the gentlewoman from Santa 
Barbara, California (Mrs. Capps).
  Mr. HALL of Ohio. Madam Speaker, I yield two minutes to the gentleman 
from New Jersey (Mr. Rothman).
  (Mr. ROTHMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. ROTHMAN. Madam Speaker, I am pleased to see that we are finally 
taking up passage of legislation designed to rein in the IRS. We have 
all heard the stories about the worst IRS nightmares in the Nation, 
people committing suicide, families going bankrupt and losing their 
small businesses. Last October I walked door-to-door and business-to-
business in my district and heard from taxpayers about their own 
battles with the IRS.
  The IRS has an extremely important job to do, but today we are making 
their job a little bit easier, and we are making the IRS a more fair, 
more efficient, and more taxpayer-friendly agency. But my friends, this 
bill is only the beginning. Next we must repeal the marriage penalty, 
which punishes two-income married couples. A married couple pays more 
in income taxes than if they were unmarried. This is simply unfair and 
sends the wrong message about the importance of families in our 
country. We must repeal the marriage penalty now.
  Finally, we must also make our Tax Code much simpler. Anyone who has 
spent long hours huddled over their 1040 with broken pencils and piles 
of frustration knows that our tax system today is simply too 
complicated. We must simplify the Tax Code so that the average American 
does not need a Ph.D. in accounting to complete his or her taxes.
  I urge support for this first step in IRS reform.
  Mr. HALL of Ohio. Madam Speaker, I have no further requests for time, 
and I yield back the balance of my time.
  Mr. DREIER. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, I rise to simply encourage my colleagues to support 
this rule. It is a very fair and balanced rule. It will finally bring 
about much needed reform of the Internal Revenue Service, which the 
American people are desperately seeking. It will provide truth in 
advertising by finally taking that MFN moniker and changing it to what 
it is, normal trade relations. I hope we can pass this overwhelmingly.
  Of course, it will bring the very, very important end to that 
horrendous 18-month holding period on capital gains, which cannot be 
forgotten. I know my friend in the Chair was a cosponsor of H.R. 14 to 
cut that top rate on capital gains, and we are hoping to go further 
with that, but this is a very good first step.
  Madam Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore (Mrs. Emerson). The question is on the 
resolution.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.

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