[Congressional Record Volume 145, Number 14 (Tuesday, January 26, 1999)]
[Senate]
[Pages S1011-S1012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself and Mr. Thurmond):
  S. 309. A bill to amend the Internal Revenue Code of 1986 to provide 
that a member of the uniformed services shall be treated as using a 
principal residence while away from home or qualified official extended 
duty in determining the exclusion of gain from the sale of such 
residence; to the Committee on Finance.


             the uniformed services home sales act of 1999

 Mr. McCAIN. Mr. President, I, along with Senator Thurmond, and 
others are proud to sponsor this bill to allow members of the Uniformed 
Services, who are away on extended active duty, to qualify for the same 
tax relief on the profit generated when they sell their main residence 
as other Americans.

[[Page S1012]]

  This bill will not create a new tax benefit; it merely modifies 
current law to include the time members of the Uniformed Services are 
away from home on active duty when calculating the number of years the 
homeowners has lived in their primary residence. In short, this bill is 
narrowly tailored to remedy a specific dilemma.
  The Taxpayer Relief Act of 1997 delivered sweeping tax relief to 
millions of Americans through a wide variety of important tax changes 
that affect individuals, families, investors and businesses. It was 
also one of the most complex tax laws enacted in recent history.
  Mr. President, as with any complex legislation, there are winners and 
losers. But in this instance, there are unintended losers: members of 
the Uniformed Services.
  The 1997 act gives taxpayers who sell their principal residence a 
much-needed tax break. Prior to the 1997 act, taxpayers received a one-
time exclusion on the profit they made when they sold their principal 
residence, but the taxpayer had to be at least 55 years old and live in 
the residence for 2 of the 5 years preceding the sale. This provision 
primarily benefitted elderly taxpayers, while not providing any relief 
to younger taxpayers and their families.
  Fortunately, the 1997 act addressed this issue. Under this law, 
taxpayers who sell their principal residence on or after May 7, 1997, 
are not taxed on the first $250,000 of profit from the sale, joint 
filers are not taxed on the first $500,000 of profit they make from 
selling their principal residence. The taxpayer must meet two 
requirements to qualify for this tax relief. The taxpayer must (1) own 
the home for at least 2 of the 5 years preceding the sale, and (2) live 
in the home as their main home for at least 2 years of the last 5 
years.
  Mr. President, I applaud the bipartisan cooperation that resulted in 
this much-needed form of tax relief. The home sales provision sounds 
great, and it is. Unfortunately, the second part of this eligibility 
test unintentionally and unfairly prohibits many of our women and men 
in the armed forces from qualifying for this beneficial tax relief.
  Constant travel across the United States and abroad is inherent in 
the Uniformed Services. Nonetheless, some members of the Uniformed 
Services choose to purchase a home in a certain locale, even though 
they will not live there much of the time. Under the new law, if a 
serviceman does not have a spouse who resides in the house during his 
absence or the spouse is also in the military and also must travel, 
that service member will not qualify for the full benefit of the new 
home sales provision, because no one ``lives'' in the home for the 
required period of time. The law is prejudiced against dual-military 
couples who are often away on active duty. They would not qualify for 
the home sales exclusion because neither spouse ``live'' in the house 
for enough time to qualify for the exclusion.
  This bill simply remedies an inequality in the 1997 law. The bill 
amends the Internal Revenue Code so that members of the Uniformed 
Services will be considered to be using their house as their main 
residence for any period that they are away on extended active duty. In 
short, members of the Uniformed Service will be deemed to be using 
their house as their main home, even if they are stationed in Bosnia, 
the Persian Gulf, in the ``no man's land,'' commonly called the DMZ 
between North and South Korea, or anywhere else on active duty orders.
  In 1998 alone, the United States had approximately 37,000 men and 
women deployed to the Persian Gulf region, preparing to go into combat, 
if so ordered. There were also 8,000 American troops deployed in 
Bosnia, and another 70,000 U.S. military personnel deployed in support 
of other commitments worldwide. That is a total of 108,000 women and 
men deployed outside of the United States, away from their primary 
home, protecting and furthering the freedoms we Americans hold so dear.
  We are in a period of robust growth. Many Americans are reaping the 
benefits of our country's growth by investing in the stock market. Many 
of our nation's recent millionaires became millionaires through the 
stock market. However, many middle- and lower-income Americans do not 
hold vast amounts of stocks, bonds, mutual funds, and the like. 
Therefore, how does the average American participate in our nation's 
robust growth? Through home ownership.
  Appreciation in the value of a home because of our country's overall 
economic growth allows everyday Americans to participate in our 
country's prosperity. Fortunately, the Taxpayer Relief Act of 1997 
recognized this and provided this break to lessen the amount of tax 
most Americans will pay on the profit they make when they sell their 
homes.
  The 1997 home sale provision unintentionally discourages home 
ownership among members of the Uniformed Services, which is bad fiscal 
policy. Home ownership has numerous benefits for communities and 
individual homeowners. Having a fixed home provides Americans with a 
sense of community and adds stability to our nation's neighborhoods. 
Home ownership also generates valuable property taxes for our nation's 
communities.
  We also cannot afford to discourage military service by penalizing 
military personnel with higher taxes merely because they are doing 
their job. Military service entails sacrifice, such as long periods of 
time away from friends and family and the constant threat of 
mobilization into hostile territory. We must not use the tax code to 
heap additional burdens upon our women and men in uniform.
  In my view, the way to decrease the likelihood of further 
inequalities in the tax code, intentional or otherwise, is to adopt a 
fairer, flatter tax system that is far less complicated than our 
current system. But, in the meantime, we must insure that the Tax Code 
is as fair and equitable as possible.
  The Taxpayers' Relief Act of 1997 was designed to provide sweeping 
tax relief to all Americans, including our women and men in uniform. 
Yes, it is true that there are winners and losers in any tax code, but, 
this inequity was unintended, Enacting this narrowly tailored remedy to 
grant equal tax relief to the members of our Uniformed Services 
restores fairness and consistency to our increasingly complex Tax 
Code.
                                 ______