[Congressional Record Volume 145, Number 57 (Monday, April 26, 1999)]
[Senate]
[Pages S4185-S4191]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. INOUYE:
S. 874. A bill to repeal the reduction in the deductible portion of
expenses for business meals and entertainment; to the Committee on
Finance.
REPEAL THE REDUCTION IN BUSINESS MEALS AND ENTERTAINMENT TAX DEDUCTION
Mr. INOUYE. Mr. President, I rise to introduce legislation to repeal
the current fifty percent tax deduction for business meals and
entertainment expenses, and to gradually restore the tax deduction to
80 percent over a five-year period. Restoration of this deduction is
essential to the livelihood of the food service, travel, tourism, and
entertainment industries throughout the United States. These industries
are being economically harmed as a result of the 50 percent tax
deduction.
The deduction for business meals and entertainment was reduced from
80 percent to 50 percent under the Omnibus Budget Reconciliation Act of
1993, and went into effect on January 1, 1994. Many companies, small
and large, have changed their policies and guidelines on travel and
entertainment expenses as a result of this reduction. Additionally,
businesses have been forced to curtail company reimbursement policies
because of the reduction in business meals and entertainment expenses.
In some cases, businesses have even eliminated their expense accounts.
Consequently, restaurants which previously relied heavily on business
lunches and dinners are being adversely affected by the reduction in
business meals. For example:
Currently, there are 23.3 million business meal spenders in the U.S.
down from 25.3 million in 1989.
The total economic impact on small businesses of restoring the
business meal deductibility from 50 percent to 80 percent ranges from
$8 to $690 million, depending on the state.
In Hawaii, the restaurant industry alone employs 47,400 people and
generates $2 billion into the state's economy. An increase in the
business meal tax deduction from 50 percent to 80 percent would result
in a 13 percent increase in business meal spending in the State of
Hawaii.
One issue of great importance to business travelers is the
deductibility of expenses, particularly the business meal expense.
Restauranteurs have reported lower business meal sales forcing some
restaurants to close during luncheon hours and lay off employees which
in turn adversely affects those employed in agriculture, food
processing, and any businesses related to the restaurant sector.
With sales equaling more than 4 percent of the U.S. gross domestic
product, and more than 10.2 million persons employed in the industry,
the restaurant business is obviously very important to the economic
foundation of America. The 50 percent deduction has adversely affected
the restaurant and entertainment industry and resulted in detrimental
factors for the U.S. economy as a whole. I urge my colleagues to join
me in cosponsoring this important legislation.
Mr. President, I ask unanimous consent that the bill text be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 874
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. REPEAL OF REDUCTION IN BUSINESS MEALS AND
ENTERTAINMENT TAX DEDUCTION.
(a) In General.--Section 274(n)(1) of the Internal Revenue
Code of 1986 (relating to only 50 percent of meal and
entertainment expenses allowed as deduction) is amended by
striking ``50 percent'' and inserting ``the applicable
percentage''.
(b) Applicable Percentage.--Section 274(n) of the Internal
Revenue Code of 1986 is amended by striking paragraph (3) and
inserting the following:
``(3) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means the percentage
determined under the following table:
``For taxable years
beginning-- The applicable
in calendar year-- percentage is--
1999..........................................................56 ....
2000..........................................................62 ....
2001..........................................................68 ....
2002..........................................................74 ....
2003 or thereafter..........................................80.''....
(c) Conforming Amendment.--The heading for section 274(n)
of the Internal Revenue Code of 1986 is amended by striking
``Only 50 percent'' and inserting ``Portion''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.
______
By Mr. ALLARD (for himself, Mr. Gramm, Mr. Bennett, Mr. Shelby,
Mr. Abraham, Mr. Hagel, Mr. Enzi, Mr. Mack, and Mr. Grams):
S. 875. A bill to amend the Internal Revenue Code of 1986 to expand S
corporation eligibility for banks, and for other purposes; to the
Committee on Finance.
small business and financial institutions tax relief act of 1999
Mr. ALLARD. Mr. President, today I am pleased to introduce
legislation that will expand and improve Subchapter S of the Internal
Revenue Code. I am joined in this effort by Senators Gramm, Bennett,
Shelby, Abraham, Hagel, Enzi, Mack, and Grams.
The Subchapter S provisions of the Internal Revenue Code reflect the
desire of Congress to eliminate the double tax burden on small business
corporations. Pursuant to that desire, Subchapter S has been
liberalized a number of times, most recently in 1996. This legislation
contains several provisions that will make the Subchapter S election
more widely available to small businesses in all sectors. It also
contains several provisions of particular benefit to community banks
that may be contemplating a conversion to Subchapter S. Financial
institutions were first made eligible for the Subchapter S election in
1996. This legislation builds on and clarifies the Subchapter S
provisions applicable to financial institutions.
Mr. President, I ask unanimous consent that the text of the bill and
the attached explanation of the provisions of the bill be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 875
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business and Financial
Institutions Tax Relief Act of 1999''.
SEC. 2. EXPANSION OF S CORPORATION ELIGIBLE SHAREHOLDERS TO
INCLUDE IRAS.
(a) In General.--Section 1361(c)(2)(A) of the Internal
Revenue Code of 1986 (relating to certain trusts permitted as
shareholders) is amended by inserting after clause (v) the
following:
``(vi) A trust which constitutes an individual retirement
account under section 408(a), including one designated as a
Roth IRA under section 408A.''
(b) Treatment as Shareholder.--Section 1361(c)(2)(B) of the
Internal Revenue Code of 1986 (relating to treatment as
shareholders) is amended by adding at the end the following:
``(vi) In the case of a trust described in clause (vi) of
subparagraph (A), the individual for whose benefit the trust
was created shall be treated as a shareholder.''
[[Page S4186]]
(c) Sale of Stock in IRA Relating To S Corporation Election
Exempt From Prohibited Transaction Rules.--Section 4975(d) of
the Internal Revenue Code of 1986 (relating to exemptions) is
amended by striking ``or'' at the end of paragraph (14), by
striking the period at the end of paragraph (15) and
inserting ``; or'', and by adding at the end the following:
``(16) a sale of stock held by a trust which constitutes an
individual retirement account under section 408(a) to the
individual for whose benefit such account is established if
such sale is pursuant to an election under section 1362(a).''
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 3. EXCLUSION OF INVESTMENT SECURITIES INCOME FROM
PASSIVE INCOME TEST FOR BANK S CORPORATIONS.
(a) In General.--Section 1362(d)(3)(C) of the Internal
Revenue Code of 1986 (defining passive investment income) is
amended by adding at the end the following:
``(v) Exception for banks; etc.--In the case of a bank (as
defined in section 581), a bank holding company (as defined
in section 246A(c)(3)(B)(ii)), or a qualified subchapter S
subsidiary bank, the term `passive investment income' shall
not include--
``(I) interest income earned by such bank, bank holding
company, or qualified subchapter S subsidiary bank, or
``(II) dividends on assets required to be held by such
bank, bank holding company, or qualified subchapter S
subsidiary bank to conduct a banking business, including
stock in the Federal Reserve Bank, the Federal Home Loan
Bank, or the Federal Agricultural Mortgage Bank or
participation certificates issued by a Federal Intermediate
Credit Bank.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1996.
SEC. 4. INCREASE IN NUMBER OF ELIGIBLE SHAREHOLDERS TO 150.
(a) In General.--Section 1361(b)(1)(A) of the Internal
Revenue Code of 1986 (defining small business corporation) is
amended by striking ``75'' and inserting ``150''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 5. TREATMENT OF QUALIFYING DIRECTOR SHARES.
(a) In General.--Section 1361 of the Internal Revenue Code
of 1986 is amended by adding at the end the following:
``(f) Treatment of Qualifying Director Shares.--
``(1) In general.--For purposes of this subchapter--
``(A) qualifying director shares shall not be treated as a
second class of stock, and
``(B) no person shall be treated as a shareholder of the
corporation by reason of holding qualifying director shares.
``(2) Qualifying director shares defined.--For purposes of
this subsection, the term `qualifying director shares' means
any shares of stock in a bank (as defined in section 581) or
in a bank holding company registered as such with the Federal
Reserve System--
``(i) which are held by an individual solely by reason of
status as a director of such bank or company or its
controlled subsidiary; and
``(ii) which are subject to an agreement pursuant to which
the holder is required to dispose of the shares of stock upon
termination of the holder's status as a director at the same
price as the individual acquired such shares of stock.
``(3) Distributions.--A distribution (not in part or full
payment in exchange for stock) made by the corporation with
respect to qualifying director shares shall be includible as
ordinary income of the holder and deductible to the
corporation as an expense in computing taxable income under
section 1363(b) in the year such distribution is received.''
(b) Conforming Amendments.--
(1) Section 1361(b)(1) of the Internal Revenue Code of 1986
is amended by inserting ``, except as provided in subsection
(f),'' before ``which does not''.
(2) Section 1366(a) of such Code is amended by adding at
the end the following:
``(3) Allocation with respect to qualifying director
shares.--The holders of qualifying director shares (as
defined in section 1361(f)) shall not, with respect to such
shares of stock, be allocated any of the items described in
paragraph (1).''
(3) Section 1373(a) of such Code is amended by striking
``and'' at the end of paragraph (1), by striking the period
at the end of paragraph (2) and inserting ``, and'', and
adding at the end the following:
``(3) no amount of an expense deductible under this
subchapter by reason of section 1361(f)(3) shall be
apportioned or allocated to such income.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1996.
SEC. 6. BAD DEBT CHARGE OFFS IN YEARS AFTER ELECTION YEAR
TREATED AS ITEMS OF BUILT-IN LOSS.
The Secretary of the Treasury shall modify Regulation
1.1374-4(f) for S corporation elections made in taxable years
beginning after December 31, 1996, with respect to bad debt
deductions under section 166 of the Internal Revenue Code of
1986 to treat such deductions as built-in losses under
section 1374(d)(4) of such Code during the entire period
during which the bank recognizes built-in gains from changing
its accounting method for recognizing bad debts from the
reserve method under section 585 of such Code to the charge-
off method under section 166 of such Code.
SEC. 7. INCLUSION OF BANKS IN 3-YEAR S CORPORATION RULE FOR
CORPORATE PREFERENCE ITEMS.
(a) In General.--Section 1363(b) of the Internal Revenue
Code of 1986 (relating to computation of corporation's
taxable income) is amended by adding at the end the following
new flush sentence:
``Paragraph (4) shall apply to any bank whether such bank is
an S corporation or a qualified subchapter S subsidiary.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 8. C CORPORATION RULES TO APPLY FOR FRINGE BENEFIT
PURPOSES.
(a) In General.--Section 1372 of the Internal Revenue Code
of 1986 (relating to partnership rules to apply for fringe
benefit purposes) is repealed.
(b) Partnership Rules To Apply for Health Insurance Costs
of Certain S Corporation Shareholders.--Paragraph (5) of
section 162(1) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(5) Treatment of certain s corporation shareholders.--
``(A) In general.--This subsection shall apply in the case
of any 2-percent shareholder of an S corporation, except
that--
``(i) for purposes of this subsection, such shareholder's
wages (as defined in section 3121) from the S corporation
shall be treated as such shareholder's earned income (within
the meaning of section 401(c)(1)), and
``(ii) there shall be such adjustments in the application
of this subsection as the Secretary may by regulations
prescribe.
``(B) 2-percent shareholder defined.--For purposes of this
paragraph, the term `2-percent shareholder' means any person
who owns (or is considered as owning within the meaning of
section 318) on any day during the taxable year of the S
corporation more than 2 percent of the outstanding stock of
such corporation or stock possessing more than 2 percent of
the total combined voting power of all stock of such
corporation.''
(c) Conforming Amendment.--The table of sections for part
III of subchapter S of chapter 1 of the Internal Revenue Code
of 1986 is amended by striking the item relating to section
1372.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 9. EXPANSION OF S CORPORATION ELIGIBLE SHAREHOLDERS TO
INCLUDE FAMILY LIMITED PARTNERSHIPS.
(a) In General.--Section 1361(b)(1)(B) of the Internal
Revenue Code of 1986 (defining small business corporation) is
amended--
(1) by striking ``or an organization'' and inserting ``an
organization'', and
(2) by inserting ``, or a family partnership described in
subsection (c)(8)'' after ``subsection (c)(6)''.
(b) Family Partnership.--Section 1361(c) of the Internal
Revenue Code of 1986 (relating to special rules for applying
subsection (b)), as amended by section 5, is amended by
adding at the end the following:
``(8) Family partnerships.--
``(A) In general.--For purposes of subsection (b)(1)(B),
any partnership or limited liability company may be a
shareholder in an S corporation if--
``(i) all partners or members are members of 1 family as
determined under section 704(e)(3), and
``(ii) all of the partners or members would otherwise be
eligible shareholders of an S corporation.
``(B) Treatment as shareholders.--For purposes of
subsection (b)(1)(A), in the case of a partnership or limited
liability company described in subparagraph (A), each partner
or member shall be treated as a shareholder.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 10. ISSUANCE OF PREFERRED STOCK PERMITTED.
(a) In General.--Section 1361 of the Internal Revenue Code
of 1986, as amended by section 5(a), is amended by adding at
the end the following:
``(g) Treatment of Qualified Preferred Stock.--
``(1) In general.--For purposes of this subchapter--
``(A) qualified preferred stock shall not be treated as a
second class of stock, and
``(B) no person shall be treated as a shareholder of the
corporation by reason of holding qualified preferred stock.
``(2) Qualified preferred stock defined.--For purposes of
this subsection, the term `qualified preferred stock' means
stock which meets the requirements of subparagraphs (A), (B),
and (C) of section 1504(a)(4). Stock shall not fail to be
treated as qualified preferred stock solely because it is
convertible into other stock.
``(3) Distributions.--A distribution (not in part or full
payment in exchange for stock) made by the corporation with
respect to qualified preferred stock shall be includible as
ordinary income of the holder and deductible to the
corporation as an expense in computing taxable income under
section 1363(b) in the year such distribution is received.''
(b) Conforming Amendments.--
(1) Section 1361(b)(1) of the Internal Revenue Code of
1986, as amended by section 5(b)(1), is amended by striking
``subsection (f)'' and inserting ``subsections (f) and (g)''.
[[Page S4187]]
(2) Section 1366(a) of such Code, as amended by section
5(b)(2), is amended by adding at the end the following:
``(4) Allocation with respect to qualified preferred
stock.--The holders of qualified preferred stock (as defined
in section 1361(g)) shall not, with respect to such stock, be
allocated any of the items described in paragraph (1).''
(3) Section 1373(a)(3) of such Code, as added by section
5(b)(3), is amended by inserting ``or 1361(g)(3)'' after
``section 1361(f)(3)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1999.
SEC. 11. CONSENT TO ELECTIONS.
(a) 90 Percent of Shares Required for Consent to
Election.--Section 1362(a)(2) of the Internal Revenue Code of
1986 (relating to all shareholders must consent to election)
is amended--
(1) by striking ``all persons who are shareholders in'' and
inserting ``shareholders holding at least 90 percent of the
shares of'', and
(2) by striking ``All shareholders'' in the heading and
inserting ``At least 90 percent of shares''.
(b) Rules for Consent.--Section 1362(a) of the Internal
Revenue Code of 1986 (relating to election) is amended by
adding at the end the following:
``(3) Rules for consent.--For purposes of making any
consent required under paragraph (2) or subsection
(d)(1)(B)--
``(A) each joint owner of shares shall consent with respect
to such shares,
``(B) the personal representative or other fiduciary
authorized to act on behalf of the estate of a deceased
individual shall consent for the estate,
``(C) one parent, the custodian, the guardian, or the
conservator shall consent with respect to shares owned by a
minor or subject to a custodianship, guardianship,
conservatorship, or similar arrangement,
``(D) the trustee of a trust shall consent with respect to
shares owned in trust,
``(E) the trustee of the estate of a bankrupt individual
shall consent for shares owned by a bankruptcy estate,
``(F) an authorized officer or the trustee of an
organization described in subsection (c)(6) shall consent for
the shares owned by such organization, and
``(G) in the case of a partnership or limited liability
company described in subsection (c)(8)--
``(i) all general partners shall consent with respect to
shares owned by such partnership,
``(ii) all managers shall consent with respect to shares
owned by such company if management of such company is vested
in 1 or more managers, and
``(iii) all members shall consent with respect to shares
owned by such company if management of such company is vested
in the members.''
(c) Treatment of Nonconsenting Shareholder Stock.--
(1) In general.--Section 1361 of the Internal Revenue Code
of 1986, as amended by section 10(a), is amended by adding at
the end the following:
``(h) Treatment of Nonconsenting Shareholder Stock.--
``(1) In general.--For purposes of this subchapter--
``(A) nonconsenting shareholder stock shall not be treated
as a second class of stock,
``(B) such stock shall be treated as C corporation stock,
and
``(C) the shareholder's pro rata share under section
1366(a)(1) with respect to such stock shall be subject to tax
paid by the S corporation at the highest rate of tax
specified in section 11(b).
``(2) Nonconsenting shareholder stock defined.--For
purposes of this subsection, the term `nonconsenting
shareholder stock' means stock of an S corporation which is
held by a shareholder who did not consent to an election
under section 1362(a) with respect to such S corporation.
``(3) Distributions.--A distribution (not in part or full
payment in exchange for stock) made by the corporation with
respect to nonconsenting shareholder stock shall be
includible as ordinary income of the holder and deductible to
the corporation as an expense in computing taxable income
under section 1363(b) in the year such distribution is
received.''
(2) Conforming amendment.--Section 1361(b)(1) of the
Internal Revenue Code of 1986, as amended by section
10(b)(1), is amended by striking ``subsections (f) and (g)''
and inserting ``subsections (f), (g), and (h)''.
(d) Effective Date.--The amendments made by this section
shall apply to elections made in taxable years beginning
after December 31, 1999.
SEC. 12. INFORMATION RETURNS FOR QUALIFIED SUBCHAPTER S
SUBSIDIARIES.
(a) In General.--Section 1361(b)(3)(A) of the Internal
Revenue Code of 1986 (relating to treatment of certain wholly
owned subsidiaries) is amended by inserting ``and in the case
of information returns required under part III of subchapter
A of chapter 61'' after ``Secretary''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1999.
____
Small Business and Financial Institutions Tax Relief Act of 1999--
Legislation To Reduce the Federal Tax Burden on Small Banks
This legislation expands Subchapter S of the IRS Code.
Subchapter S corporations do not pay corporate income taxes,
earnings are passed through to the shareholders where income
taxes are paid, eliminating the double taxation of
corporations. By contrast, Subchapter C corporations pay
corporate income taxes on earnings, and shareholders pay
income taxes again on those same earnings when they pass
through as dividends. Subchapter S of the IRS Code was
enacted in 1958 to reduce the tax burden on small business.
The Subchapter S provisions have been liberalized a number of
times over the last two decades, significantly in 1982, and
again in 1996. This reflects a desire on the part of Congress
to reduce taxes on small business.
This S corporation legislation would benefit many small
businesses, but its provisions are particularly applicable to
banks. Congress made S corporation status available to small
banks for the first time in the 1996 ``Small Business Job
Protection Act'' but many banks are having trouble qualifying
under the current rules. The proposed legislation:
Permits S corporation shares to be held as Individual
Retirement Accounts (IRAs), and permits IRA shareholders to
purchase their shares from the IRA in order to facilitate a
Subchapter S election.
Clarifies that interest and dividends on investments
maintained by a bank for liquidity and safety and soundness
purposes shall not be ``passive'' income. This is necessary
because S corporations are restricted in the amount of
passive investment income they may generate.
Increases the number of S corporation eligible shareholders
from 75 to 150.
Provides that any stock that bank directors must hold under
banking regulations shall not be a disqualifying second class
of stock. This is necessary because S corporations are
permitted only one class of stock.
Permits banks to treat bad debt charge offs as items of
built in loss over the same number of years that the
accumulated bad debt reserve must be recaptured (four years)
for built in gains tax purposes. This provision is necessary
to properly match built in gains and losses relating to
accounting for bad debts. Banks that are converting to S
corporations must convert from the reserve method of
accounting to the specific charge off method and the
recapture of the accumulated bad debt reserve is built in
gain. Presently the presumption that a bad debt charge off is
a built in loss applies only to the first S corporation year.
Clarifies that the general 3 Year S corporation rule for
certain ``preference'' items applies to interest deductions
by S corporation banks, thereby providing equitable treatment
for S corporation banks. S corporations that convert from C
corporations are denied certain interest deductions
(preference items) for up to 3 years after the conversion, at
the end of three years the deductions are allowed.
Provides that non-health care related fringe benefits such
as group-term life insurance will be excludable from wages
for ``more-than-two-percent'' shareholders. Current law taxes
the fringe benefits of these shareholders. Health care
related benefits are not included because their deductibility
would increase the revenue impact of the legislation.
Permits Family Limited Partnerships to be shareholders in
Subchapter S corporations. Many family owned small businesses
are organized as Family Limited Partnerships or controlled by
Family Limited Partnerships for a variety of reasons. A
number of small banks have Family Limited Partnership
shareholders, and this legislation would for the first time
permit those partnerships to be S corporation shareholders.
Permits S corporations to issue preferred stock in addition
to common. Prohibited under current law which permits S
corporations to have only one class of stock. Because of
limitations on the number of common shareholders, banks need
to be able to issue preferred stock in order to have adequate
access to equity.
Reduces the required level of shareholder consent to
convert to an S corporation from unanimous to 90 percent of
shares. Non-consenting shareholders retain their stock, with
such stock treated as C corporation stock. The procedures for
consent are clarified in order to streamline the process.
Clarifies that Qualified Subchapter S Subsidiaries (QSSS)
provide information returns under their own tax id number.
This can help avoid confusion by depositors and other parties
over the insurance of deposits and the payer of salaries and
interest.
______
By Mr. HOLLINGS:
S. 876. A bill to amend the Communications Act of 1934 to require
that the broadcast of violent video programming be limited to hours
when children are not reasonably likely to comprise a substantial
portion of the audience; to the Committee on Commerce, Science, and
Transportation.
children's protection from violent programming act
Mr. HOLLINGS. Mr. President, I rise to offer legislation to help
parents limit the amount of television violence coming into their
homes. We have reviewed this issue for decades and the analysis has not
changed. All of the assurances and promises have been insufficient to
protect our children from the dangerous influence of television
violence.
[[Page S4188]]
The bill that I introduce today requires a safeharbor time period
during which broadcasters and basic cable programmers would not be
permitted to transmit violent programming. The legislation directs the
Federal Communications Commission to develop an appropriate safeharbor
time period to protect television audiences that are likely to be
comprised of a substantial number of children.
We can argue all day long about which study reaches what conclusion
about the impacts of television violence. But it defies common sense to
believe that television violence does not impact our kids in some
adverse way. Even the National Cable Television Association's own study
on television violence states that the ``evidence of the harmful
effects associated with televised violence'' is ``firmly established.''
The recent events in Littleton, Colorado serve to highlight the sad
and unfortunate fact that violence in our culture is begetting violence
by our youths. violence is everywhere, it is readily accessible, and,
to make matters worse, it is a source of corporate profits. A recent
Washington Post article entitled, ``When Death Imitates Art,'' made
this very point. It states:
For young people, the culture at large is bathed in blood
and violence . . . where the more extreme the message, the
more over the top gruesomeness, the better. . . . Film,
television, music, dress, technology, games: They've become
one giant playground filled with accessible evil, darker than
ever before.
While we know we can't regulate every market and every technology,
and don't want to, we also know that the purveyors of violence must be
held accountable in those instances when we can do so, consistent with
our values and our Constitution. One way to do this is through
television programming.
This approach has already been successfully applied to television
with respect to indecent programming, for which a safeharbor has been
on the books since 1992--an approach that the D.C. Circuit has
validated. I am confident that a similar result would be obtained if
the video programming industry or First Amendment advocates were to
attack this legislation that I introduce today. Indeed, prior
legislative history also substantiates the constitutionality of my
approach. In 1993, when I introduced my safeharbor legislation for the
first time, the Commerce Committee held a hearing at which Attorney
General Janet Reno and FCC Commissioner Reed Hundt both testified that
the bill was constitutional.
Now, I know that there will be opponents of this legislation who will
state that the ratings system is working, that the V-chip is being
deployed, and that our parents are being armed with the tools to
protect their children from television violence. I also know that some
Senators wrote a letter in July 1997, suggesting that the government
forbear from regulation TV violence. But I'm not convinced. We should
not forbear from protecting our children.
Besides, the ratings system is incomplete. For example, one major
broadcast network refuses to this day to use content ratings, and one
major cable channel refuses to use any ratings at all. We all know what
is going on here--money talks and violence sells. A recent article in
USA Today illustrates this point. Entitled ``TV Violence for Profit,''
the article reports that some TV networks and basic cable channels
increase the amount of violent programming during ``sweeps--the key
months when Nielson measures audience size in every market.''
Regardless, even if the industry is right that the V-Chip will
eventually be the magic solution, we all know that thousands, and
perhaps millions of families, will be without a V-chip for years. The
V-chip is not required by the FCC to be manufactured in all television
until January 1, 2000. Will every parent go to Circuit City on New
Year's day and buy a new TV with a V-chip? Of course not. The V-Chip is
not a complete solution. The only complete solution is a safeharbor.
To conclude, I want to stress that this is an issue about
accountability and responsibility. Those responsible for supplying
video programming have been granted a public trust through the
availability of broadcast spectrum and FCC licenses to deliver their
programming to America's children. They should be responsible in their
programming choices. We know, however, that market forces may encourage
them to be irresponsible and transmit excessive violent programming. We
in the Congress therefore have a responsibility to hold them
accountable. This legislation does just that.
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. 876
Be it enacted by the Senate and House of Representatives of
the United states of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Children's Protection from
Violent Programming Act''.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) Television influences the perception children have of
the values and behavior that are common and acceptable in
society.
(2) Broadcast television, cable television, and video
programming are--
(A) pervasive presences in the lives of all American
children; and
(B) readily accessible to all American children.
(3) Violent video programming influences children, as does
indecent programming.
(4) There is empirical evidence that children exposed to
violent video programming at a young age have a higher
tendency to engage in violent and aggressive behavior later
in life than those children not so exposed.
(5) Children exposed to violent video programming are prone
to assume that acts of violence are acceptable behavior and
therefore to imitate such behavior.
(6) Children exposed to violent video programming have an
increased fear of becoming a victim of violence, resulting in
increased self-protective behaviors, resulting in increased
self-protective behaviors and increased mistrust of others.
(7) There is a compelling governmental interest in limiting
the negative influences of violent video programming on
children.
(8) There is a compelling governmental interest in
channeling programming with violent content to periods of the
day when children are not likely to comprise a substantial
portion of the television audience.
(9) Because some programming that is readily accessible to
minors remains unrated and therefore cannot be blocked solely
on the basis of its violent content, restricting the hours
when violent video programming is shown is the least
restrictive and most narrowly tailored means to achieve a
compelling governmental interest.
(10) Warning labels about the violent content of video
programming will not in themselves prevent children from
watching violent video programming.
(11) Although many programs are now subject to both age-
based and content-based ratings, some broadcast and non-
premium cable programs remain unrated with respect to the
content of their programming.
(12) Technology-based solutions may be helpful in
protecting some children, but may not be effective in
achieving the compelling governmental interest in protecting
all children from violent programming when parents are only
able to block programming that has in fact been rated for
violence.
(13) Technology-based solutions will not be installed in
all newly manufactured televisions until January 1, 2000.
(14) Even though technology-based solutions will be readily
available, many consumers of video programming will not
actually own such technology for several years and therefore
will be unable to take advantage of content based ratings to
prevent their children from watching violent programming.
(15) In light of the fact that some programming remains
unrated for content, and given that many consumers will not
have blocking technology in the near future, the channeling
of violent programming is the least restrictive means to
limit the exposure of children to the harmful influences of
violent programming.
(16) Restricting the hours when violent programming can be
shown protects the interests of children whose parents are
unavailable, are unable to supervise their children's viewing
behavior, do not have the benefit of technology-based
solutions, are unable to afford the costs of technology-based
solution, or are unable to determine the content of those
shows that are only subject to age-based ratings.
SEC. 3. UNLAWFUL DISTRIBUTION OF VIOLENT VIDEO PROGRAMMING.
Title VII of the Communications Act of 1934 (47 U.S.C. 701
et seq.) is amended by adding at the end the following:
``SEC. 715. UNLAWFUL DISTRIBUTION OF VIOLENT VIDEO
PROGRAMMING NOT SPECIFICALLY BLOCKABLE BY
ELECTRONIC MEANS.
``(a) Unlawful Distribution.--It shall be unlawful for any
person to distribute to the public any violent video
programming during hours when children are reasonably likely
to comprise a substantial portion of the audience.
``(b) Rulemaking Proceeding.--The Commission shall conduct
a rulemaking proceeding to implement the provisions of this
section and shall promulgate final regulations pursuant to
that proceeding not later than 9 months after the date of
enactment of
[[Page S4189]]
the Children's Protection from Violent Programming Act. As
part of that proceeding, the Commission--
``(1) may exempt from the prohibition under subsection (a)
programming (including news programs and sporting events)
whose distribution does not conflict with the objective of
protecting children from the negative influences of violent
video programming, as that objective is reflected in the
findings in section 551(a) of the Telecommunications Act of
1996;
``(2) shall exempt premium and pay-per-view cable
programming; and
``(3) shall define the term `hours when children are
reasonably likely to comprise a substantial portion of the
audience' and the term `violent video programming'.
``(c) Repeat Violations.--If a person repeatedly violates
this section or any regulation promulgated under this
section, the Commission shall, after notice and opportunity
for hearing, revoke any license issued to that person under
this Act.
``(d) Consideration of Violations in License Renewals.--The
Commission shall consider, among the elements in its review
of an application for renewal of a license under this Act,
whether the licensee has complied with this section and the
regulations promulgated under this section.
``(e) Distribute Defined.--In this section, the term
`distribute' means to send, transmit, retransmit, telecast,
broadcast, or cablecast, including by wire, microwave, or
satellite.''.
SEC. 4. SEPARABILITY.
If any provision of this Act, or any provision of an
amendment made by this Act, or the application thereof to
particular persons or circumstances, is found to be
unconstitutional, the remainder of this Act or that
amendment, or the application thereof to other persons or
circumstances shall not be affected.
SEC. 5. EFFECTIVE DATE.
The prohibition contained in section 715 of the
Communications Act of 1934 (as added by section 3 of this
Act) and the regulations promulgated thereunder shall take
effect 1 year after the regulations are adopted by the
Commission.
______
By Mr. BROWNBACK (for himself, Mr. Nickles, and Mr. Craig):
S. 877. A bill to encourage the provision of advanced service, and
for other purposes; to the Committee on Commerce, Science, and
Transportation.
BROADBAND INTERNET REGULATORY RELIEF ACT OF 1999
Mr. BROWNBACK. Mr. President, I rise today to introduce the Broadband
Internet Regulatory Relief Act of 1999 on behalf of myself, Senator
Nickles, and Senator Craig. This bill is intended to speed up the
deployment of broadband networks throughout the United States and to
make residential high-speed Internet access a widely-available service.
Mr. President, the Internet has revolutionized the way we
communicate, conduct business, shop, and learn. The Internet presents
us with the opportunity to remove distance as an obstacle to employment
and education. But while tens of millions of Americans now log onto the
Internet every day, narrowband connections to the Internet make using
the Net a slow and cumbersome process.
Broadband connections, on the other hand, provide ultra-fast access
to the Internet. With a broadband connection, users may download and
upload data from and to the Internet at substantially greater speeds
than with a narrowband connection. From downloading full-motion video
to uploading an architect's plans, broadband permits consumers to
utilize many more applications that will increase the value of the
Internet as a communications medium.
The technology to provide broadband connections to the Internet is a
reality. Cable companies are deploying hybrid fiber-coax (HFC) networks
that will enable cable modems to provide high-speed Internet access. In
addition, telephone companies have discovered a way to provide high-
speed Internet access over their copper-based telephone loops. With the
addition of a digital switch in a telephone company's central office, a
digital modem at a customer's premises, and the conditioning of a
copper loop, consumers may obtain access to the Internet at more than
ten time the speed of narrowband connections.
The most promising technology employed by telephone companies for
residential high-speed Internet access is digital subscriber line (DSL)
technology. The family of DSL services, especially asymmetric digital
subscriber line (ADSL) service, have the greatest potential to ensure
that all consumers throughout the United States obtain high-speed
Internet access. Cable service has penetration rates approaching
telephone service in urban and densely-populated suburban areas.
However, cable penetration is much lower in rural areas whereas the
ubiquity of the telephone network makes telephone penetration rates
close to one hundred percent even in rural areas. Thus, for many rural
consumers, including those in Kansas, high-speed Internet access may
only be available in the next several years through the telephone
network.
As a result, Congress needs to ensure that high-speed Internet access
is being made available over the public telephone network as rapidly as
possible. While ADSL service is being rolled out in may urban and
densely-populated suburban areas, most rural consumers do not have
access to it.
I am introducing the Broadband Internet Regulatory Relief Act to
ensure that high-speed Internet access is available to my rural
constituents as soon as possible. To accomplish this goal, I am
proposing to provide regulatory relief to telephone companies willing
to deliver broadband connections to rural areas. My proposal has
several components.
First, incumbent local exchange carriers that make seventy percent of
their loops ready to support high-speed Internet access will not have
to resell their advanced services to competitors and will not have to
make the network elements used exclusively for the provision of
advanced services available to competitors. Second, the prices for
advanced services offered by incumbent local exchange carriers that
face competition in the provision of such services will be deregulated.
Third, where incumbent local exchange carriers are offering advanced
services but do not face competition, the companies will receive
pricing flexibility. Fourth, competitive local exchange carriers will
not be required to resell their advanced services.
Mr. President, the ubiquity of our nation's telephone network
presents us with a tremendous opportunity to deliver high-speed
Internet access to our rural constituents at a pace comparable with the
rate at which urban and suburban consumers will be offered such
service. But to realize this goal, we must remove unnecessary
regulation that has impeded the rapid deployment of broadband networks.
Advanced services should not be regulated in the same manner as basic
telephone service. Broadband services are an entirely new market, one
in which no company can exercise market power.
In the absence of market power, the incumbents should not have to
resell their advanced services or provide competitors with access to
unbundled advanced service elements. And pricing regulations applied to
telephone service should not be applied to advanced services. In
addition, a competitive local exchange carrier willing to deploy the
facilities necessary to provide broadband services should not be forced
to resell its service.
Mr. President, I am confident that we can ensure the rapid deployment
of broadband networks to rural areas. But to do so, we must be willing
to provide companies with an incentive to build out their broadband
networks in rural areas. The Broadband Internet Regulatory Relief Act
would provide companies with such incentives, and I hope that my
colleagues will support this crucial legislation.
______
By Mr. TORRICELLI (for himself, Mr. Mack, Mr. Gregg, Mr. Graham,
Mr. Moynihan, Mr. Kerry, Mrs. Boxer, Mr. Reed, Mrs. Feinstein,
and Mrs. Murray):
S. 878. A bill to amend the Federal Water Pollution Control Act to
permit grants for the national estuary program to be used for the
development and implementation of a comprehensive conservation and
management plan, to reauthorize appropriations to carry out the
program, and for other purposes; to the Committee on Environment and
Public Works.
national estuary conservation act of 1999
Mr. TORRICELLI. Mr. President, today, Senators Mack, Gregg, Graham,
Moynihan, Kerry, Boxer, Reed, Feinstein, Murray, and I are introducing
the National Estuary Conservation Act of 1999. I rise to draw this
country's attention to our nationally significant estuaries that are
threatened by pollution, development, or
[[Page S4190]]
overuse. With forty five percent of the nation's population residing in
estuarine areas, there is a compelling need for us to promote
comprehensive planning and management efforts to restore and protect
them.
Estuaries are significant habitat for fish, birds, and other wildlife
because they provide safe spawning grounds and nurseries. Seventy five
percent of the U.S. commercial fish catch depends on estuaries during
some stage of their life. Commercial and recreational fisheries
contribute $111 billion to the nation's economy and support 1.5 million
jobs. Estuaries are also important to our nation's tourist economy for
boating and outdoor recreation. Coastal tourism in just four states--
New Jersey, Florida, Texas, and California--totals $75 billion.
Due to their popularity, the overall capacity of our nation's
estuaries to function as healthy productive ecosystems is declining.
This is a result of the cumulative effects of increasing development
and fast growing year round populations which increase dramatically in
the summer. Land development, and associated activities that come with
people's desire to live and play near these beautiful resources, cause
runoff and storm water discharges that contribute to siltation,
increased nutrients, and other contamination. Bacterial contamination
closes many popular beaches and shellfish harvesting areas in
estuaries. Also, several estuaries are afflicted by problems that still
require significant research. Examples include the outbreaks of the
toxic microbe, Pfiesteria piscicida, in rivers draining to estuaries in
Maryland and Virginia.
Congress recognized the importance of preserving and enhancing
coastal environments with the establishment of the National Estuary
Program in the Clean Water Act Amendments of 1987. The Program's
purpose is of facilitate state and local governments preparation of
comprehensive conservation and management plans for threatened
estuaries of national significance. In support of this effort, section
320 of the Clean Water Act authorized the EPA to make grants to states
to develop environmental management plans. To date, 28 estuaries across
the country have been designated into the Program. However, the law
fails to provide assistance once plans are complete and ready for
implementation. Already, 18 of the 28 plans are finished.
As the majority of plans are now in the implementation stage, it is
incumbent upon us to maintain the partnership the Federal Government
initiated ten years ago to insure that our nationally significant
estuaries are protected. The legislation we are introducing will take
the next step by giving EPA authority to make grants for plan
implementation and authorize annual appropriations in the amount of $50
million. To insure the program is a true partnership and leverage
scarce resources, there is a direct match requirement for grant
recipients so funds will be available to upgrade sewage treatment
plants, fix combined sewer overflows, control urban stormwater
discharges, and reduce polluted runoff into estuarine areas.
______
By Mr. CONRAD (for himself, Mr. Mack, Mr. Nickles, Mr. Robb, and
Mr. Baucus):
S. 879. A bill to amend the Internal Revenue Code of 1986 to provide
a shorter recovery period for the depreciation of certain leasehold
improvements; to the Committee on Finance.
ten-year leasehold improvement depreciation
Mr. CONRAD. Mr. President, I rise today, joined by my colleagues Mr.
Nickles, Mr. Mack, Mr. Robb, and Mr. Baucus, to introduce important
legislation to provide for a 10-year depreciation life for leasehold
improvements. Leasehold improvements are the alterations to leased
space made by a building owner as part of the lease agreement with a
tenant.
These improvements can include interior walls, partitions, flooring,
lighting, wiring and plumbing--essentially any fixture that an owner
provides in space leased to a tenant. They keep a building modern,
upgraded, and energy efficient. In actual commercial use, leasehold
improvements typically last as long as the lease--an average of 5 to 10
years. However, the Internal Revenue Code requires leasehold
improvements to be depreciated over 39 years--the life of the building.
Economically, this makes no sense. The owner receives taxable income
over the life of the lease (i.e., 10 years), yet can only recover the
costs of the improvements associated with the lease over 39 years--a
rate nearly four times slower. This wild mismatch of income and
expenses causes the owner to incur an artificially high tax cost on
these improvements.
The bill we introduce today will correct this irrational and
uneconomic tax treatment by shortening the cost recovery period for
certain leasehold improvements from 39 years to a more realistic 10
years. If enacted, this legislation would more closely align the
expenses incurred to construct these improvements with the income they
generate during the lease term.
For example, a building owner who makes a $100,000 leasehold
improvement for a 10-year, $1 million lease would be able to recover
this entire investment by the end of that lease at a rate of $10,000
per year. Under current law, this $100,000 improvement is recovered at
a rate of $2,564 per year over 39 years.
By reducing this cost recovery period, the expense of making these
improvements would fall more into line with the economics of a
commercial lease transaction, and more property owners would be able to
adapt their buildings to fit the demanding needs of today's modern
business tenant. Small business should find this bill particularly
helpful, because small businesses turn over their rental space more
frequently than larger businesses. And we cannot forget that over 80
percent of building owners who provide space to small businesses are
themselves small businesses.
We have an interest in keeping existing buildings commercially
viable. When older buildings can serve tenants who need modern,
efficient commercial space, there is less pressure for developing
greenfields in outlying areas. Americans are concerned about preserving
open space, natural resources and a sense of neighborhood. The current
law 39-year cost recovery for leasehold improvements is an impediment
to reinvesting in existing properties and communities.
This legislation has the strong backing of six major real estate
organizations, including the National Realty Committee, the national
Association of Realtors, the International Council of Shopping Centers,
the national Association of Industrial and Office Properties, the
national Association of Real Estate Investment Trusts, and the Building
and Office Managers Association, International.
I urge all Senators to join us in supporting this legislation to
provide rational depreciation treatment for leasehold improvements.
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. 879
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN
LEASEHOLD IMPROVEMENTS.
(a) 10-Year Recovery Period.--Subparagraph (D) of section
168(e)(3) of the Internal Revenue Code of 1986 (relating to
10-year property) is amended by striking ``and'' at the end
of clause (i), by striking the period at the end of clause
(ii) and inserting ``, and'', and by adding at the end the
following new clause:
``(iii) any qualified leasehold improvement property.''.
(b) Qualified Leasehold Improvement Property.--Subsection
(e) of section 168 of such Code is amended by adding at the
end the following new paragraph:
``(6) Qualified leasehold improvement property.--
``(A) In general.--The term `qualified leasehold
improvement property' means any improvement to an interior
portion of a building which is nonresidential real property
if--
``(i) such improvement is made under or pursuant to a lease
(as defined in subsection (h)(7))--
``(I) by the lessee (or any sublessee) of such portion, or
``(II) by the lessor of such portion,
``(ii) such portion is to be occupied exclusively by the
lessee (or any sublessee) of such portion, and
``(iii) such improvement is placed in service more than 3
years after the date the building was first placed in
service.
``(B) Certain improvements not included.--Such term shall
not include any
[[Page S4191]]
improvement for which the expenditure is attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefiting a common area,
and
``(iv) the internal structural framework of the building.
``(C) Definitions and special rules.--For purposes of this
paragraph--
``(i) Commitment to lease treated as lease.--A commitment
to enter into a lease shall be treated as a lease, and the
parties to such commitment shall be treated as lessor and
lessee, respectively.
``(ii) Related persons.--A lease between related persons
shall not be considered a lease. For purposes of the
preceding sentence, the term `related persons' means--
``(I) members of an affiliated group (as defined in section
1504), and
``(II) persons having a relationship described in
subsection (b) of section 267; except that, for purposes of
this clause, the phrase `80 percent or more' shall be
substituted for the phrase `more than 50 percent' each place
it appears in such subsection.''
(c) Requirement To Use Straight Line Method.--Paragraph (3)
of section 168(b) of such Code is amended by adding at the
end the following new subparagraph:
``(G) Qualified leasehold improvement property described in
subsection (e)(6).''.
(d) Alternative System.--The table contained in section
168(g)(3)(B) of such Code is amended by inserting after the
item relating to subparagraph (D)(ii) the following new item:
``(D)(iii).................................................10 ''.
(e) Effective Date.--The amendments made by this section
shall apply to qualified leasehold improvement property
placed in service after the date of the enactment of this
Act.
____________________