[Congressional Record Volume 146, Number 26 (Thursday, March 9, 2000)]
[House]
[Pages H773-H792]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 PROVIDING FOR CONSIDERATION OF H.R. 3081, WAGE AND EMPLOYMENT GROWTH 
         ACT OF 1999, AND H.R. 3846, MINIMUM WAGE INCREASE ACT

  Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 434 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 434

       Resolved, That upon the adoption of this resolution it 
     shall be in order without intervention of any point of order 
     to consider in the House the bill (H.R. 3081) to increase the 
     Federal minimum wage and to amend the Internal Revenue Code 
     of 1986 to provide tax benefits for small businesses, and for 
     other purposes. The bill shall be considered as read for 
     amendment. In lieu of the amendment recommended by the 
     Committee on Ways and Means now printed in the bill, an 
     amendment in the nature of a substitute consisting of the 
     text of H.R. 3832 shall be considered as adopted. The 
     previous question shall be considered as ordered on the bill, 
     as amended, to final passage without intervening motion 
     except: (1) two hours of debate on the bill, as amended, 
     equally divided and controlled by the chairman and ranking 
     minority member of the Committee on Ways and Means; and (2) 
     one motion to recommit with or without instructions.
       Sec. 2. Upon the adoption of this resolution it shall be in 
     order to consider in the House the bill (H.R. 3846) to amend 
     the Fair Labor Standards Act of 1938 to increase the minimum 
     wage, and for other purposes. The bill shall be considered as 
     read for amendment. The previous question shall be considered 
     as ordered on the bill and any amendment thereto to final 
     passage without intervening motion except: (1) one hour of 
     debate equally divided and controlled by the chairman and 
     ranking minority member of the Committee on Education and the 
     Workforce; (2) the amendments printed in the report of the 
     Committee on Rules accompanying this resolution, which shall 
     be in order without intervention of any point of order 
     (except those arising under section 425 of the Congressional 
     Budget Act of 1974) and which may be offered only in the 
     order printed in the report, may be offered only by a Member 
     designated in the report, shall be considered as read, and 
     shall be separately debatable for the time specified in the 
     report equally divided and controlled by the proponent and an 
     opponent; and (3) one motion to recommit with or without 
     instructions.
       Sec. 3. (a) In the engrossment of H.R. 3081, the Clerk 
     shall--
       (1) await the disposition of H.R. 3846;
       (2) add the text of H.R. 3846, as passed by the House, as 
     new matter at the end of H.R. 3081;
       (3) conform the title of H.R. 3081 to reflect the addition 
     of the text of H.R. 3846 to the engrossment;
       (4) assign appropriate designations to provisions within 
     the engrossment; and
       (5) conform provisions for short titles within the 
     engrossment.
       (b) Upon the addition of the text of H.R. 3846 to the 
     engrossment of H.R. 3081, H.R. 3846 shall be laid on the 
     table.

                              {time}  1345

  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Texas (Mr. 
Sessions) is recognized for 1 hour.
  Mr. SESSIONS. Mr. Speaker, for the purposes of debate only, I yield 
the customary 30 minutes to the gentleman and my friend from 
Massachusetts (Mr. Moakley), pending which I yield myself such time as 
I may consume. During consideration of this resolution, all time is 
yielded for the purpose of debate only.
  Mr. Speaker, this resolution provides for the consideration of H.R. 
3081 in the House under a closed rule without intervention of any point 
of order.
  The rule provides that the bill be considered as read and that, in 
lieu of the amendment recommended by the Committee on Ways and Means 
now printed in the bill, the text H.R. 3832 shall be considered as 
adopted.
  The rule provides two hours of debate equally divided and controlled 
by the chairman and the ranking minority member of the Committee on 
Ways and Means.
  The rule provides one motion to recommit H.R. 3081 with or without 
instructions.
  The rule also provides for consideration of H.R. 3846 in the House 
under a modified closed rule. It provides that the bill be considered 
as read and provides for 1 hour of debate equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on Education and the Workforce.
  The rule provides for consideration of the amendments printed in the 
Committee on Rules report accompanying the resolution, which shall be 
in order without intervention of any point of order, except those 
arising under section 425 of the Congressional Budget

[[Page H774]]

Act of 1974, prohibiting consideration of legislation containing 
certain unfunded mandates.
  The rule provides that the amendments printed in the Committee on 
Rules report accompanying the resolution may only be offered by the 
Member designated in the report, shall be considered as read, and shall 
be separately debatable for the time specified in the report equally 
divided and controlled by the proponent and an opponent.
  The rule provides one motion to recommit H.R. 3846 with or without 
instructions.
  Finally, the rule provides that in the engrossment of H.R. 3081, The 
Clerk shall add the text of H.R. 3846 as passed by the House as a new 
matter at the end of H.R. 3081, after which H.R. 3846 shall be laid 
upon the table.
  Mr. Speaker, the rule before us today is a carefully crafted rule 
that makes in order two separate bills. The first is a bill out of the 
Committee on Ways and Means, H.R. 3081, the Wage and Employment Growth 
Act of 1999, which provides a series of tax benefits to small 
businesses.
  The second piece of legislation, H.R. 3846, is a bill to increase the 
minimum wage by $1.00 through incremental steps over the course of 3 
years.
  Mr. Speaker, the Committee on Ways and Means bill, like almost every 
tax bill for many, many years, will not be open to further amendments 
on the House Floor. This long-standing policy is designed to keep the 
Internal Revenue Code from becoming more cluttered than it is already 
with special interest provisions.
  Also, amendments offered on short notice on the House floor might 
have unintended consequences which may not be fully appreciated without 
the adequate time to research those issues.
  The Committee on Ways and Means bill will be subject to 2 hours of 
debate and allows the minority a motion to recommit with instructions. 
The minimum wage bill will receive 1 hour of general debate and makes 
in order two amendments, one to increase the minimum wage over the 
course of 2 years rather than 3 and another allows States flexibility 
to determine their own minimum wage.
  By making these amendments in order, the rule facilitates a thorough 
debate and vote on the major issues associated with the two bills under 
consideration, and by allowing a motion to recommit the legislation 
with or without instructions, the minority is assured their perspective 
on this issue will be aired and will be voted upon.

  Mr. Speaker, I am particularly pleased that Congress is undertaking 
an important effort to give tax relief to hard working people who run 
small businesses and create jobs. Through small business provisions, 
they include an acceleration of the increase in the self-employed 
health insurance deduction to 100 percent. This is crucial to making 
health care more available to innovative people who take risks by 
starting and running their own businesses.
  It is often too difficult and costly for a small business to set up 
pensions or retirement plans for their employees, especially in their 
new and start-up years. The legislation before the House today provides 
pension reform and improves retirement security. It increases 
contribution and benefit levels and limits in tax-favored retirement 
plans. It shortens investing requirements of employer matching 
contributions which is very important in today's marketplace, where a 
worker often spends only a few years on the job and then moves on.
  Mr. Speaker, I represent a district in Texas that has many, many 
small businesses. In my district and all across America, small 
businesses are an important part of our economy. Small business is the 
engine that drives the economy and creates new jobs in America. In 
fact, small businesses create more jobs than any other types of 
businesses, including large corporations. Too many businesses fail 
because our unfair Tax Code and because of heavy regulatory burdens 
that consume critical operating capital in their early years. These 
small business tax provisions do not just help small businesses but 
they help everyone by encouraging job growth.
  I remind my colleague that this rule allows for vigorous debate on 
every major issue related to the underlying legislation.
  Mr. Speaker, like many other conservative Members of this body, I 
question if raising the minimum wage might actually hurt those it is 
intended to help. I am afraid that employers may look at their rising 
payroll ledgers and decide to cut back on the number of employees that 
they hire to offset the added expense of the minimum wage hike.
  Having said that, it is apparent to me that a majority of Members 
feel now that it is the appropriate time to pass a minimum wage 
increase. I strongly support this rule because by allowing for an 
increase in the minimum wage, it ensures measures to offset the impact 
of doing so as part of a major deal that has been encouraged by my 
party.
  Mr. Speaker, I encourage all Members to support the rule so that the 
House may debate the important issues contained in the underlying 
legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MOAKLEY. Mr. Speaker, I thank my colleague and my friend from 
Texas (Mr. Sessions) for yielding me the customary half-hour, and I 
yield myself such time as I may consume.
  Mr. Speaker, this rule provides for the consideration of two bills, a 
minimum wage bill and a bill providing predominately estate tax breaks. 
Then once both bills pass, they lump them together and they go to the 
entire White House.
  Mr. Speaker, this is a very bad combination of tax breaks and much 
too slow minimum wage hikes. By stretching the minimum wage out to 3 
years, the Republican minimum wage bill is a year late and several 
dollars short, while their tax bill could just as well be called who 
wants to make a millionaire a multimillionaire.
  Mr. Speaker, once again my Republican colleagues have taken a 
perfectly good idea to raise the $5.15 minimum wage by a dollar and 
turned it into another way to make the rich richer while stiffing the 
rest of the citizenry.
  Furthermore, Mr. Speaker, by linking these two bills together and 
creating this very unholy marriage, they have doomed both of these 
bills to the veto bin, and American workers deserve better.
  Over 10 million people work for minimum wage in this country, and 
minimum wage workers are predominately women and minorities. They are 
the people who take care of our youngsters, our senior citizens. They 
clean up our offices. They cook our food. They pump our gas. Mr. 
Speaker, despite working full-time they earn only $10,700 a year.
  Let me repeat, Mr. Speaker, full-time a minimum wage worker in the 
United States makes only $10,700 a year. That is only $3,200 below the 
poverty line. I think it is high time they get a raise, even if it is 
only a dollar an hour, but my Republican colleagues want to phase this 
raise in over 3 years instead of 2.
  Mr. Speaker, for those who say there is not much difference between 2 
and 3 years, let me add that that extra year will mean a net loss of 
$1,000 over 3 years to minimum wage workers.
  Any Member who is committed to welfare reform, any Member who is 
committed to getting families off the dole and into the workplace 
should take that commitment to the next step and give these people that 
very much needed raise. They will still be below the poverty level but 
at least the poverty line will be in sight.
  A dollar an hour may not sound like much to most people, but let me 
say it does make a big difference. It will mean an overall raise of 
about $2,000 to over 10 million Americans. Instead of giving these 
people the help they need, my Republican colleagues are watering it 
down by stretching it out to 3 years and then dooming it by attaching 
this very lopsided tax break for the very rich.
  Last month, my colleagues on the Republican side of the aisle 
introduced a marriage penalty bill and most of the benefits of that 
bill went to the top 25 percent of wage earners and half of it went to 
people who pay no marriage tax at all. Today's Republican tax bill is 
no different. 91.4 percent of the tax cuts in this bill will go to the 
richest top 10 percent of taxpayers and most of those people do not 
even own small businesses.
  What it means, Mr. Speaker, is that for every dollar in higher wages 
for

[[Page H775]]

minimum wage workers, the rich will get $10.90 in tax breaks. We had a 
marriage penalty bill for people who pay no marriage penalty, and now 
we have a small business tax bill for people who do not own small 
businesses.
  Mr. Speaker, this is just the second installment of that $800 billion 
tax break that they tried to get through last year.
  Mr. Speaker, minimum wage workers are not looking for a handout. They 
work hard for a living, and they deserve a fair day's pay. Our country 
is enjoying a tremendous economic expansion so now really is the time 
to make sure that the minimum wage workers can share in it.
  My Democratic colleagues want to offer a minimum wage bill, a real 
minimum wage bill, to make sure that they can share in it, and we want 
to offer a small business tax bill that will actually help small 
businesses. Yes, we have a small business tax bill that will help small 
businesses instead of helping the rich get richer. Under this rule, we 
just cannot do it.
  Just this morning, a Washington Post editorial warns that these tax 
cuts are much too high a price to pay for a wage increase to which they 
bear very little relationship.

                              {time}  1400

  If I may at this time read a column from The Washington Post, today's 
editorial page.

       Inverting the Minimum Wage. Congressional Republicans are 
     seeking enactment of still another batch of deceptively 
     packaged tax cuts whose long-term cost the Government just 
     cannot afford. The latest are to be voted on today in the 
     House in connection with the minimum-wage increase. The gloss 
     is that they will compensate small employers for the added 
     cost of the higher wage. The fact is that most of the benefit 
     will go to other than small employers and has nothing to do 
     with the wage.

  Then I will skip, Mr. Speaker, because I do not want to read the 
whole thing, but it is a very interesting column, and these are not my 
words, these are the words of the editorial writers of the Washington 
Post. Then they say,

       An estimated three-fourths of the tax savings in the bill 
     would go to the highest income 1 percent of all the taxpayers 
     and 90 percent to the highest income 10 percent. The tax 
     savings are 11 times greater than the estimated cost to 
     employers of the minimum wage increase because that is the 
     pretext for them.

  Then it goes on to say, Mr. Speaker, ``The tax cuts are too high a 
price to pay for the wage increase to which they bear so little 
relation.''
  It goes on and on, Mr. Speaker. I think the people in this Chamber 
get the picture.
  I urge my colleagues to really look at this closely and see if the 
title really matches the contents. I urge my colleagues to defeat the 
previous question in order that we can put a Democratic alternative 
forward that really does give a minimum wage and really does help small 
business.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  I really enjoy being in debates with my colleagues on the other side. 
They want to argue about how we have to give and give and give, but 
when it comes time for the taxpayer or the small businessperson or the 
person that has made the investment to get something that is fair 
treatment back, they get nothing in return from my friends. I would 
like to also add that there were 48 of my colleagues on the other side 
of the aisle that voted for this outrageous marriage penalty; 48 
Democrats joined the majority party because it is the right thing to do 
for the American families to get 1,400 more dollars rather than giving 
it to Uncle Sam.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Dreier), the chairman of the Committee on Rules.
  Mr. DREIER. Mr. Speaker, I thank my friend for yielding and I 
congratulate him on managing what obviously is a somewhat challenging 
and controversial rule.
  I happen to be one who believes very much that we have a 
responsibility to put into place economic policies which will ensure 
that everyone, regardless of where they are on the economic scale, has 
an opportunity to improve their plight. I want to see those at the 
lower end of the economic spectrum get their wages up. I want us to 
encourage growth and investment and productivity so that those wages 
can increase.
  I do have a difficulty, however, with having the Federal Government 
mandate a wage rate that frankly has the potential to jeopardize 
economic growth and has the potential again to hurt most those we are 
trying to assist.
  Now, having said that, I realize that a majority of this House 
supports an increase in the minimum wage. I am in the minority here in 
believing that we should simply encourage economic growth through tax 
and other investment incentives. But I am in the minority. I am in the 
minority, so I feel the responsibility to do everything that we 
possibly can to allow a free flow of ideas and debate on these very 
important questions that are before us; and that is why we have, as the 
gentleman from Texas (Mr. Sessions) has outlined, an extraordinarily 
fair and balanced rule which allows all of the alternatives that are 
out there to be considered. One over two, one over three. We have tax 
incentives which some of us do support. So we have a wide range of 
options that are there, put into place.
  I will say that I happen to think that tax relief is something that 
is much needed, and the issues that my friend from his summer spot in 
South Boston mentioned, the tax issue, is something that enjoys 
bipartisan support. The gentleman from Texas (Mr. Sessions) said that 
48 Democrats joined in support of the marriage tax penalty. President 
Clinton stood here during his State of the Union message and talked 
about his support for that. He indicated that he was adamantly opposed 
to increasing the earnings cap for retirees. Now, he is prepared to 
sign it and we welcome that.
  So aspects that were in that tax bill that he vetoed last year, he 
has clearly indicated that he supports and we welcome that kind of 
support and recognition of the fact that we as a country need to do 
everything, and as a Congress, need to do everything that we can to 
encourage this kind of economic growth.

  Specifically, the items that are in this tax package that are 
particularly beneficial, of course, allow us to deal with this health 
care question by providing for the self-employed workers to deduct 
their health care insurance expenses. We also, and I see my very dear 
friend from New York (Mr. Rangel) here, we want to encourage community 
redevelopment. We want the community renewal movement to go ahead. 
Again, President Clinton has joined with Speaker Hastert in supporting 
that. So I know that my friend from New York will strongly embrace that 
provision that is in this measure.
  So there are very, very good aspects of it; and I hope that we will 
see a strong vote for this rule. But before my colleagues get a chance 
to vote for the rule, I suspect that there just may be a vote on the 
previous question. So in light of that, I urge my colleagues on both 
sides of the aisle to join in support of the previous question so that 
we can move ahead with a fair, balanced rule that allows all of the 
different ideas out there to be considered, and then we will do what 
Speaker Hastert said when he on the opening day of the 106th Congress 
just a little over a year ago stood here and said we will allow the 
House to work its will so that the majority will prevail.
  Mr. MOAKLEY. Mr. Speaker, I am very happy that my chairman really has 
the courage to say he is against the minimum wage. Unfortunately, many 
people are hiding behind this bill who are also against the minimum 
wage.
  Mr. Speaker, I yield 5 minutes to the gentleman from New York (Mr. 
Rangel), the ranking Democrat on the Committee on Ways and Means, who 
is in favor of a real minimum-wage increase.
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. Mr. Speaker, let me join in congratulating the 
distinguished chairman of the Committee on Rules. His honesty in terms 
of opposing the minimum wage for the lowest working employees is really 
to be commended for coming forward and saying it, because like Governor 
Bush, I wondered about the meanness on this side of the aisle; and it 
is good to see that people are willing to say that there is a reason 
behind it.

[[Page H776]]

  Mr. Speaker, one can be reforming and want results if one is going to 
cave in to the things that one believes in, and I would like to join 
with my Senator who makes it abundantly clear that the country is 
really not looking for tax cuts, but looking for us to do the right 
thing, protecting Social Security, Medicare, the Patients' Bill of 
Rights, affordable drugs. These are the things that the Congress, not 
Republicans and not Democrats, but working together, should be doing. 
There is very, very little compassion for the working people at a time 
that our country is doing so great.
  I oppose the rule because my colleagues do not even give us an 
opportunity to have an alternative. What is the fear in just allowing 
the House to work its will? There was a time that the tax-writing 
committee used to be involved in taxes. We yield to the 
distinguished people on the Committee on Rules to pick and choose what 
they would like. But when they do not have the courage of the gentleman 
from California (Mr. Dreier) to say that they are against the minimum-
wage increase, for God's sake, do not kill it by just burdening taxes 
on it. Just say that we do not want reform on this side of the House of 
Representatives.

  How dare my colleagues say, how dare my colleagues say that the tax 
provisions in this bill is to protect small businesses. That is 
outrageous. It is an insult to the American people. It is clear that 
two-thirds of the tax benefits, they do not go to small businesses, 
they go to the richest Republicans that we have. So do what you want 
politically and kill the minimum-wage bill, but for God's sake, do not 
say that you are doing it fairly.
  The same thing applies to the Patients' Bill of Rights. If you do not 
want patients to have a bill of rights, and your leadership does not, 
do not compromise and say you are coming out for it and then load it up 
with hundreds of billions of dollars in tax cuts.
  Mr. Speaker, it was clear to us a long time ago what our Republican 
colleagues' game plan was, and that is to do absolutely nothing and get 
out of this House of Representatives. And how did they intend to do it? 
By getting this big $800 billion tax cut, thinking about anything you 
could imagine, and having the President veto it so that you could go 
home and campaign on just how we Democrats are against tax cuts. Well, 
guess what? We Democrats are for tax cuts, but we also are for saving 
Social Security, saving Medicare, and helping all Americans enjoy it 
and not just the chosen and the blessed few.
  Why is it that when my colleagues' tax cut was vetoed, they did not 
move to override the veto? Could it be that they had lack of votes, or 
could it be they had lack of guts? In any event, now they have to give 
us an $800 billion tax cut $200 billion at a time. What does the $122 
billion tax cut have to do with giving working people a buck increase 
from $5.15 to $6.15? Why did my Republican colleagues wait until the 
President said he would veto it before they brought it to the floor?
  Many of the things that my colleagues have in the tax provision we 
support. Why did they overdo it? If they really wanted to be fair, why 
did they not give us a chance really to report out a tax bill that the 
President will sign?
  Now, if my Republican colleagues want to be against the working poor, 
do it. But at least have the courage to stand up here and to say that 
every time you steal one of the President's good ideas that you have to 
load it up with some piece of the $800 billion tax cut until you have 
to force him to veto it.
  So if we want to talk about reformists with results, we better walk 
away from many of the critics outside of our side of the aisle that are 
talking about the way my colleagues on the other side of the aisle are 
not taking care of the people's business.
  Mr. Speaker, I want to thank my colleagues for seeing their way clear 
to allowing the gentleman from Ohio (Mr. Traficant) to have an 
amendment to this bill, and I wondered why my colleagues could not 
reach beyond that to allow some of us on the tax-writing committee to 
have an amendment to the tax bill.
  I know one thing: my Republican colleagues may be for reform, but 
they certainly are not supporting results.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Hearing my colleagues talk about this rule would make me think that 
they simply do not understand what the Committee on Rules did. First of 
all, the Committee on Rules, under Republicans, has always insisted or 
guaranteed that there will be a motion to recommit to the minority 
party. As my recollection tells me, that rarely happened when the 
Democrats were in control.
  Secondly, the fairness of this rule is very obvious to everyone. We 
will have a separate vote that will be on the provisions for minimum 
wage from the vote for the tax package, which means if the gentleman 
from New York or any of my colleagues wish to vote yes or no on minimum 
wage, they will be allowed to do that. If they want to vote yes or no 
on the tax package, they will be allowed to do that. If we were being 
unfair, we would have put them together. Then we would have heard that 
would be a poison pill, and I think that that could be said and it 
would be true.
  The fact of the matter is that the wisdom of this Committee on Rules 
is that we are trying to present an opportunity of fairness to fully 
debate the issue, to allow open votes that will take place; and I am 
very, very proud of what we have done. I believe that any criticism 
like this is from someone that simply has not read the rule, taken the 
time to read the rule, or who is trying to dissuade someone else by not 
using the facts that are at hand.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Illinois (Mr. Shimkus).
  (Mr. SHIMKUS asked and was given permission to revise and extend his 
remarks.)

                              {time}  1415

  Mr. SHIMKUS. Mr. Speaker, I want to thank the Committee on Rules and 
commend them for the work they have done. We worked in a bipartisan 
manner with a group of Republicans and Democrats, myself, the gentleman 
from New York (Mr. Lazio), the gentleman from California (Mr. Condit), 
and the gentleman from Alabama (Mr. Cramer) to try to reach across the 
divide to address an issue that would do two things: It would increase 
the minimum wage, while protecting those jobs that could be lost 
through the increase of a minimum wage.
  In this rule, the will of the House will be heard. I think that is 
the important thing. If we want to judge the fairness of a rule, the 
question is, does the House have the ability to have their will heard 
on votes? We will have a debate, and we will have a vote on the tax cut 
portion of this bill, so those who believe that it is important to cut 
taxes to help offset the cost of small business can vote yes, and those 
who do not can vote no.
  Not many people in the 20th District of Illinois read the Washington 
Post. I have great respect for the gentleman from Massachusetts (Mr. 
Moakley), but they do read the Herald and Review from Decatur, 
Illinois.
  In an October 26, 1999, editorial, it reads: ``Minimum Wage Tax Break 
Sensible.'' I will quote just a portion of it.
  The paper stated that ``When the minimum wage increases, someone has 
to pay for it, because business owners have to maintain a profit level. 
The result could be higher prices or fewer jobs at minimum wage. Just 
as a worker will offer his labor at an acceptable wage level, an 
employer will pay workers a wage that will permit his company to earn a 
profit. That is why a minimum wage increase alone won't work, and why a 
bill to raise the rate linked to some tax breaks for small businesses 
makes sense.''
  Again, that is from the October 26 Herald and Review from Decatur, 
Illinois.
  So we are going to have a vote on the tax cut. We are going to have a 
vote and debate on an issue that me and my friends on the conservative 
side want, State flexibility. We are going to have a debate. We are 
going to have a debate and a vote, and the will of the House is going 
to move forward.
  We are going to have a debate and we are going to have a vote on the 
increase, whether it should be $1 over 3 years or $1 over 2 years. The 
will of the House will have an opportunity to be spoken.
  I think the rule is pretty fair and pretty balanced, but what I 
really appreciate about the rule is that I think

[[Page H777]]

it respects the work that we tried to do over an entire year of keeping 
a balance, trying to get to the center ground to raise the minimum wage 
and cut taxes and protect jobs, a group of two Republicans and two 
Democrats that worked long and hard to get to the point where we are 
here today.
  I want to thank the gentleman from California (Mr. Dreier), the 
chairman, I want to thank the Committee on Rules, and I urge all my 
colleagues to support the rule.
  Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would just like to correct my dear friend, the 
gentleman from Texas. Since 1892, the rules of the House have 
prohibited the Committee on Rules from reporting any rule that prevents 
a motion to recommit from being made.
  Mr. SESSIONS. Mr. Speaker, will the gentleman yield?
  Mr. MOAKLEY. I yield to the gentleman from Texas.
  Mr. SESSIONS. A motion to recommit with instructions.
  Mr. MOAKLEY. I thought the gentleman was just talking about a motion 
to recommit.
  Mr. SESSIONS. With instructions.
  Mr. MOAKLEY. That was added later.
  Mr. SESSIONS. I thank the gentleman for helping me with that history, 
Mr. Speaker.
  Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Gephardt), the leader of the Democratic Party in the 
House of Representatives.
  (Mr. GEPHARDT asked and was given permission to revise and extend his 
remarks.)
  Mr. GEPHARDT. Mr. Speaker, do not be fooled. This is not an 
illustration of bipartisanship at work. This debate is a good 
illustration of how to turn what should have been a proud bipartisan 
moment for the House into a partisan action by Republican leaders. The 
majority is performing a charade of bipartisanship. It is not the real 
thing.
  For more than 2 years, there has been a true bipartisan effort in 
this House to increase the minimum wage by $1 over 2 years. This effort 
has repeatedly run head on into the desire by Republican leaders to 
keep this issue off the floor for good, but the bipartisan coalition 
never gave up, thanks to the efforts of Members on both sides of the 
aisle like the gentleman from Michigan (Mr. Bonior) and the gentleman 
from New York (Mr. Quinn). Because of their persistence and because of 
the insistence of the American people, Republican leaders had no choice 
but to bring a minimum wage bill to the floor.
  Like so many times before, Republican leaders decided if they could 
not kill a popular bill they disagree with, they would kill it through 
neglect. They would try and kill it, attacking it in the light of day 
on the floor of the House with legislative trickery.
  Today they are dispensing dollars to the wealthy through the tax bill 
that is going to be attached at the end, but pennies to the working 
poor. Republican leaders are forcing us to vote on a minimum wage bill 
originally designed to help hard-working low-income families that is 
tied to a regressive tax bill designed to give $120 billion in tax 
breaks to the very wealthiest Americans. They are preventing Democrats 
from even offering an alternative that would provide tax cuts targeted 
to owners of small businesses and family farms, giving relief to those 
who need it.
  For every penny that would go to working low-income Americans, 
Republicans want to give 10 cents or a dime to the wealthiest Americans 
among us.
  It is really emblematic of their values. Republicans do not seem able 
to ever give a break to working families without making sure that they 
first take care of the wealthiest in America with even greater 
largesse.
  We should be voting on a minimum wage that provides a real pay 
increase and a tax package that provides sensible, responsible tax 
relief to small businesses, just as the Democratic tax alternative 
would do. We should be voting on a bill that will be signed by the 
President, so we can get this minimum wage increase to the people who 
need it now.
  The Republican rule is designed to produce a bill that will eliminate 
the possibility that we can ever get this minimum wage done this year. 
The people who need it need it now. They do not need to have a bill 
vetoed by the President because the bill gets joined up with a tax bill 
that the President will not sign.
  If we are really, truly committed to working in a bipartisan manner 
and ensuring that a minimum wage bill passes this year, Members will 
join me in voting against this rule and putting together a rule that 
will allow us to have a tax bill joined with the minimum wage that will 
get this bill signed by the President of the United States.
  Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Clay), the ranking member of the Committee on Education 
and the Workforce, a gentleman who knows what the minimum wage is, he 
has been fighting it for so long.
  Mr. CLAY. Mr. Speaker, I thank the gentleman for yielding time to me.
  Mr. Speaker, I rise in opposition to this rule, because it limits the 
opportunity for Members to have a fair and open debate on a pocketbook 
issue affecting millions of workers.
  First, it denies us an opportunity to offer a Democratic substitute 
that would phase in a $1 increase over a 2-year period. This 
parliamentary maneuver bars Members from debating and amending 
provisions of the bill that repeal overtime pay for millions of 
employees working in computers, sales, and funeral services.
  This maneuver is even more insulting to Members of this body because 
the effect of these overtime provisions were never considered in this 
Congress by the Committee on Education and the Workforce, or evaluated 
by expert witnesses to determine what impact they may have on the work 
force.
  Second, Mr. Speaker, the rule automatically includes the DeMint 
amendment, which will destroy the concept of a Federal minimum wage by 
allowing 50 States to enact 50 different Federal minimum wage 
provisions.
  What a disaster, Mr. Speaker. What an administrative nightmare: fifty 
States, some of them competing against each other to see who can reduce 
their State's minimum wage to a level as close to Mexico's and other 
Nations that exploit their workers.
  Mr. Speaker, this House should not be in the business of relegating 
our workers to slave wages in order to compete with cruel, insensitive 
economic systems of Third World countries. This rule should be opposed 
because it abuses the House rules, because it violates fair play, and 
because it stacks the deck against American workers. I urge its defeat, 
Mr. Speaker.
  Mr. MOAKLEY. Mr. Speaker, I yield 5 minutes to the gentleman from 
Michigan (Mr. Bonior), the Democratic whip.
  Mr. BONIOR. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, the dictionary defines ``outrage'' as a forcible 
violation of others' rights, and a gross or wanton offense or 
indignity. That definition could easily apply to this rule. But what 
else can we expect when the Republican leader once again this year 
tells the American people that raising the minimum wage is, and I quote 
``the wrong thing?''
  Let me tell the Members what Democrats think is wrong, Mr. Speaker. 
We think it is wrong that even as our economy is surging ahead, 
millions of Americans are left behind. They are the workers who earn 
the minimum wage. These are the folks that look after our children at 
day care, that take care of our parents and our grandparents when they 
are sick. These are the folks who work in our hospitals, who clean our 
offices.
  Most of them are women. They have families of their own, in many 
instances. They struggle to keep a roof over their heads, the heads of 
their children, food on the table; to give their kids a better life, a 
little bit of hope; to spend some time with them, but they cannot spend 
any time with them because they are making $10,700 a year, $2,300 below 
the poverty level, if they have two children.
  What do they end up doing? They are out there working two and often 
three jobs, and it is not right. They deserve a raise, just like the 
rest of America. By providing a $1 increase over 2 years, our plan will 
help them achieve just that.
  Some may ask, what is the difference between a $1 increase over 2 
years or $1 over 3 years? The answer to that is,

[[Page H778]]

$1,000. I know some of my Republican leadership friends may seem to 
think, well, that is pocket change. That is not a lot of money. But to 
a poverty wage worker, it can make all the difference in the world. It 
can make a difference on whether their children get another pair of 
blue jeans, whether they can meet the bills at the end of the month, 
whether they may even have a little left over to go to the movies. It 
makes a heck of a difference.
  Our initiative does not stop with providing a fair wage, Mr. Speaker. 
We understand that small businesses are creating most of the jobs in 
this country and we want to help them. That is why our plan expands the 
tax relief for family businesses and family farms. It provides for the 
deductibility of health care premium insurance. Our plan offers a 
higher minimum wage to workers who have earned it, and tax relief to 
the businesses who need it.
  Under the outrageous rule that we have before us right now, it is a 
plan we will not even have a fair chance to consider. Instead, the 
leadership on this side of the aisle is presenting us with an elaborate 
scheme. They will provide a wage increase all right, but only if it is 
tied to this jumbo tax cut for the wealthy and the super rich, tax cuts 
that are reckless and that are enormous.
  Their message basically is this, to working families: Sure, we will 
give you a little bologna sandwich, but first you have to buy my 
friends who belong to the country club a really nice, thick, juicy 
steak dinner. Mr. Speaker, we have news for the Republican leaders, and 
it is that the minimum wage was never intended to become a meal ticket 
for their fat cat friends.
  Mr. Speaker, what the Republican leaders propose is not policy-
making, it is a shell game. No wonder the President has pledged that he 
will veto the Republican plan. Whether we agree with it or not, every 
Member of this House deserves a chance to consider our substitute, but 
this rule would deny us that opportunity, and that is why we are 
fighting it.
  We will not be denied. We will offer motions to recommit that will 
give workers a fair minimum wage and provide real tax relief for small 
businesses and family farms.

                              {time}  1430

  Mr. Speaker, our plan is the only one that provides the raise that 
workers have earned and the tax relief small business and family farms 
need. Vote against this outrageous rule. Bring back a rule that will 
give us some sense of equity and fairness and stand with us for 
America's workers, for small business, for the family farmer. We are 
not asking for anything more; and by God, the country deserves nothing 
less.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, when I hear the debate on the other side, the debate is 
as though these Republicans have not allowed a fair and open rule, a 
great vote for people who think we ought to raise the minimum wage and 
a great vote and an opportunity for small businesses, men and women who 
create opportunity for America. You would think by listening to the 
other side that they do not want to create opportunity and jobs and 
growth and happiness and the opportunity for the next generation to be 
employed.
  I want to stand up and say that my Republican Party has the 
provisions that accelerate the increase and the self-employed health 
insurance deduction to 100 percent because we want people to be able to 
have, not only health insurance, we want people to have their own 
doctors; that we want to do the things that will extend work 
opportunities and tracks credits to extend welfare to work.
  We want to put America to work, want to have opportunity and jobs 
that are available for everyone. That is what this fair and open rule 
is about.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Perry 
Township, Ohio (Ms. Pryce) who sits on the Committee on Rules with me.
  Ms. PRYCE of Ohio. Mr. Speaker, I rise in support of this very fair 
rule which will allow the House to work its will on the question of 
raising the minimum wage and providing tax relief to the very 
businesses that will pay the cost of this new Federal mandate.
  Now, no matter what my colleagues' position may be on the minimum 
wage or on tax relief, they will have an opportunity to make their 
views very clear through the procedure by which we will consider these 
two bills. Now what could be fairer?
  For those who support this minimum wage, this rule makes in order 
legislation to increase it by a dollar over 3 years. If that table is 
not fast enough, the rule allows Members to vote for a Democrat 
amendment that increases the minimum wage by $1 over 2 years.
  Now, of course, many of my colleagues do not think the government 
should play any role in setting the wages and telling businesses what 
to pay employees. Even these Members will have at least two 
opportunities to make their disapproval known when they vote against 
the Martinez-Traficant amendment and final passage.
  Whatever one's view is on the minimum wage, I hope that we all 
recognize that this policy is not free. Someone actually has to pay the 
higher wages. Those who pay the highest prices are the small businesses 
across this Nation, the engines of our economy, those businesses which 
are creating jobs for some of our workers who are the very, very 
hardest to employ.
  That is why this rule also allows the House to vote on tax relief for 
these small companies. The mom and pop store fronts and the new start-
up businesses, the dreams of our country's entrepreneurs.
  Under this rule, Members can register their support for these 
businesses by voting for legislation that increases the self-employed 
health insurance deduction to 100 percent, reduces the death tax so 
that family businesses can be passed on from one generation to the 
next. It increases the deduction for business meal expenses, and it 
reforms pension laws to help businesses offer more retirement security 
to their workers.
  All of these changes will be helpful to the businessmen and women who 
are responsible for the innovations and job creation that are making 
this economy so very strong.
  Mr. Speaker, we are dealing with some controversial issues today on 
which Members of the House have very, very different views. But this 
rule gives all Members a fair opportunity to express their position and 
let the House work its will.
  Many of my colleagues on the other side of the aisle are not happy, 
but believe me, Mr. Speaker, many of our colleagues on this side of the 
aisle are not happy either; and it is my experience that that usually 
means we have a pretty good rule.
  I urge all of my colleagues to support it.
  Mr. MOAKLEY. Mr. Speaker, I yield 1 minute to the gentleman from Ohio 
(Mr. Kucinich).
  (Mr. KUCINICH asked and was given permission to revise and extend his 
remarks.)
  Mr. KUCINICH. Mr. Speaker, I rise today to support raising the 
minimum wage over a period of 2 years instead of 3 years. The current 
minimum wage is $5.15 per hour. At this rate, a full-time year-round 
minimum wage earner in the United States makes approximately $10,712 
per year. In 1998, the yearly salary determined necessary for a family 
of three to rise above the poverty level in this country was $13,003, 
an amount $2,291 more than the minimum wage salary provides. Clearly, 
the current minimum wage is too low.
  Congress has already inexcusably allowed the value of the minimum 
wage to fall 21 percent lower than in 1979. If the minimum wage is not 
increased by the year 2001, recent studies show that the inflation 
adjusted value will fall to $4.90 per hour.
  It is essential that the minimum wage is raised over the course of 2 
years instead of 3. That is why I will support the Traficant amendment, 
and I urge everyone to support the Traficant amendment.
  Mr. MOAKLEY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Stenholm).
  (Mr. STENHOLM asked and was given permission to revise and extend his 
remarks.)
  Mr. STENHOLM. Mr. Speaker, the previous speaker was right. Not all of 
us are happy with this rule. I believe it deals fairly with the minimum 
wage question. But I continue to not understand why the majority party 
continues to refuse to allow a substitute

[[Page H779]]

tax bill when there are sufficient Members on both sides of the aisle 
who I believe would like our version better than the version that is 
put before us.
  But here again, the fundamental question is why not allow a simple 
vote? Why not allow the package put together by the gentleman from New 
York (Mr. Rangel) and the gentleman from Tennessee (Mr. Tanner) to have 
the opportunity to have the will of the House worked?
  The bill that we will be voting on today continues the fiscal 
irresponsible pattern of legislation coming from the majority side 
that, once again, will squander our national surplus and our 
opportunity to deal with Social Security and Medicare. This, when one 
adds up this $122 billion unpaid for, will amount to something over 
$400 billion now voted by the House and by the Senate in spending the 
surplus that is not yet real.
  The tax bill that this rule will allow is the latest in the series of 
tax bills that will drain the projected budget surplus drip by drip 
without regard for the consequences.
  If we pass this bill today, it will be fiscally reckless for this 
body to continue to rush down this path of passing tax cuts and 
spending bills without a road map.
  Why do we continue to casually waive the budget rules? Why do we just 
continue to come to this floor of the House without first bringing a 
road map so we can deal with how we are going to spend money and cut 
taxes this year?
  The tax bill before us is simply a political document that will never 
become law. We know this. It appears the majority wants a political 
issue rather than dealing with the estates of family farmers and small 
businessmen and women.
  If my colleagues are truly concerned about estate tax relief, which I 
am and have been, I very much appreciate what could have been an 
opportunity to vote on an immediate exemption exclusion of $4 million 
estates immediately. But, yet, the bill that we have before us pays 
more attention to estates over $10 million. I do not understand this.
  The President has promised that he will sign into law the Democratic 
tax package. The fact the leadership will not allow the House to vote 
on this amendment suggests they are more interested in keeping a 
political issue, which I fail to understand, than they are on actually 
providing tax relief to small businesses.
  This rule is unfair to our children and grandchildren who will face 
the consequences of our fiscal irresponsibility if this bill should 
become law, which it will not.
  What I do not understand is why we never allow the House of 
Representatives to work our will so that we might send something to the 
President that the President will actually sign. Mr. Speaker, I ask 
that simple question. Why not let the House be the House?
  Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Speaker, I was sitting in my office 
not intending to participate in this debate and really got incensed. I 
sat there, and I wondered, what must the American people be thinking is 
going on here? What must my Republican colleagues be thinking? Do they 
think the American people are stupid? What are they doing?
  It is obvious that their leadership does not support the minimum wage 
increase, and they are trying to kill the minimum wage increase by 
loading it up with an irresponsible tax cut that benefits the richest 
people in America. Are we stupid? Do they think we are stupid? That is 
exactly what is going on here.
  The President has said, I will veto this bill. We cannot stand here 
on the floor and say, hey, we are being bipartisan. There is no 
bipartisanship here.
  All we are trying to do is get a wage increase for people in America 
who need it and want it. All they are trying to do is kill that minimum 
wage increase. They will try anything and everything to accomplish that 
objective.
  We should not sit here and pretend that we are doing something being 
bipartisan. There is nobody being bipartisan in this House. If they 
were being bipartisan, they would separate these two bills, let them be 
voted up or down, give us the opportunity to offer amendments on both 
bills, and let the House work its will.
  That is all we are asking for in this equation. It is quite obvious 
that the Republicans are not going to give it to us and not going to 
give the opportunity to the American people to have a wage increase.
  Mr. MOAKLEY. Mr. Speaker, just directing my conversation to the 
gentleman from Texas (Mr. Sessions), is he the only remaining speaker?
  Mr. SESSIONS. Mr. Speaker, I have one additional speaker who I am 
going to give 7 minutes to, rundown the time to where we have a minute 
or so left, and then I will reserve 1 minute for myself when that 
speaker is through.
  Mr. MOAKLEY. Then I would be delighted to sit back and listen to the 
gentleman's speaker for 7 minutes right now.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  In response to both gentlemen who have just spoken, the fact of the 
matter is that the Republican House of Representatives is not going to 
send a tax increase, which is what President Clinton wants to sign. The 
American people understand this. The bills that the President wants to 
sign are tax increases that take money away from people.
  Forty-eight of my colleagues on the Democrat side came across just 
within weeks to sign the marriage penalty. The President of the United 
States cannot join us.
  What we are doing today is talking about a minimum wage that is good 
for America and great for the people who employ those people, small 
businesses.
  Mr. Speaker, I yield 7 minutes to the gentleman from Ohio (Mr. 
Traficant).
  (Mr. TRAFICANT asked and was given permission to revise and extend 
his remarks.)
  Mr. TRAFICANT. Mr. Speaker, I disagree with the Democrat leadership 
on their analysis of this bill. I support the rule. I will support the 
tax break. I will support an amendment to increase the minimum wage $1 
over a 24-month span, and I will vote for final passage when they are 
linked together.
  My district desperately needs an increase in the minimum wage. The 
sharpest politician to ever sit on Independence Avenue, with great 
political wisdom, owns two-thirds of the votes, and there are many 
political machinations that follow down the road on this bill. But a 
tax break for the boss who raises the wages of my workers is a decent 
trade-off for me.
  Am I totally crazy about their tax break? Not totally. There is a 
thing called a conference. But in the last 4 years, we have had two 
increases in the minimum wage that were under Republican Party 
leadership.
  The Republicans could have brought a bill out here today that did not 
have an opportunity for $1 over 2 years. They could have left it $1 
over 3 years. They did that. I thank them for that. But I want to also 
say this, those who say that the Republican Party's tactics are simply 
mean spirited, trying to kill a minimum wage are not truthful.

                              {time}  1445

  Their concerns over inflation causing a downward spiral that could 
hurt my workers is a valid concern that I share, just as they do. I 
believe our economy is strong enough that it can absorb both.
  But I think the point that I would like to make today is this: there 
are many people who come from different backgrounds. I look around and 
I see great Members coming from very, very poor families. I come from a 
very poor family. My dad finally got on his feet maybe when I was about 
11 years old. My dad never worked for a poor man.
  This business of bashing one another should stop. Is this bill good 
for America or not? My Democrat colleagues are saying it is not. I am a 
Democrat. I am saying it is, after it goes through the conference and 
after we go through the political machinations to work out those 
problems. That is what the process is all about, my colleagues.
  But let us look at this. How many times do we come to the floor that 
we bash, that we pit old against the young; rich against the poor; 
black against the white; man against the woman; worker against the 
company? My colleagues, without a company there is no worker. Without 
an entrepreneur there is no company. I think the Democrat Party has got 
to look at this issue.

[[Page H780]]

  I am appealing to the Democrat Party to pass the rule. I do not want 
to see the Republican Party on their own pass the rule and give an 
opportunity for a minimum-wage increase on their own, because President 
Clinton is sharp. I believe if the Clinton White House and the 
Republican leadership, whose intentions I believe are honorable, were 
to get together in reasonableness on that tax scheme, we will have a 
minimum-age increase, and my people desperately need it.
  My colleagues, the gas prices in America are beginning to approach $2 
a gallon. So I want to say this: I want to commend the Republican Party 
and the Republican leadership for bringing out an opportunity for a 
minimum-wage increase and, yes, politically machinating the process to 
accommodate some of their goals. That is what we do here. We are not 
the Rotary.
  In closing, Democrats, my amendment does this: the bill says there is 
a $1 increase over 3 years. The Traficant bill would accelerate the 
minimum wage of $1 over 2 years. I am asking for a positive vote. I 
will vote ``yes'' on the previous question; I will vote ``yes'' on the 
rule.
  And I will also say this in closing: I served on the majority and on 
the minority; and we have had, in my opinion, much fairer rules coming 
from this majority party than we did when I was in the majority. That 
is telling it like it is.
  Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I urge Members to vote ``no'' on the previous question. 
If the previous question is defeated, I will offer an amendment to the 
rule that will allow the Democrats to offer a substitute to both the 
minimum-wage bill and to the small business tax bill.
  It is extremely unfortunate that the majority leadership in this 
House has shut the minority out of the amendment process on these two 
very critical bills. The two substitutes proposed by the Democrats are 
reasonable, and they are responsible alternatives to the two bills 
being offered by the Republicans. Members deserve an opportunity to 
choose between these two approaches. So, Mr. Speaker, I urge Members to 
vote ``no'' on the previous question so that we may consider these two 
sensible alternatives.

        The Vote on the Previous Question: What It Really Means

       This vote, the vote on whether to order the previous 
     question on a special rule, is not merely a procedural vote. 
     A vote against ordering the previous question is a vote 
     against the Republican majority agenda and a vote to allow 
     the opposition, at least for the moment, to offer an 
     alternative plan. It is a vote about what the House should be 
     debating.
       Mr. Clarence Cannon's Precedents of the House of 
     Representatives, (VI, 308-311) describes the vote on the 
     previous question on the rule as ``a motion to direct or 
     control the consideration of the subject before the House 
     being made by the Member in charge.'' To defeat the previous 
     question is to give the opposition a chance to decide the 
     subject before the House. Cannon cities the Speaker's ruling 
     of January 13, 1920, to the effect that ``the refusal of the 
     House to sustain the demand for the previous question passes 
     the control of the resolution to the opposition'' in order to 
     offer an amendment. On March 15, 1909, a member of the 
     majority party offered a rule resolution. The House defeated 
     the previous question and a member of the opposition rose to 
     a parliamentary inquiry, asking who was entitled to 
     recognition. Speaker Joseph G. Cannon (R-Illinois) said: 
     ``The previous question having been refused, the gentleman 
     from New York, Mr. Fitzgerald, who had asked the gentleman to 
     yield to him for an amendment, is entitled to the first 
     recognition.
       Because the vote today may look bad for the Republican 
     majority they will say ``the vote on the previous question is 
     simply a vote on whether to proceed to an immediate vote on 
     adopting the resolution . . . [and] has no substantive 
     legislation or policy implications whatsoever.'' But that is 
     not what they have always said. Listen to the Republican 
     Leadership Manual on the Legislative Process in the United 
     States House of Representatives, (6th edition, page 135). 
     Here's how the Republicans describe the previous question 
     vote in their own manual: ``Although it is generally not 
     possible to amend the rule because the majority Member 
     controlling the time will not yield for the purpose of 
     offering an amendment, the same result may be achieved by 
     voting down the previous question on the rule . . . When the 
     motion for the previous question is defeated, control of the 
     time passes to the Member who led the opposition to ordering 
     the previous question. That Member, because he then controls 
     the time, may offer an amendment to the rule, or yield for 
     the purpose of amendment.''
        Deschler's Procedure in the U.S. House of Representatives, 
     the subchapter titled ``Amending Special Rules'' states: ``a 
     refusal to order the previous question on such a rule [a 
     special rule reported from the Committee on Rules] opens the 
     resolution to amendment and further debate.'' (Chapter 21, 
     section 21.2) Section 21.3 continues: ``Upon rejection of the 
     motion for the previous question on a resolution reported 
     from the Committee on Rules, control shifts to the Member 
     leading the opposition to the previous question, who may 
     offer a proper amendment or motion and who controls the time 
     for debate thereon.''
       The vote on the previous question on a rule does have 
     substantive policy implications. It is one of the only 
     available tools for those who oppose the Republican 
     majority's agenda to offer an alternative plan.

  Mr. Speaker, I submit for the Record the text of the amendments I 
have just referred to and other extraneous materials:

 Previous Question for H. Res.    Small Business Tax and Minimum Wage 
            Increase H.R. 3081 and H.R. 3846--March 9, 2000

       Strike all after the resolving clause and insert in lieu 
     thereof the following:
       Providing for consideration of the bill (H.R. 3081) to 
     increase the Federal minimum wage and to amend the Internal 
     Revenue Code of 1986 to provide tax benefits for small 
     businesses, and for other purposes, and for consideration of 
     the bill (H.R. 3846) to amend the Fair Labor Standards Act of 
     1938 to increase the minimum wage, and for other purposes.
       Resolved, That upon the adoption of this resolution it 
     shall be in order without intervention of any point of order 
     to consider in the House the bill (H.R. 3081) to increase the 
     Federal minimum wage and to amend the Internal Revenue Code 
     of 1986 to provide tax benefits for small businesses, and for 
     other purposes. The bill shall be considered as read for 
     amendment. In lieu of the amendment recommended by the 
     Committee on Ways and Means now printed in the bill, the 
     amendment in the nature of a substitute printed in part A of 
     the report of the Committee on Rules accompanying this 
     resolution shall be considered as adopted. The previous 
     question shall be considered as ordered on the bill, as 
     amended, and on any further amendment thereto to final 
     passage without intervening motion except: (1) one hour of 
     debate on the bill, as amended, equally divided and 
     controlled by the chairman and ranking minority member of the 
     Committee on Ways and Means; (2) the amendment in the nature 
     of a substitute printed in section 4 of this resolution, if 
     offered by Representative Rangel or a designee, which shall 
     be in order without intervention of any point of order, shall 
     be considered as read, and shall be separately debatable for 
     one hour equally divided and controlled by the proponent and 
     an opponent; and (3) one motion to recommit with or without 
     instructions.
       Sec. 2. After disposition of H.R. 3081, it shall be in 
     order without intervention of any point of order to consider 
     in the House the bill (H.R. 3846) to amend the Fair Labor 
     Standards Act of 1938 to increase the minimum wage, and for 
     other purposes. The bill shall be considered as read for 
     amendment. The previous question shall be considered as 
     ordered on the bill and on any amendment thereto to final 
     passage without intervening motion except: (1) one hour of 
     debate on the bill equally divided and controlled by the 
     chairman and ranking minority member of the Committee on 
     Education and the Workforce; (2) the amendment in the nature 
     of a substitute printed in section 5 of this resolution, if 
     offered by Representative Bonior or a designee, which shall 
     be in order without intervention of any point of order, shall 
     be considered as read, and shall be separately debatable for 
     one hour equally divided and controlled by the proponent and 
     an opponent; and (3) one motion to recommit with or without 
     instructions.
       Sec. 3. (a) In the engrossment of H.R. 3081, the Clerk 
     shall--
       (1) await the disposition of H.R. 3846;
       (2) add the text of H.R. 3846, as passed by the House, as 
     new matter at the end of H.R. 3081;
       (3) conform the title of H.R. 3081 to reflect the addition 
     of the text of H.R. 3846 to the engrossment;
       (4) assign appropriate designations to provisions within 
     the engrossment; and
       (5) conform provisions for short titles within the 
     engrossment.
       (b) Upon the addition of the text of H.R. 3846 to the 
     engrossment of H.R. 3081, H.R. 3846 shall be laid on the 
     table.
       Sec. 4. The second amendment specified in the first section 
     of this resolution is as follows:
       Strike all after the enacting clause, and insert the 
     following:

         TITLE II--AMENDMENTS OF INTERNAL REVENUE CODE OF 1986

     SEC. 200. SHORT TITLE.

       (a) Short Title.--This title may be cited as the ``Small 
     Business Tax Relief Act of 2000''.
       (b) Table of Contents.--

         TITLE II--AMENDMENTS OF INTERNAL REVENUE CODE OF 1986

Sec. 200. Table of contents.

[[Page H781]]

Subtitle A--Permanent Extension of Work Opportunity Credit and Welfare-
                             to-Work Credit

Sec. 201. Work opportunity credit and welfare-to-work credit; repeal of 
              age limitation on eligibility of food stamp recipients.

  Subtitle B--Deduction for 100 Percent of Health Insurance Costs of 
                       Self-Employed Individuals

Sec. 211. Deduction for 100 percent of health insurance costs of self-
              employed individuals.

                     Subtitle C--Pension Provisions

Sec. 221. Treatment of multiemployer plans under section 415.
Sec. 222. Early retirement limits for certain plans.
Sec. 223. Certain post-secondary educational benefits provided by an 
              employer to children of employees excludable from gross 
              income as a scholarship.

                    Subtitle D--Business Tax Relief

Sec. 231. Increase in expense treatment for small businesses.
Sec. 232. Small businesses allowed increased deduction for meal and 
              entertainment expenses.
Sec. 233. Restoration of deduction for travel expenses of spouse, etc. 
              accompanying taxpayer on business travel.
Sec. 234. Increased credit and amortization deduction for reforestation 
              expenditures.
Sec. 235. Repeal of modification of installment method.

         Subtitle E--Expansion of Incentives for Public Schools

Sec. 241. Expansion of incentives for public schools.

   Subtitle F--Increased Estate Tax Relief for Family-Owned Business 
                               Interests

Sec. 251. Increase in estate tax benefit for family-owned business 
              interests.

                      Subtitle G--Revenue Offsets

             Part I--Revision of Tax Rules on Expatriation

Sec. 261. Revision of tax rules on expatriation.

          Part II--Disallowance of Noneconomic Tax Attributes


  SUBPART A--DISALLOWANCE OF NONECONOMIC TAX ATTRIBUTES; INCREASE IN 
     PENALTY WITH RESPECT TO DISALLOWED NONECONOMIC TAX ATTRIBUTES

Sec. 266. Disallowance of noneconomic tax attributes.
Sec. 267. Increase in substantial underpayment penalty with respect to 
              disallowed noneconomic tax attributes.
Sec. 268. Penalty on marketed tax avoidance strategies which have no 
              economic substance, etc.
Sec. 269. Effective dates.


  SUBPART B--LIMITATIONS ON IMPORTATION OR TRANSFER OF BUILT-IN LOSSES

Sec. 271. Limitation on importation of built-in losses.
Sec. 272. Disallowance of partnership loss transfers.

                 Part III--Estate and Gift Tax Offsets

Sec. 276. Valuation rules for transfers involving nonbusiness assets.
Sec. 277. Correction of technical error affecting largest estates.

                         Part IV--Other Offsets

Sec. 281. Consistent amortization periods for intangibles.
Sec. 282. Modification of foreign tax credit carryover rules.
Sec. 283. Recognition of gain on transfers to swap funds.
Subtitle A--Permanent Extension of Work Opportunity Credit and Welfare-
                             to-Work Credit

     SEC. 201. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK CREDIT; 
                   REPEAL OF AGE LIMITATION ON ELIGIBILITY OF FOOD 
                   STAMP RECIPIENTS.

       (a) Permanent Extension.--
       (1) In general.--
       (A) Section 51(c) of the Internal Revenue Code of 1986 is 
     amended by striking paragraph (4).
       (B) Section 51A of such Code is amended by striking 
     subsection (f).
       (2) Effective date.--The amendments made by this subsection 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.
       (b) Repeal of Age Limitation on Eligibility of Food Stamp 
     Recipients.--
       (1) In general.--Subparagraph (A) of section 51(d)(8) of 
     such Code is amended to read as follows:
       ``(A) In general.--The term `qualified food stamp 
     recipient' means any individual who is certified by the 
     designated local agency as being a member of a family--
       ``(i) receiving assistance under a food stamp program under 
     the Food Stamp Act of 1977 for the 6- month period ending on 
     the hiring date, or
       ``(ii) receiving such assistance for at least 3 months of 
     the 5-month period ending on the hiring date, in the case of 
     a member of a family who ceases to be eligible for such 
     assistance under section 6(o) of the Food Stamp Act of 
     1977.''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act.
  Subtitle B--Deduction for 100 Percent of Health Insurance Costs of 
                       Self-Employed Individuals

     SEC. 211. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS 
                   OF SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (1) of section 162(l) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer and the taxpayer's spouse and dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                     Subtitle C--Pension Provisions

     SEC. 221. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--Paragraph (11) of section 415(b) 
     of the Internal Revenue Code of 1986 (relating to limitation 
     for defined benefit plans) is amended to read as follows:
       ``(11) Special limitation rule for governmental and 
     multiemployer plans.--In the case of a governmental plan (as 
     defined in section 414(d)) or a multiemployer plan (as 
     defined in section 414(f)), subparagraph (B) of paragraph (1) 
     shall not apply.''.
       (b) Combining and Aggregation of Plans.--
       (1) Combining of plans.--Subsection (f) of section 415 of 
     such Code (relating to combining of plans) is amended by 
     adding at the end the following:
       ``(3) Exception for multiemployer plans.--Notwithstanding 
     paragraph (1) and subsection (g), a multiemployer plan (as 
     defined in section 414(f)) shall not be combined or 
     aggregated with any other plan maintained by an employer for 
     purposes of applying the limitations established in this 
     section, except that such plan shall be combined or 
     aggregated with another plan which is not such a 
     multiemployer plan solely for purposes of determining whether 
     such other plan meets the requirements of subsection 
     (b)(1)(A).''.
       (2) Conforming amendment for aggregation of plans.--
     Subsection (g) of section 415 of such Code (relating to 
     aggregation of plans) is amended by striking ``The 
     Secretary'' and inserting ``Except as provided in subsection 
     (f)(3), the Secretary''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 222. EARLY RETIREMENT LIMITS FOR CERTAIN PLANS.

       (a) In General.--Subparagraph (F) of section 415(b)(2) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(F) Multiemployer plans and plans maintained by 
     governments and tax exempt organizations.--In the case of a 
     governmental plan (within the meaning of section 414(d)), a 
     plan maintained by an organization (other than a governmental 
     unit) exempt from tax under this subtitle, a multiemployer 
     plan (as defined in section 414(f)), or a qualified merchant 
     marine plan--
       ``(i) subparagraph (C) shall be applied--

       ``(I) by substituting `age 62' for `social security 
     retirement age' each place it appears, and
       ``(II) as if the last sentence thereof read as follows: 
     `The reduction under this subparagraph shall not reduce the 
     limitation of paragraph (1)(A) below (i) 80 percent of such 
     limitation as in effect for the year, or (ii) if the benefit 
     begins before age 55, the equivalent of such 80 percent 
     amount for age 55.', and

       ``(ii) subparagraph (D) shall be applied by substituting 
     `age 65' for `social security retirement age' each place it 
     appears.
     For purposes of this subparagraph, the term `qualified 
     merchant marine plan' means a plan in existence on January 1, 
     1986, the participants in which are merchant marine officers 
     holding licenses issued by the Secretary of Transportation 
     under title 46, United States Code.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 223. CERTAIN POST-SECONDARY EDUCATIONAL BENEFITS 
                   PROVIDED BY AN EMPLOYER TO CHILDREN OF 
                   EMPLOYEES EXCLUDABLE FROM GROSS INCOME AS A 
                   SCHOLARSHIP.

       (a) In General.--Section 117 of the Internal Revenue Code 
     of 1986 (relating to qualified scholarships) is amended by 
     adding at the end the following:
       ``(e) Employer-Provided Post-Secondary Educational Benefits 
     Provided to Children of Employees.--
       ``(1) In general.--In determining whether any amount is a 
     qualified scholarship for purposes of subsection (a), the 
     fact that such amount is provided in connection with an 
     employment relationship shall be disregarded if--
       ``(A) such amount is provided by the employer to a child 
     (as defined in section 151(c)(3)) of an employee or former 
     employee of such employer,
       ``(B) such amount is provided pursuant to a plan which 
     meets the nondiscrimination requirements of subsection 
     (d)(3), and
       ``(C) amounts provided under such plan are in addition to 
     any other compensation payable to employees and such plan 
     does not provide employees with a choice between such amounts 
     and any other benefit.

[[Page H782]]

     For purposes of subparagraph (C), the business practices of 
     the employer (as well as such plan) shall be taken into 
     account.
       ``(2) Dollar limitations.--
       ``(A) Per child.--The amount excluded from the gross income 
     of the employee by reason of paragraph (1) for a taxable year 
     with respect to amounts provided to each child of such 
     employee shall not exceed $2,000.
       ``(B) Aggregate limit.--The amount excluded from the gross 
     income of the employee by reason of paragraph (1) for a 
     taxable year (after the application of subparagraph (A)) 
     shall not exceed the excess of the dollar amount contained in 
     section 127(a)(2) over the amount excluded from the 
     employee's gross income under section 127 for such year.
       ``(3) Principal shareholders and owners.--Paragraph (1) 
     shall not apply to any amount provided to any child of any 
     individual if such individual (or such individual's spouse) 
     owns (on any day of the year) more than 5 percent of the 
     stock or of the capital or profits interest in the employer.
       ``(4) Special rules of application.--In the case of an 
     amount which is treated as a qualified scholarship by reason 
     of this subsection--
       ``(A) subsection (a) shall be applied without regard to the 
     requirement that the recipient be a candidate for a degree, 
     and
       ``(B) subsection (b)(2)(A) shall be applied by substituting 
     `section 529(e)(5)' for `section 170(b)(1)(A)(ii)'.
       ``(5) Certain other rules to apply.--Rules similar to the 
     rules of paragraphs (4), (5), and (7) of section 127(c) shall 
     apply for purposes of this subsection.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                    Subtitle D--Business Tax Relief

     SEC. 231. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

       (a) In General.--Paragraph (1) of section 179(b) of the 
     Internal Revenue Code of 1986 (relating to dollar limitation) 
     is amended to read as follows:
       ``(1) Dollar limitation.--The aggregate cost which may be 
     taken into account under subsection (a) for any taxable year 
     shall not exceed $30,000.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 232. SMALL BUSINESSES ALLOWED INCREASED DEDUCTION FOR 
                   MEAL AND ENTERTAINMENT EXPENSES.

       (a) In General.--Subsection (n) of section 274 (relating to 
     only 50 percent of meal and entertainment expenses allowed as 
     deduction) is amended by adding at the end the following new 
     paragraph:
       ``(4) Special rule for small businesses.--
       ``(A) In general.--In the case of any taxpayer which is a 
     small business, paragraph (1) shall be applied by 
     substituting for `50 percent'--
       ``(i) `55 percent' in the case of taxable years beginning 
     in 2001 and 2002, and
       ``(ii) `60 percent' in the case of taxable years beginning 
     in 2003, 2004, 2005 and 2006, and
       ``(iii) `65 percent' in the case of taxable years beginning 
     after 2006.
       ``(B) Small business.--For purposes of this paragraph, the 
     term `small business' means, with respect to expenses paid or 
     incurred during any taxable year--
       ``(i) any C corporation which meets the requirements of 
     section 55(e)(1) for such year, and
       ``(ii) any S corporation, partnership, or sole 
     proprietorship which would meet such requirements if it were 
     a C corporation.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 233. RESTORATION OF DEDUCTION FOR TRAVEL EXPENSES OF 
                   SPOUSE, ETC. ACCOMPANYING TAXPAYER ON BUSINESS 
                   TRAVEL.

       (a) In General.--Subsection (m) of section 274 of the 
     Internal Revenue Code of 1986 (relating to additional 
     limitations on travel expenses) is amended by striking 
     paragraph (3).
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 234. INCREASED CREDIT AND AMORTIZATION DEDUCTION FOR 
                   REFORESTATION EXPENDITURES.

       (a) Increase in Credit.--Paragraph (1) of section 48(b) of 
     the Internal Revenue Code of 1986 (relating to reforestation 
     credit) is amended by striking ``10 percent'' and inserting 
     ``20 percent''.
       (b) Reduction in Amortization Period.--Subsection (a) of 
     section 194 of such Code (relating to amortization of 
     reforestation expenditures) is amended--
       (1) by striking ``84 months'' and inserting ``36 months'', 
     and
       (2) by striking ``84-month period'' and inserting ``36-
     month period''.
       (c) Increase in Maximum Amount Which May Be Amortized.--
     Paragraph (1) of section 194(b) of such Code is amended by 
     striking ``$10,000 ($5,000'' and inserting ``$20,000 
     ($10,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 235. REPEAL OF MODIFICATION OF INSTALLMENT METHOD.

       (a) In General.--Subsection (a) of section 536 of the 
     Ticket to Work and Work Incentives Improvement Act of 1999 
     (relating to modification of installment method and repeal of 
     installment method for accrual method taxpayers) is repealed 
     effective with respect to sales and other dispositions 
     occurring on or after the date of the enactment of such Act.
       (b) Applicability.--The Internal Revenue Code of 1986 shall 
     be applied and administered as if that subsection (and the 
     amendments made by that subsection) had not been enacted.
         Subtitle E--Expansion of Incentives for Public Schools

     SEC. 241. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

       (a) In General.--Chapter 1 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     subchapter:

         ``Subchapter X--Public School Modernization Provisions

``Part I. Credit to holders of qualified public school modernization 
              bonds.
``Part II. Qualified school construction bonds.
``Part III. Incentives for education zones.

 ``PART I--CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL MODERNIZATION 
                                 BONDS

``Sec. 1400F. Credit to holders of qualified public school 
              modernization bonds.

     ``SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL 
                   MODERNIZATION BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified public school modernization bond on a 
     credit allowance date of such bond which occurs during the 
     taxable year, there shall be allowed as a credit against the 
     tax imposed by this chapter for such taxable year an amount 
     equal to the sum of the credits determined under subsection 
     (b) with respect to credit allowance dates during such year 
     on which the taxpayer holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified public school modernization bond is 25 
     percent of the annual credit determined with respect to such 
     bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any qualified public school modernization bond is 
     the product of--
       ``(A) the applicable credit rate, multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Applicable credit rate.--For purposes of paragraph 
     (1), the applicable credit rate with respect to an issue is 
     the rate equal to an average market yield (as of the day 
     before the date of issuance of the issue) on outstanding 
     long-term corporate debt obligations (determined under 
     regulations prescribed by the Secretary).
       ``(4) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed.
       ``(c) Limitation Based on Amount of Tax.--
       ``(1) In general.--The credit allowed under subsection (a) 
     for any taxable year shall not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under part IV of 
     subchapter A (other than subpart C thereof, relating to 
     refundable credits).
       ``(2) Carryover of unused credit.--If the credit allowable 
     under subsection (a) exceeds the limitation imposed by 
     paragraph (1) for such taxable year, such excess shall be 
     carried to the succeeding taxable year and added to the 
     credit allowable under subsection (a) for such taxable year.
       ``(d) Qualified Public School Modernization Bond; Credit 
     Allowance Date.--For purposes of this section--
       ``(1) Qualified public school modernization bond.--The term 
     `qualified public school modernization bond' means--
       ``(A) a qualified zone academy bond, and
       ``(B) a qualified school construction bond.
       ``(2) Credit allowance date.--The term `credit allowance 
     date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.
     Such term includes the last day on which the bond is 
     outstanding.
       ``(e) Other Definitions.--For purposes of this subchapter--
       ``(1) Local educational agency.--The term `local 
     educational agency' has the meaning given to such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965. Such term includes the local educational agency that 
     serves the District of Columbia but does not include any 
     other State agency.
       ``(2) Bond.--The term `bond' includes any obligation.
       ``(3) State.--The term `State' includes the District of 
     Columbia and any possession of the United States.
       ``(4) Public school facility.--The term `public school 
     facility' shall not include--

[[Page H783]]

       ``(A) any stadium or other facility primarily used for 
     athletic contests or exhibitions or other events for which 
     admission is charged to the general public, or
       ``(B) any facility which is not owned by a State or local 
     government or any agency or instrumentality of a State or 
     local government.
       ``(f) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(g) Bonds Held by Regulated Investment Companies.--If any 
     qualified public school modernization bond is held by a 
     regulated investment company, the credit determined under 
     subsection (a) shall be allowed to shareholders of such 
     company under procedures prescribed by the Secretary.
       ``(h) Credits May Be Stripped.--Under regulations 
     prescribed by the Secretary--
       ``(1) In general.--There may be a separation (including at 
     issuance) of the ownership of a qualified public school 
     modernization bond and the entitlement to the credit under 
     this section with respect to such bond. In case of any such 
     separation, the credit under this section shall be allowed to 
     the person who on the credit allowance date holds the 
     instrument evidencing the entitlement to the credit and not 
     to the holder of the bond.
       ``(2) Certain rules to apply.--In the case of a separation 
     described in paragraph (1), the rules of section 1286 shall 
     apply to the qualified public school modernization bond as if 
     it were a stripped bond and to the credit under this section 
     as if it were a stripped coupon.
       ``(i) Treatment for Estimated Tax Purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a qualified 
     public school modernization bonds on a credit allowance date 
     shall be treated as if it were a payment of estimated tax 
     made by the taxpayer on such date.
       ``(j) Credit May Be Transferred.--Nothing in any law or 
     rule of law shall be construed to limit the transferability 
     of the credit allowed by this section through sale and 
     repurchase agreements.
       ``(k) Reporting.--Issuers of qualified public school 
     modernization bonds shall submit reports similar to the 
     reports required under section 149(e).
       ``(l) Penalty on Contractors Failing To Pay Prevailing 
     Wage.--
       ``(1) In general.--If any contractor on any project funded 
     by any qualified public school modernization bond has failed, 
     during any portion of such contractor's taxable year, to pay 
     prevailing wages that would be required under section 439 of 
     the General Education Provisions Act if such funding were an 
     applicable program under such section, the tax imposed by 
     chapter 1 on such contractor for such taxable year shall be 
     increased by 200 percent of the amount involved in such 
     failure.
       ``(2) Amount involved.--For purposes of paragraph (1), the 
     amount involved with respect to any failure is the excess of 
     the amount of wages such contractor would be so required to 
     pay under such section over the amount of wages paid.
       ``(3) Abatement of tax if failure corrected.--If a failure 
     to pay prevailing wages is corrected within a reasonable 
     period, then any tax imposed by paragraph (1) with respect to 
     such failure (including interest, additions to the tax, and 
     additional amounts) shall not be assessed, and if assessed 
     the assessment shall be abated, and if collected shall be 
     credited or refunded as an overpayment.
       ``(4) No credits against tax.--The tax imposed by paragraph 
     (1) shall not be treated as a tax imposed by this chapter for 
     purposes of determining--
       ``(A) the amount of any credit allowable under this 
     chapter, or
       ``(B) the amount of the minimum tax imposed by section 55.
       ``(m) Termination.--This section shall not apply to any 
     bond issued after December 31, 2004.

             ``PART II--QUALIFIED SCHOOL CONSTRUCTION BONDS

``Sec. 1400G. Qualified school construction bonds.

     ``SEC. 1400G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

       ``(a) Qualified School Construction Bond.--For purposes of 
     this subchapter, the term `qualified school construction 
     bond' means any bond issued as part of an issue if--
       ``(1) 95 percent or more of the proceeds of such issue are 
     to be used for the construction, rehabilitation, or repair of 
     a public school facility or for the acquisition of land on 
     which such a facility is to be constructed with part of the 
     proceeds of such issue,
       ``(2) the bond is issued by a State or local government 
     within the jurisdiction of which such school is located,
       ``(3) the issuer designates such bond for purposes of this 
     section, and
       ``(4) the term of each bond which is part of such issue 
     does not exceed 15 years.
       ``(b) Limitation on Amount of Bonds Designated.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) by 
     any issuer shall not exceed the sum of--
       ``(1) the limitation amount allocated under subsection (d) 
     for such calendar year to such issuer, and
       ``(2) if such issuer is a large local educational agency 
     (as defined in subsection (e)(4)) or is issuing on behalf of 
     such an agency, the limitation amount allocated under 
     subsection (e) for such calendar year to such agency.
       ``(c) National Limitation on Amount of Bonds Designated.--
     There is a national qualified school construction bond 
     limitation for each calendar year. Such limitation is--
       ``(1) $11,000,000,000 for 2001,
       ``(2) except as provided in subsection (f), zero after 
     2001.
       ``(d) Half of Limitation Allocated Among States.--
       ``(1) In general.--One-half of the limitation applicable 
     under subsection (c) for any calendar year shall be allocated 
     among the States under paragraph (2) by the Secretary. The 
     limitation amount allocated to a State under the preceding 
     sentence shall be allocated by the State to issuers within 
     such State and such allocations may be made only if there is 
     an approved State application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     the States in proportion to the respective amounts each such 
     State received for Basic Grants under subpart 2 of part A of 
     title I of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6331 et seq.) for the most recent fiscal year 
     ending before such calendar year. For purposes of the 
     preceding sentence, Basic Grants attributable to large local 
     educational agencies (as defined in subsection (e)) shall be 
     disregarded.
       ``(3) Minimum allocations to states.--
       ``(A) In general.--The Secretary shall adjust the 
     allocations under this subsection for any calendar year for 
     each State to the extent necessary to ensure that the sum 
     of--
       ``(i) the amount allocated to such State under this 
     subsection for such year, and
       ``(ii) the aggregate amounts allocated under subsection (e) 
     to large local educational agencies in such State for such 
     year,

     is not less than an amount equal to such State's minimum 
     percentage of the amount to be allocated under paragraph (1) 
     for the calendar year.
       ``(B) Minimum percentage.--A State's minimum percentage for 
     any calendar year is the minimum percentage described in 
     section 1124(d) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 6334(d)) for such State for the most 
     recent fiscal year ending before such calendar year.
       ``(4) Allocations to certain possessions.--The amount to be 
     allocated under paragraph (1) to any possession of the United 
     States other than Puerto Rico shall be the amount which would 
     have been allocated if all allocations under paragraph (1) 
     were made on the basis of respective populations of 
     individuals below the poverty line (as defined by the Office 
     of Management and Budget). In making other allocations, the 
     amount to be allocated under paragraph (1) shall be reduced 
     by the aggregate amount allocated under this paragraph to 
     possessions of the United States.
       ``(5) Allocations for indian schools.--In addition to the 
     amounts otherwise allocated under this subsection, 
     $200,000,000 for calendar year 2001 shall be allocated by the 
     Secretary of the Interior for purposes of the construction, 
     rehabilitation, and repair of schools funded by the Bureau of 
     Indian Affairs. In the case of amounts allocated under the 
     preceding sentence, Indian tribal governments (as defined in 
     section 7871) shall be treated as qualified issuers for 
     purposes of this subchapter.
       ``(6) Approved state application.--For purposes of 
     paragraph (1), the term `approved State application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the State with the involvement of local 
     education officials, members of the public, and experts in 
     school construction and management) of such State's needs for 
     public school facilities, including descriptions of--
       ``(i) health and safety problems at such facilities,
       ``(ii) the capacity of public schools in the State to house 
     projected enrollments, and
       ``(iii) the extent to which the public schools in the State 
     offer the physical infrastructure needed to provide a high-
     quality education to all students, and
       ``(B) a description of how the State will allocate to local 
     educational agencies, or otherwise use, its allocation under 
     this subsection to address the needs identified under 
     subparagraph (A), including a description of how it will--
       ``(i) give highest priority to localities with the greatest 
     needs, as demonstrated by inadequate school facilities 
     coupled with a low level of resources to meet those needs,
       ``(ii) use its allocation under this subsection to assist 
     localities that lack the fiscal capacity to issue bonds on 
     their own, and
       ``(iii) ensure that its allocation under this subsection is 
     used only to supplement, and not supplant, the amount of 
     school construction, rehabilitation, and repair in the State 
     that would have occurred in the absence of such allocation.

     Any allocation under paragraph (1) by a State shall be 
     binding if such State reasonably determined that the 
     allocation was in accordance with the plan approved under 
     this paragraph.
       ``(e) Half of Limitation Allocated Among Largest School 
     Districts.--

[[Page H784]]

       ``(1) In general.--One-half of the limitation applicable 
     under subsection (c) for any calendar year shall be allocated 
     under paragraph (2) by the Secretary among local educational 
     agencies which are large local educational agencies for such 
     year. No qualified school construction bond may be issued by 
     reason of an allocation to a large local educational agency 
     under the preceding sentence unless such agency has an 
     approved local application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     large local educational agencies in proportion to the 
     respective amounts each such agency received for Basic Grants 
     under subpart 2 of part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for 
     the most recent fiscal year ending before such calendar year.
       ``(3) Allocation of unused limitation to state.--The amount 
     allocated under this subsection to a large local educational 
     agency for any calendar year may be reallocated by such 
     agency to the State in which such agency is located for such 
     calendar year. Any amount reallocated to a State under the 
     preceding sentence may be allocated as provided in subsection 
     (d)(1).
       ``(4) Large local educational agency.--For purposes of this 
     section, the term `large local educational agency' means, 
     with respect to a calendar year, any local educational agency 
     if such agency is--
       ``(A) among the 100 local educational agencies with the 
     largest numbers of children aged 5 through 17 from families 
     living below the poverty level, as determined by the 
     Secretary using the most recent data available from the 
     Department of Commerce that are satisfactory to the 
     Secretary, or
       ``(B) 1 of not more than 25 local educational agencies 
     (other than those described in subparagraph (A)) that the 
     Secretary of Education determines (based on the most recent 
     data available satisfactory to the Secretary) are in 
     particular need of assistance, based on a low level of 
     resources for school construction, a high level of enrollment 
     growth, or such other factors as the Secretary deems 
     appropriate.
       ``(5) Approved local application.--For purposes of 
     paragraph (1), the term `approved local application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the local educational agency or the State with 
     the involvement of school officials, members of the public, 
     and experts in school construction and management) of such 
     agency's needs for public school facilities, including 
     descriptions of--
       ``(i) the overall condition of the local educational 
     agency's school facilities, including health and safety 
     problems,
       ``(ii) the capacity of the agency's schools to house 
     projected enrollments, and
       ``(iii) the extent to which the agency's schools offer the 
     physical infrastructure needed to provide a high-quality 
     education to all students,
       ``(B) a description of how the local educational agency 
     will use its allocation under this subsection to address the 
     needs identified under subparagraph (A), and
       ``(C) a description of how the local educational agency 
     will ensure that its allocation under this subsection is used 
     only to supplement, and not supplant, the amount of school 
     construction, rehabilitation, or repair in the locality that 
     would have occurred in the absence of such allocation.
     A rule similar to the rule of the last sentence of subsection 
     (d)(6) shall apply for purposes of this paragraph.
       ``(f) Carryover of Unused Limitation.--If for any calendar 
     year--
       ``(1) the amount allocated under subsection (d) to any 
     State, exceeds
       ``(2) the amount of bonds issued during such year which are 
     designated under subsection (a) pursuant to such allocation,
     the limitation amount under such subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. A similar rule shall apply to the 
     amounts allocated under subsection (d)(5) or (e).
       ``(g) Special Rules Relating to Arbitrage.--
       ``(1) In general.--A bond shall not be treated as failing 
     to meet the requirement of subsection (a)(1) solely by reason 
     of the fact that the proceeds of the issue of which such bond 
     is a part are invested for a temporary period (but not more 
     than 36 months) until such proceeds are needed for the 
     purpose for which such issue was issued.
       ``(2) Binding commitment requirement.--Paragraph (1) shall 
     apply to an issue only if, as of the date of issuance, there 
     is a reasonable expectation that--
       ``(A) at least 10 percent of the proceeds of the issue will 
     be spent within the 6-month period beginning on such date for 
     the purpose for which such issue was issued, and
       ``(B) the remaining proceeds of the issue will be spent 
     with due diligence for such purpose.
       ``(3) Earnings on proceeds.--Any earnings on proceeds 
     during the temporary period shall be treated as proceeds of 
     the issue for purposes of applying subsection (a)(1) and 
     paragraph (1) of this subsection.

               ``PART III--INCENTIVES FOR EDUCATION ZONES

``Sec. 1400H. Qualified zone academy bonds.

     ``SEC. 1400H. QUALIFIED ZONE ACADEMY BONDS.

       ``(a) Qualified Zone Academy Bond.--For purposes of this 
     subchapter--
       ``(1) In general.--The term `qualified zone academy bond' 
     means any bond issued as part of an issue if--
       ``(A) 95 percent or more of the proceeds of such issue are 
     to be used for a qualified purpose with respect to a 
     qualified zone academy established by a local educational 
     agency,
       ``(B) the bond is issued by a State or local government 
     within the jurisdiction of which such academy is located,
       ``(C) the issuer--
       ``(i) designates such bond for purposes of this section,
       ``(ii) certifies that it has written assurances that the 
     private business contribution requirement of paragraph (2) 
     will be met with respect to such academy, and
       ``(iii) certifies that it has the written approval of the 
     local educational agency for such bond issuance, and
       ``(D) the term of each bond which is part of such issue 
     does not exceed 15 years.
     Rules similar to the rules of section 1400G(g) shall apply 
     for purposes of paragraph (1).
       ``(2) Private business contribution requirement.--
       ``(A) In general.--For purposes of paragraph (1), the 
     private business contribution requirement of this paragraph 
     is met with respect to any issue if the local educational 
     agency that established the qualified zone academy has 
     written commitments from private entities to make qualified 
     contributions having a present value (as of the date of 
     issuance of the issue) of not less than 10 percent of the 
     proceeds of the issue.
       ``(B) Qualified contributions.--For purposes of 
     subparagraph (A), the term `qualified contribution' means any 
     contribution (of a type and quality acceptable to the local 
     educational agency) of--
       ``(i) equipment for use in the qualified zone academy 
     (including state-of-the-art technology and vocational 
     equipment),
       ``(ii) technical assistance in developing curriculum or in 
     training teachers in order to promote appropriate market 
     driven technology in the classroom,
       ``(iii) services of employees as volunteer mentors,
       ``(iv) internships, field trips, or other educational 
     opportunities outside the academy for students, or
       ``(v) any other property or service specified by the local 
     educational agency.
       ``(3) Qualified zone academy.--The term `qualified zone 
     academy' means any public school (or academic program within 
     a public school) which is established by and operated under 
     the supervision of a local educational agency to provide 
     education or training below the postsecondary level if--
       ``(A) such public school or program (as the case may be) is 
     designed in cooperation with business to enhance the academic 
     curriculum, increase graduation and employment rates, and 
     better prepare students for the rigors of college and the 
     increasingly complex workforce,
       ``(B) students in such public school or program (as the 
     case may be) will be subject to the same academic standards 
     and assessments as other students educated by the local 
     educational agency,
       ``(C) the comprehensive education plan of such public 
     school or program is approved by the local educational 
     agency, and
       ``(D)(i) such public school is located in an empowerment 
     zone or enterprise community (including any such zone or 
     community designated after the date of the enactment of this 
     section), or
       ``(ii) there is a reasonable expectation (as of the date of 
     issuance of the bonds) that at least 35 percent of the 
     students attending such school or participating in such 
     program (as the case may be) will be eligible for free or 
     reduced-cost lunches under the school lunch program 
     established under the National School Lunch Act.
       ``(4) Qualified purpose.--The term `qualified purpose' 
     means, with respect to any qualified zone academy--
       ``(A) constructing, rehabilitating, or repairing the public 
     school facility in which the academy is established,
       ``(B) acquiring the land on which such facility is to be 
     constructed with part of the proceeds of such issue,
       ``(C) providing equipment for use at such academy,
       ``(D) developing course materials for education to be 
     provided at such academy, and
       ``(E) training teachers and other school personnel in such 
     academy.
       ``(b) Limitations on Amount of Bonds Designated.--
       ``(1) In general.--There is a national zone academy bond 
     limitation for each calendar year. Such limitation is--
       ``(A) $400,000,000 for 1998,
       ``(B) $400,000,000 for 1999,
       ``(C) $400,000,000 for 2000,
       ``(D) $1,400,000,000 for 2001,
       ``(E) except as provided in paragraph (3), zero after 2001.
       ``(2) Allocation of limitation.--
       ``(A) Allocation among states.--
       ``(i) 1998, 1999, and 2000 limitations.--The national zone 
     academy bond limitations for calendar years 1998, 1999, and 
     2000 shall be allocated by the Secretary among the States on 
     the basis of their respective populations of individuals 
     below the poverty line (as defined by the Office of 
     Management and Budget).
       ``(ii) Limitation after 2000.--The national zone academy 
     bond limitation for any calendar year after 2000 shall be 
     allocated by

[[Page H785]]

     the Secretary among the States in the manner prescribed by 
     section 1400G(d); except that in making the allocation under 
     this clause, the Secretary shall take into account--

       ``(I) Basic Grants attributable to large local educational 
     agencies (as defined in section 1400G(e)).
       ``(II) the national zone academy bond limitation.

       ``(B) Allocation to local educational agencies.--The 
     limitation amount allocated to a State under subparagraph (A) 
     shall be allocated by the State education agency to qualified 
     zone academies within such State.
       ``(C) Designation subject to limitation amount.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) 
     with respect to any qualified zone academy shall not exceed 
     the limitation amount allocated to such academy under 
     subparagraph (B) for such calendar year.
       ``(3) Carryover of unused limitation.--If for any calendar 
     year--
       ``(A) the limitation amount under this subsection for any 
     State, exceeds
       ``(B) the amount of bonds issued during such year which are 
     designated under subsection (a) (or the corresponding 
     provisions of prior law) with respect to qualified zone 
     academies within such State,
     the limitation amount under this subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess.''.
       (b) Reporting.--Subsection (d) of section 6049 of such Code 
     (relating to returns regarding payments of interest) is 
     amended by adding at the end the following new paragraph:
       ``(8) Reporting of credit on qualified public school 
     modernization bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 1400F(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 
     1400F(d)(2)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A) of this paragraph, subsection 
     (b)(4) of this section shall be applied without regard to 
     subparagraphs (A), (H), (I), (J), (K), and (L)(i).
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''
       (c) Other Conforming Amendments.--
       (1) Subchapter U of chapter 1 of such Code is amended by 
     striking part IV, by redesignating part V as part IV, and by 
     redesignating section 1397F as section 1397E.
       (2) The table of subchapters for chapter 1 of such Code is 
     amended by adding at the end the following new item:

``Subchapter X. Public school modernization provisions.''
       (3) The table of parts of subchapter U of chapter 1 of such 
     Code is amended by striking the last 2 items and inserting 
     the following item:

``Part IV. Regulations.''
       (d) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to obligations issued after December 31, 2000.
       (2) Repeal of restriction on zone academy bond holders.--In 
     the case of bonds to which section 1397E of the Internal 
     Revenue Code of 1986 (as in effect before the date of the 
     enactment of this Act) applies, the limitation of such 
     section to eligible taxpayers (as defined in subsection 
     (d)(6) of such section) shall not apply after the date of the 
     enactment of this Act.
   Subtitle F--Increased Estate Tax Relief for Family-Owned Business 
                               Interests

     SEC. 251. INCREASE IN ESTATE TAX BENEFIT FOR FAMILY-OWNED 
                   BUSINESS INTERESTS.

       (a) Transfer to Credit Provisions.--Section 2057 of the 
     Internal Revenue Code of 1986 (relating to family-owned 
     business interests) is hereby moved to part II of subchapter 
     A of chapter 11 of such Code, inserted after section 2010, 
     and redesignated as section 2010A.
       (b) Increase in Credit; Surviving Spouse Allowed Unused 
     Credit of Decedent.--Subsection (a) of section 2010A of such 
     Code, as redesignated by subsection (a) of this section, is 
     amended to read as follows:
       ``(a) Increase in United Credit.--For purposes of 
     determining the unified credit under section 2010 in the case 
     of an estate of a decedent to which this section applies--
       ``(1) In general.--The applicable exclusion amount under 
     section 2010(c) shall be increased (but not in excess of 
     $2,000,000) by the adjusted value of the qualified family-
     owned business interests of the decedent which are described 
     in subsection (b)(2) and for which no deduction is allowed 
     under section 2056.
       ``(2) Treatment of unused limitation of predeceased 
     spouse.--In the case of a decedent--
       ``(A) having no surviving spouse, but
       ``(B) who was the surviving spouse of a decedent--
       ``(i) who died after December 31, 2000, and
       ``(ii) whose estate met the requirements of subsection 
     (b)(1) other than subparagraph (B) thereof,
     there shall be substituted for `$2,000,000' in paragraph (1) 
     an amount equal to the excess of $4,000,000 over the 
     exclusion equivalent of the credit allowed under section 2010 
     (as increased by this section) to the estate of the decedent 
     referred to in subparagraph (B). For purposes of the 
     preceding sentence, the exclusion equivalent of the credit is 
     the amount on which a tentative tax under section 2001(c) 
     equal to such credit would be imposed.''
       (c) Conforming Amendments.--
       (1) The table of sections for part IV of subchapter A of 
     chapter 11 of such Code is amended by striking the item 
     relating to section 2057.
       (2) Paragraph (10) of section 2031(c) of such Code is 
     amended by striking ``section 2057(e)(3)'' and inserting 
     ``section 2010A(e)(3)''.
       (3) The table of sections for part II of subchapter A of 
     chapter 11 of such Code is amended by inserting after the 
     item relating to section 2010 the following new item:

``Sec. 2010A. Family-owned business interests.''
       (d) Effective date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2000.

                      Subtitle G--Revenue Offsets

             PART I--REVISION OF TAX RULES ON EXPATRIATION

     SEC. 261. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsection 
     (f), all property of a covered expatriate to whom this 
     section applies shall be treated as sold on the day before 
     the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--The amount which would 
     (but for this paragraph) be includible in the gross income of 
     any individual by reason of this section shall be reduced 
     (but not below zero) by $600,000. For purposes of this 
     paragraph, allocable expatriation gain taken into account 
     under subsection (f)(2) shall be treated in the same manner 
     as an amount required to be includible in gross income.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2)(A) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be under paragraph (1) 
     with respect to an interest in a

[[Page H786]]

     trust with respect to which gain is required to be recognized 
     under subsection (f)(1).
       ``(7) Interest.--For purposes of section 6601, the last 
     date for the payment of tax shall be determined without 
     regard to the election under this subsection.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--The term `covered expatriate' means an 
     expatriate who meets the requirements of subparagraph (A) or 
     (B) of section 877(a)(2).
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has been a resident of the United States (as defined 
     in section 7701(b)(1)(A)(ii)) for not more than 8 taxable 
     years during the 15-taxable year period ending with the 
     taxable year during which the expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Section Not To Apply to Certain Property.--This 
     section shall not apply to the following property:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(c)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for tax-favored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes his 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii).
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.
     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rule.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust--

       ``(I) which is organized under, and governed by, the laws 
     of the United States or a State, and
       ``(II) with respect to which the trust instrument requires 
     that at least 1 trustee of the trust be an individual citizen 
     of the United States or a domestic corporation.

       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest

[[Page H787]]

     shall be determined by assuming the maximum exercise of 
     discretion in favor of the beneficiary and the occurrence of 
     all contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar advisor.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Tax on Gifts and Bequests Received By United States 
     Citizens and Residents From Expatriates.--
       (1) In general.--Subtitle B of the Internal Revenue Code of 
     1986 (relating to estate and gift taxes) is amended by 
     inserting after chapter 13 the following new chapter:

           ``CHAPTER 13A--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2681. Imposition of tax.

     ``SEC. 2681. IMPOSITION OF TAX.

       ``(a) In General.--If, during any calendar year, any United 
     States citizen or resident receives any covered gift or 
     bequest, there is hereby imposed a tax equal to the product 
     of--
       ``(1) the highest rate of tax specified in the table 
     contained in section 2001(c) as in effect on the date of such 
     receipt, and
       ``(2) the value of such covered gift or bequest.
       ``(b) Tax To Be Paid by Recipient.--The tax imposed by 
     subsection (a) on any covered gift or bequest shall be paid 
     by the person receiving such gift or bequest.
       ``(c) Exception for Certain Gifts.--Subsection (a) shall 
     apply only to the extent that the covered gifts and bequests 
     received during the calendar year exceed $10,000.
       ``(d) Tax Reduced By Foreign Gift or Estate Tax.--The tax 
     imposed by subsection (a) on any covered gift or bequest 
     shall be reduced by the amount of any gift or estate tax paid 
     to a foreign country with respect to such covered gift or 
     bequest.
       ``(e) Covered Gift or Bequest.--
       ``(1) In general.--For purposes of this chapter, the term 
     `covered gift or bequest' means--
       ``(A) any property acquired by gift directly or indirectly 
     from an individual who, at the time of such acquisition, was 
     an expatriate, and
       ``(B) any property acquired by bequest, devise, or 
     inheritance directly or indirectly from an individual who, at 
     the time of death, was an expatriate.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Such term shall not include--
       ``(A) any property shown on a timely filed return of tax 
     imposed by chapter 12 which is a taxable gift by the 
     expatriate, and
       ``(B) any property shown on a timely filed return of tax 
     imposed by chapter 11 of the estate of the expatriate.
       ``(3) Transfers in trust.--Any covered gift or bequest 
     which is made in trust shall be treated as made to the 
     beneficiaries of such trust in proportion to their respective 
     interests in such trust (as determined under section 
     877A(f)(3)).
       ``(f) Expatriate.--For purposes of this section, the term 
     `expatriate' has the meaning given to such term by section 
     877A(e)(1).''.
       (2) Clerical amendment.--The table of chapters for subtitle 
     B of such Code is amended by inserting after the item 
     relating to chapter 13 the following new item:

``Chapter 13A. Gifts and bequests from expatriates.''
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(47) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''
       (d) Conforming Amendment.--Paragraph (1) of section 
     6039G(d) of such Code is amended by inserting ``or 877A'' 
     after ``section 877''.
       (e) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of such Code is 
     amended by inserting after the item relating to section 877 
     the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.
       (f) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after March 9, 
     2000.
       (2) Gifts and bequests.--Chapter 13A of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to covered gifts and bequests (as defined in section 2681 of 
     such Code, as so added) received on or after March 9, 2000.

          PART II--DISALLOWANCE OF NONECONOMIC TAX ATTRIBUTES

  Subpart A--Disallowance of Noneconomic Tax Attributes; Increase in 
     Penalty With Respect to Disallowed Noneconomic Tax Attributes

     SEC. 266. DISALLOWANCE OF NONECONOMIC TAX ATTRIBUTES.

       Section 7701 of the Internal Revenue Code of 1986 is 
     amended by redesignating subsection (m) as subsection (n) and 
     by inserting after subsection (l) the following new 
     subsection:
       ``(m) Disallowance of Noneconomic Tax Attributes.--
       ``(1) In general.--In determining liability for any tax 
     under subtitle A, noneconomic tax attributes shall not be 
     allowed.
       ``(2) Noneconomic tax attribute.--For purposes of this 
     subsection, a noneconomic tax attribute is any deduction, 
     loss, or credit claimed to result from any transaction 
     unless--
       ``(A) the transaction changes in a meaningful way (apart 
     from Federal income tax consequences) the taxpayer's economic 
     position, and
       ``(B)(i) the present value of the reasonably expected 
     potential income from the transaction (and the taxpayer's 
     risk of loss from the transaction) are substantial in 
     relationship to the present value of the tax benefits 
     claimed, or
       ``(ii) in the case of a transaction which is in substance 
     the borrowing of money or the acquisition of financial 
     capital, the deductions claimed with respect to the 
     transaction for any period are not significantly in excess of 
     the economic return for such period realized by the person 
     lending the money or providing the financial capital.
       ``(3) Presumption of noneconomic tax attributes.--For 
     purposes of paragraph (2), the following factors shall give 
     rise to a presumption that a transaction fails to meet the 
     requirements of paragraph (2):
       ``(A) The fact that the payments, liabilities, or assets 
     that purport to create a loss (or other benefit) for tax 
     purposes are not reflected to any meaningful extent on the 
     taxpayer's books and records for financial reporting 
     purposes.
       ``(B) The fact that the transaction results in an 
     allocation of income or gain to a tax-indifferent party which 
     is substantially in excess of such party's economic income or 
     gain from the transaction.
       ``(4) Treatment of built-in loss.--The determination of 
     whether a transaction results in the realization of a built-
     in loss shall be made under subtitle A as if this subsection 
     had not been enacted. For purposes of the preceding sentence, 
     the term `built-in loss' means any loss or deduction to the 
     extent that such loss or deduction had economically been 
     incurred before such transaction is entered into and to the 
     extent that the loss or deduction was economically borne by 
     the taxpayer.
       ``(5) Definition and special rules.--For purposes of this 
     subsection--
       ``(A) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity exempt from tax under 
     subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if, by reason of such 
     person's method of accounting, the items taken into account 
     with respect to the transaction have no substantial impact on 
     such person's liability under subtitle A.
       ``(B) Series of related transaction.--A transaction which 
     is part of a series of related transactions shall be treated 
     as meeting the requirements of paragraph (2) only if--

[[Page H788]]

       ``(i) such transaction meets such requirements without 
     regard to the other transactions, and
       ``(ii) such transactions, if treated as 1 transaction, 
     would meet such requirements.
     A similar rule shall apply to a multiple step transaction 
     with each step being treated as a separate related 
     transaction.
       ``(C) Normal business transactions.--In the case of a 
     transaction which is an integral part of a taxpayer's trade 
     or business and which is entered into in the normal course of 
     such trade or business, the determination of the potential 
     income from such transaction shall be made by taking into 
     account its relationship to the overall trade or business of 
     the taxpayer.
       ``(D) Treatment of fees.--In determining whether there is 
     risk of loss from a transaction (and the amount thereof), 
     potential loss of fees and other transaction expenses shall 
     be disregarded.
       ``(E) Treatment of economic return enhancements.--The 
     following shall be treated as economic returns and not tax 
     benefits:
       ``(i) The credit under section 29 (relating to credit for 
     producing fuel from a nonconventional source).
       ``(ii) The credit under section 42 (relating to low-income 
     housing credit).
       ``(iii) The credit under section 45 (relating to 
     electricity produced from certain renewable resources).
       ``(iv) The credit under section 1397E (relating to credit 
     to holders of qualified zone academy bonds) or any similar 
     program hereafter enacted.
       ``(v) Any other tax benefit specified in regulations.
       ``(F) Exceptions for nonbusiness transactions.--
       ``(i) Individuals.--In the case of an individual, this 
     subsection shall only apply to transactions entered into in 
     connection with a trade or business or activity engaged in 
     for profit.
       ``(ii) Charitable transfers.--This subsection shall not 
     apply in determining the amount allowable as a deduction 
     under section 170, 545(b)(2), 556(b)(2), or 642(c).
       ``(6) Economic substance doctrine, etc., not affected.--The 
     provisions of this subsection shall not be construed as 
     altering or supplanting any rule of law referred to in 
     section 6662(i)(2)(B) and the requirements of this subsection 
     shall be construed as being in addition to any such rule of 
     law.''

     SEC. 267. INCREASE IN SUBSTANTIAL UNDERPAYMENT PENALTY WITH 
                   RESPECT TO DISALLOWED NONECONOMIC TAX 
                   ATTRIBUTES.

       (a) In General.--Section 6662 of the Internal Revenue Code 
     of 1986 (relating to imposition of accuracy-related penalty) 
     is amended by adding at the end the following new subsection:
       ``(i) Increase in Penalty in Case of Disallowed Noneconomic 
     Tax Attributes.--
       ``(1) In general.--In the case of the portion of the 
     underpayment to which this subsection applies--
       ``(A) subsection (a) shall be applied with respect to such 
     portion by substituting `40 percent' for `20 percent', and
       ``(B) subsection (d)(2)(B) and section 6664(c) shall not 
     apply.
       ``(2) Underpayments to which subsection applies.--This 
     subsection shall apply to an underpayment to which this 
     section applies by reason of paragraph (1) or (2) of 
     subsection (b) but--
       ``(A) only to the extent that such underpayment is 
     attributable to--
       ``(i) the disallowance of any noneconomic tax attribute 
     (determined under section 7701(m)), or
       ``(ii) the disallowance of any other benefit--

       ``(I) because of a lack of economic substance or business 
     purpose for the transaction giving rise to the claimed 
     benefit,
       ``(II) because the form of the transaction did not reflect 
     its substance, or
       ``(III) because of any other similar rule of law, and

       ``(B) only if the underpayment so attributable exceeds 
     $1,000,000.
       ``(3) Increase in penalty not to apply if compliance with 
     disclosure requirements.--Paragraph (1)(A) shall not apply if 
     the taxpayer--
       ``(A) discloses to the Secretary within 30 days after the 
     closing of the transaction appropriate documents describing 
     the transaction, and
       ``(B) files with the taxpayer's return of tax imposed by 
     subtitle A--
       ``(i) a statement verifying that such disclosure has been 
     made,
       ``(ii) a detailed description of the facts, assumptions of 
     facts, and factual conclusions with respect to the business 
     or economic purposes or objectives of the transaction that 
     are relied upon to support the manner in which it is reported 
     on the return,
       ``(iii) a description of the due diligence performed to 
     ascertain the accuracy of such facts, assumptions, and 
     factual conclusions,
       ``(iv)(I) a statement (signed by the senior financial 
     officer of the corporation under penalty of perjury) that the 
     facts, assumptions, or factual conclusions relied upon in 
     reporting the transaction are true and correct as of the date 
     the return is filed, to the best of such officer's knowledge 
     and belief, and
       ``(II) if the actual facts varied materially from the 
     facts, assumptions, or factual conclusions relied upon, a 
     statement describing such variances,
       ``(v) copies of any written material provided in connection 
     with the offer of the transaction to the taxpayer by a third 
     party,
       ``(vi) a full description of any express or implied 
     agreement or arrangement with any advisor, or with any 
     offeror, that the fee payable to such person would be 
     contingent or subject to possible reimbursement, and
       ``(vii) a full description of any express or implied 
     warranty from any person with respect to the anticipated tax 
     results from the transaction.''
       (b) Modifications to Penalty on Substantial Understatement 
     of Income Tax.--
       (1) Modification of threshold.--Subparagraph (A) of section 
     6662(d)(2) of such Code is amended to read as follows:
       ``(A) In general.--For purposes of this section, there is a 
     substantial understatement of income tax for any taxable year 
     if the amount of the understatement for the taxable year 
     exceeds the lesser of--
       ``(i) $1,000,000, or
       ``(ii) the greater of 10 percent of the tax required to be 
     shown on the return for the taxable year or $5,000.''
       (2) Reduction of penalty on account of disclosure not to 
     apply to tax shelters.--Subparagraph (C) of section 
     6662(d)(2) of such Code is amended by striking clause (ii), 
     by redesignating clause (iii) as clause (ii), and by striking 
     clause (i) and inserting the following new clause:
       ``(i) In general.--Subparagraph (B) shall not apply to any 
     item attributable to a tax shelter.''
       (c) Treatment of Amended Returns.--Subsection (a) of 
     section 6664 of such Code is amended by adding at the end the 
     following new sentence: ``For purposes of this subsection, an 
     amended return shall be disregarded if such return is filed 
     on or after the date the taxpayer is first contacted by the 
     Secretary regarding the examination of the return.''

     SEC. 268. PENALTY ON MARKETED TAX AVOIDANCE STRATEGIES WHICH 
                   HAVE NO ECONOMIC SUBSTANCE, ETC.

       (a) Penalty.--
       (1) In general.--Section 6700 of the Internal Revenue Code 
     of 1986 (relating to promoting abusive tax shelters, etc.) is 
     amended by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Penalty on Substantial Promoters for Promoting Tax 
     Avoidance Strategies Which Have No Economic Substance, Etc.--
       ``(1) Imposition of penalty.--Any substantial promoter of a 
     tax avoidance strategy shall pay a penalty in the amount 
     determined under paragraph (2) with respect to such strategy 
     if any tax benefit attributable to such strategy (or any 
     similar strategy promoted by such promoter) is not allowable 
     by reason of any rule of law referred to in section 
     6662(i)(2)(A).
       ``(2) Amount of penalty.--The penalty under paragraph (1) 
     with respect to a promoter of a tax avoidance strategy is an 
     amount equal to 100 percent of the gross income derived (or 
     to be derived) by such promoter from such strategy.
       ``(3) Tax avoidance strategy.--For purposes of this 
     subsection, the term `tax avoidance strategy' means any 
     entity, plan, arrangement, or transaction a significant 
     purpose of the structure of which is the avoidance or evasion 
     of Federal income tax.
       ``(4) Substantial promoter.--For purposes of this 
     subsection --
       ``(A) In general.--The term `substantial promoter' means, 
     with respect to any tax avoidance strategy, any promoter if--
       ``(i) such promoter offers such strategy to more than 1 
     potential participant, and
       ``(ii) such promoter may receive fees in excess of 
     $1,000,000 in the aggregate with respect to such strategy.
       ``(B) Aggregation rules.--For purposes of this paragraph--
       ``(i) Related persons.--A promoter and all persons related 
     to such promoter shall be treated as 1 person.
       ``(ii) Similar strategies.--All similar tax avoidance 
     strategies of a promoter shall be treated as 1 tax avoidance 
     strategy.
       ``(C) Promoter.--The term `promoter' means any person who 
     participates in the promotion, offering, or sale of the tax 
     avoidance strategy.
       ``(D) Related person.--Persons are related if they bear a 
     relationship to each other which is described in section 
     267(b) or 707(b).
       ``(4) Coordination with subsection (a).--No penalty shall 
     be imposed by this subsection on any promoter with respect to 
     a tax avoidance strategy if a penalty is imposed under 
     subsection (a) on such promoter with respect to such 
     strategy.''
       (2) Conforming amendment.--Subsection (d) of section 6700 
     of such Code is amended--
       (A) by striking ``Penalty'' and inserting ``Penalties'', 
     and
       (B) by striking ``penalty'' the first place it appears in 
     the text and inserting ``penalties''.
       (b) Increase in Penalty on Promoting Abusive Tax 
     Shelters.--The first sentence of section 6700(a) of such Code 
     is amended by striking ``a penalty equal to'' and all that 
     follows and inserting ``a penalty equal to the greater of 
     $1,000 or 100 percent of the gross income derived (or to be 
     derived) by such person from such activity.''

     SEC. 269. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsections (b) and 
     (c), the amendments made by this subpart shall apply to 
     transactions after the date of the enactment of this Act.
       (b) Section 267.--The amendments made by subsections (b) 
     and (c) of section 267 shall

[[Page H789]]

     apply to taxable years ending after the date of the enactment 
     of this Act.
       (c) Section 268.--The amendments made by subsection (a) of 
     section 268 shall apply to any tax avoidance strategy (as 
     defined in section 6700(c) of the Internal Revenue Code of 
     1986, as amended by this title) interests in which are 
     offered to potential participants after the date of the 
     enactment of this Act.

  Subpart B--Limitations on Importation or Transfer of Built-in Losses

     SEC. 271. LIMITATION ON IMPORTATION OF BUILT-IN LOSSES.

       (a) In General.--Section 362 of the Internal Revenue Code 
     of 1986 (relating to basis to corporations) is amended by 
     adding at the end the following new subsection:
       ``(e) Limitation on Importation of Built-in Losses.--
       ``(1) In general.--If in any transaction described in 
     subsection (a) or (b) there would (but for this subsection) 
     be an importation of a net built-in loss, the basis of each 
     property described in paragraph (2) which is acquired in such 
     transaction shall (notwithstanding subsections (a) and (b)) 
     be its fair market value immediately after such transaction.
       ``(2) Property described.--For purposes of paragraph (1), 
     property is described in this paragraph if--
       ``(A) gain or loss with respect to such property is not 
     subject to tax under this subtitle in the hands of the 
     transferor immediately before the transfer, and
       ``(B) gain or loss with respect to such property is subject 
     to such tax in the hands of the transferee immediately after 
     such transfer.
     In any case in which the transferor is a partnership, the 
     preceding sentence shall be applied by treating each partner 
     in such partnership as holding such partner's proportionate 
     share of the property of such partnership.
       ``(3) Importation of net built-in loss.--For purposes of 
     paragraph (1), there is an importation of a net built-in loss 
     in a transaction if the transferee's aggregate adjusted bases 
     of property described in paragraph (2) which is transferred 
     in such transaction would (but for this subsection) exceed 
     the fair market value of such property immediately after such 
     transaction.''
       (b) Comparable Treatment Where Liquidation.--Paragraph (1) 
     of section 334(b) of such Code (relating to liquidation of 
     subsidiary) is amended to read as follows:
       ``(1) In general.--If property is received by a corporate 
     distributee in a distribution in a complete liquidation to 
     which section 332 applies (or in a transfer described in 
     section 337(b)(1)), the basis of such property in the hands 
     of such distributee shall be the same as it would be in the 
     hands of the transferor; except that the basis of such 
     property in the hands of such distributee shall be the fair 
     market value of the property at the time of the 
     distribution--
       ``(A) in any case in which gain or loss is recognized by 
     the liquidating corporation with respect to such property, or
       ``(B) in any case in which the liquidating corporation is a 
     foreign corporation, the corporate distributee is a domestic 
     corporation, and the corporate distributee's aggregate 
     adjusted bases of property described in section 362(e)(2) 
     which is distributed in such liquidation would (but for this 
     subparagraph) exceed the fair market value of such property 
     immediately after such liquidation.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act.

     SEC. 272. DISALLOWANCE OF PARTNERSHIP LOSS TRANSFERS.

       (a) Treatment of Contributed Property With Built-in Loss.--
     Paragraph (1) of section 704(c) of the Internal Revenue Code 
     of 1986 is amended by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following:
       ``(C) if any property so contributed has a built-in loss--
       ``(i) such built-in loss shall be taken into account only 
     in determining the amount of items allocated to the 
     contributing partner, and
       ``(ii) except as provided in regulations, in determining 
     the amount of items allocated to other partners, the basis of 
     the contributed property in the hands of the partnership 
     shall be treated as being equal to its fair market value 
     immediately after the contribution.
     For purposes of subparagraph (C), the term `built-in loss' 
     means the excess of the adjusted basis of the property over 
     its fair market value immediately after the contribution.''
       (b) Adjustment to Basis of Partnership Property on Transfer 
     of Partnership Interest If There is Substantial Built-in 
     Loss.--
       (1) Adjustment required.--Subsection (a) of section 743 of 
     such Code (relating to optional adjustment to basis of 
     partnership property) is amended by inserting before the 
     period ``or unless the partnership has a substantial built-in 
     loss immediately after such transfer''.
       (2) Adjustment.--Subsection (b) of section 743 of such Code 
     is amended by inserting ``or with respect to which there is a 
     substantial built-in loss immediately after such transfer'' 
     after ``section 754 is in effect''.
       (3) Substantial built-in loss.--Section 743 of such Code is 
     amended by adding at the end the following new subsection:
       ``(d) Substantial Built-in Loss.--For purposes of this 
     section, a partnership has a substantial built-in loss with 
     respect to a transfer of an interest in a partnership if the 
     transferee partner's proportionate share of the adjusted 
     basis of the partnership property exceeds 110 percent of the 
     basis of such partner's interest in the partnership.''
       (4) Clerical amendments.--
       (A) The section heading for section 743 of such Code is 
     amended to read as follows:

     ``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE 
                   SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN 
                   LOSS.''

       (B) The table of sections for subpart C of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 743 and inserting the following 
     new item:

``Sec. 743. Adjustment to basis of partnership property where section 
              754 election or substantial built-in loss.''
       (c) Adjustment to Basis of Undistributed Partnership 
     Property If There is Substantial Basis Reduction.--
       (1) Adjustment required.--Subsection (a) of section 734 of 
     such Code (relating to optional adjustment to basis of 
     undistributed partnership property) is amended by inserting 
     before the period ``or unless there is a substantial downward 
     adjustment''.
       (2) Adjustment.--Subsection (b) of section 734 of such Code 
     is amended by inserting ``or unless there is a substantial 
     downward adjustment'' after ``section 754 is in effect''.
       (3) Substantial downward adjustment.--Section 734 of such 
     Code is amended by adding at the end the following new 
     subsection:
       ``(d) Substantial Downward Adjustment.--For purposes of 
     this section, there is a substantial downward adjustment with 
     respect to a distribution if the sum of the amounts described 
     in subparagraphs (A) and (B) of subsection (b)(2) exceeds 10 
     percent of the aggregate adjusted basis of partnership 
     property immediately after the distribution.''
       (4) Clerical amendments.--
       (A) The section heading for section 734 of such Code is 
     amended to read as follows:

     ``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP 
                   PROPERTY WHERE SECTION 754 ELECTION OR 
                   SUBSTANTIAL BASIS REDUCTION.''

       (B) The table of sections for subpart B of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 734 and inserting the following 
     new item:

``Sec. 734. Adjustment to basis of undistributed partnership property 
              where section 754 election or substantial basis 
              reduction.''
       (d) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to contributions made after the date of the 
     enactment of this Act.
       (2) Subsection (b).--The amendments made by subsection (a) 
     shall apply to transfers after the date of the enactment of 
     this Act.
       (3) Subsection (c).--The amendments made by subsection (a) 
     shall apply to distributions after the date of the enactment 
     of this Act.

                 PART III--ESTATE AND GIFT TAX OFFSETS

     SEC. 276. VALUATION RULES FOR TRANSFERS INVOLVING NONBUSINESS 
                   ASSETS.

       (a) In General.--Section 2031 of the Internal Revenue Code 
     of 1986 (relating to definition of gross estate) is amended 
     by redesignating subsection (d) as subsection (e) and by 
     inserting after subsection (c) the following new subsection:
       ``(d) Valuation Rules for Certain Transfers of Nonbusiness 
     Assets.--For purposes of this chapter and chapter 12--
       ``(1) In general.--In the case of the transfer of any 
     interest in an entity other than an interest which is 
     actively traded (within the meaning of section 1092), the 
     value of such interest shall be determined by taking into 
     account--
       ``(A) the value of such interest's proportionate share of 
     the nonbusiness assets of such entity (and no valuation 
     discount shall be allowed with respect to such nonbusiness 
     assets), plus
       ``(B) the value of such entity determined without regard to 
     the value taken into account under subparagraph (A).
       ``(2) Nonbusiness assets.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonbusiness asset' means any 
     asset which is not used in the active conduct of 1 or more 
     trades or businesses.
       ``(B) Exception for certain passive assets.--Except as 
     provided in subparagraph (C), a passive asset shall not be 
     treated for purposes of subparagraph (A) as used in the 
     active conduct of a trade or business unless--
       ``(i) the asset is property described in paragraph (1) or 
     (4) of section 1221(a) or is a hedge with respect to such 
     property, or
       ``(ii) the asset is real property used in the active 
     conduct of 1 or more real property trades or businesses 
     (within the meaning of section 469(c)(7)(C)) in which the 
     transferor materially participates and with respect to which 
     the transferor meets the requirements of section 
     469(c)(7)(B)(ii).
     For purposes of clause (ii), material participation shall be 
     determined under the rules of section 469(h), except that 
     section 469(h)(3) shall be applied without regard to the 
     limitation to farming activity.
       ``(C) Exception for working capital.--Any asset (including 
     a passive asset) which is held as a part of the reasonably 
     required

[[Page H790]]

     working capital needs of a trade or business shall be treated 
     as used in the active conduct of a trade or business.
       ``(3) Passive asset.--For purposes of this subsection, the 
     term `passive asset' means any--
       ``(A) cash or cash equivalents,
       ``(B) except to the extent provided by the Secretary, stock 
     in a corporation or any other equity, profits, or capital 
     interest in any entity,
       ``(C) evidence of indebtedness, option, forward or futures 
     contract, notional principal contract, or derivative,
       ``(D) asset described in clause (iii), (iv), or (v) of 
     section 351(e)(1)(B),
       ``(E) annuity,
       ``(F) real property used in 1 or more real property trades 
     or businesses (as defined in section 469(c)(7)(C)),
       ``(G) asset (other than a patent, trademark, or copyright) 
     which produces royalty income,
       ``(H) commodity,
       ``(I) collectible (within the meaning of section 401(m)), 
     or
       ``(J) any other asset specified in regulations prescribed 
     by the Secretary.
       ``(4) Look-thru rules.--
       ``(A) In general.--If a nonbusiness asset of an entity 
     consists of a 10-percent interest in any other entity, this 
     subsection shall be applied by disregarding the 10-percent 
     interest and by treating the entity as holding directly its 
     ratable share of the assets of the other entity. This 
     subparagraph shall be applied successively to any 10-percent 
     interest of such other entity in any other entity.
       ``(B) 10-percent interest.--The term `10-percent interest' 
     means--
       ``(i) in the case of an interest in a corporation, 
     ownership of at least 10 percent (by vote or value) of the 
     stock in such corporation,
       ``(ii) in the case of an interest in a partnership, 
     ownership of at least 10 percent of the capital or profits 
     interest in the partnership, and
       ``(iii) in any other case, ownership of at least 10 percent 
     of the beneficial interests in the entity.
       ``(5) Coordination with subsection (b).--Subsection (b) 
     shall apply after the application of this subsection.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. 277. CORRECTION OF TECHNICAL ERROR AFFECTING LARGEST 
                   ESTATES.

       (a) In General.--Paragraph (2) of section 2001(c) of the 
     Internal Revenue Code of 1986 is amended by striking 
     ``$10,000,000'' and all that follows and inserting 
     ``$10,000,000. The amount of the increase under the preceding 
     sentence shall not exceed the sum of the applicable credit 
     amount under section 2010(c) (as increased by section 2010A) 
     and $359,200.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

                         PART IV--OTHER OFFSETS

     SEC. 281. CONSISTENT AMORTIZATION PERIODS FOR INTANGIBLES.

       (a) Start-Up Expenditures.--
       (1) Allowance of deduction.--Paragraph (1) of section 
     195(b) of the Internal Revenue Code of 1986 (relating to 
     start-up expenditures) is amended to read as follows:
       ``(1) Allowance of Deduction.--If a taxpayer elects the 
     application of this subsection with respect to any start-up 
     expenditures--
       ``(A) the taxpayer shall be allowed a deduction for the 
     taxable year in which the active trade or business begins in 
     an amount equal to the lesser of--
       ``(i) the amount of start-up expenditures with respect to 
     the active trade or business, or
       ``(ii) $5,000, reduced (but not below zero) by the amount 
     by which such start-up expenditures exceed $50,000, and
       ``(B) the remainder of such start-up expenditures shall be 
     allowed as a deduction ratably over the 180-month period 
     beginning with the month in which the active trade or 
     business begins.''
       (2) Conforming amendment.--Subsection (b) of section 195 is 
     amended by striking ``Amortize'' and inserting ``Deduct'' in 
     the heading.
       (b) Organizational Expenditures.--Subsection (a) of section 
     248 of such Code (relating to organizational expenditures) is 
     amended to read as follows:
       ``(a) Election to Deduct.--If a corporation elects the 
     application of this subsection (in accordance with 
     regulations prescribed by the Secretary) with respect to any 
     organizational expenditures--
       ``(1) the corporation shall be allowed a deduction for the 
     taxable year in which the corporation begins business in an 
     amount equal to the lesser of--
       ``(A) the amount of organizational expenditures with 
     respect to the taxpayer, or
       ``(B) $5,000, reduced (but not below zero) by the amount by 
     which such organizational expenditures exceed $50,000, and
       ``(2) the remainder of such organizational expenditures 
     shall be allowed as a deduction ratably over the 180-month 
     period beginning with the month in which the corporation 
     begins business.''
       (c) Treatment of Organizational and Syndication Fees or 
     Partnerships.--Section 709(b) of such Code (relating to 
     amortization of organization fees) is amended by 
     redesignating paragraph (2) as paragraph (4) and by amending 
     paragraph (1) to read as follows:
       ``(1) Allowance of deduction.--If a taxpayer elects the 
     application of this subsection (in accordance with 
     regulations prescribed by the Secretary) with respect to any 
     organizational expenses--
       ``(A) the taxpayer shall be allowed a deduction for the 
     taxable year in which the partnership begins business in an 
     amount equal to the lesser of--
       ``(i) the amount of organizational expenses with respect to 
     the partnership, or
       ``(ii) $5,000, reduced (but not below zero) by the amount 
     by which such organizational expenses exceed $50,000, and
       ``(B) the remainder of such organizational expenses shall 
     be allowed as a deduction ratably over the 180-month period 
     beginning with the month in which the partnership begins 
     business.
       ``(2) Dispositions before close of amortization period.--In 
     any case in which a partnership is liquidated before the end 
     of the period to which paragraph (1)(B) applies, any deferred 
     expenses attributable to the partnership which were not 
     allowed as a deduction by reason of this section may be 
     deducted to the extent allowable under section 165.''
       (d) Conforming Amendment.--Subsection (b) of section 709 of 
     such Code is amended by striking ``Amortization'' and 
     inserting ``Deduction'' in the heading.
       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act.

     SEC. 282. MODIFICATION OF FOREIGN TAX CREDIT CARRYOVER RULES.

       (a) In General.--Section 904(c) of the Internal Revenue 
     Code of 1986 (relating to limitation on credit) is amended--
       (1) by striking ``in the second preceding taxable year,'', 
     and
       (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
     or seventh''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to credits arising in taxable years beginning 
     after December 31, 2000.

     SEC. 283. RECOGNITION OF GAIN ON TRANSFERS TO SWAP FUNDS.

       (a) Interests Similar to Preferred Stock Treated as 
     Stock.--Clause (vi) of section 351(e)(1)(B) of the Internal 
     Revenue Code of 1986 (relating to transfer of property to an 
     investment company) is amended to read as follows:
       ``(vi) except as otherwise provided in regulations 
     prescribed by the Secretary--

       ``(I) any interest in an entity if the return on such 
     interest is limited and preferred, and
       ``(II) interests (not described in subclause (I)) in any 
     entity if substantially all of the assets of such entity 
     consist (directly or indirectly) of any assets described in 
     subclause (I), any preceding clause, or clause (viii).''

       (b) Certain Transfers Deemed To Be to Investment 
     Companies.--Subsection (e) of section 351 of such Code is 
     amended by adding at the end the following new paragraph:
       ``(3) Transfers of marketable securities to certain 
     corporations.--A transfer of property to a corporation if--
       ``(A) such property is marketable securities (as defined in 
     section 731(c)(2)), other than a diversified portfolio of 
     securities,
       ``(B) such corporation--
       ``(i) is registered under the Investment Company Act of 
     1940 as an investment company, or is exempt from registration 
     as a investment company under section 3(c)(7) of such Act 
     because interests in such corporation are offered to 
     qualified purchasers within the meaning of section 2(a)(51) 
     of such Act, or
       ``(ii) is formed or availed of for purposes of allowing 
     persons who have significant blocks of marketable securities 
     with unrealized appreciation to diversify those holdings 
     without recognition of gain, and
       ``(C) the transfer results, directly or indirectly, in 
     diversification of the transferor's interest.''
       (c) Transfers to Partnerships.--Subsection (b) of section 
     721 of such Code is amended to read as follows:
       ``(b) Special Rule.--Subsection (a) shall not apply to gain 
     realized on a transfer of property to a partnership if, were 
     the partnership incorporated--
       ``(1) such partnership would be treated as an investment 
     company (within the meaning of section 351), or
       ``(2) section 351 would not apply to such transfer by 
     reason of section 351(e)(3).''
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to transfers after March 8, 2000.
       (2) Binding contracts.--The amendments made by this section 
     shall not apply to any transfer pursuant to a written binding 
     contract in effect on August 4, 1999, and at all times 
     thereafter before such transfer if such contract provides for 
     the transfer of a fixed amount of property.
       Sec. 5. The amendment specified in section 2 of this 
     resolution is as follows:
       Strike all after the enacting clause and insert the 
     following:
       At the appropriate place, insert the following:
                     TITLE  --MINIMUM WAGE INCREASE

     SEC.  01. SHORT TITLE.

       This title may be cited as the ``Fair Minimum Wage Act of 
     2000.''

     SEC.  02. MINIMUM WAGE INCREASE.

       Paragraph (1) of section 6(a) of the Fair Labor Standards 
     Act of 1938 (29 U.S.C. 206(a)(1)) is amended to read as 
     follows:

[[Page H791]]

       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.65 an hour during the year beginning on the date 
     that is 30 days after the date of enactment of the Fair 
     Minimum Wage Act of 2000; and
       ``(B) $6.15 an hour beginning on the date that is 1 year 
     after the date on which the increase in subparagraph (A) 
     takes effect;''.

     SEC.  03. MINIMUM WAGE IN THE COMMONWEALTH OF THE NORTHERN 
                   MARIANA ISLANDS.

       (a) In General.--Subject to subsection (b), the provisions 
     of section 6 of the Fair Labor Standards Act of 1938 (29 
     U.S.C. 206) shall apply to the Commonwealth of the Northern 
     Mariana Islands.
       (b) Transition.--
       (1) In general.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be $3.55 an 
     hour beginning on the date that is 30 days after the date of 
     enactment of this section.
       (2) Increases in minimum wage.--
       (A) In general.--On the date that is 6 months after the 
     date of enactment of this Act, and every 6 months thereafter, 
     the minimum wage applicable to the Commonwealth of the 
     Northern Mariana Islands under section 6(a)(1) of the Fair 
     Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be 
     increased by $0.50 per hour (or such a leaser amount as may 
     be necessary to equal the minimum wage under such section) 
     until such time as the minimum wage applicable to the 
     Commonwealth of the Northern Mariana Islands under this 
     subsection is equal to the minimum wage set forth in section 
     6(a)(1) of such Act for the date involved.
       (B) Further increases.--With respect to dates beginning 
     after the minimum wage applicable to the Commonwealth of the 
     Northern Mariana Islands is equal to the minimum wage set 
     forth in section 6(a)(1) of the Fair Labor Standards Act of 
     1938 (29 U.S.C. 206(a)(1)), as provided in subparagraph (A), 
     such applicable minimum wage shall be immediately increased 
     so as to remain equal to the minimum wage set forth in 
     section 6(a)(1) of such Act for the date involved.

  Mr. MOAKLEY: Mr. Speaker, I yield back the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Today, we have had an opportunity to have a vigorous debate about the 
rule, the rule which will decide how we are going to follow forth on 
talking about the bill that is before us.
  We have a tax bill, a tax bill that gives an opportunity to the 
workers of America to have more small businesses, and more people who 
want to take that risk and opportunity to go and invest their savings 
and to open up their own stores and to do things that might be a 
lifetime dream. On the other hand, we are going to allow a vote that 
would be very directly for people who wish to support raising the 
minimum wage.
  What we have done is we have crafted a fair rule. We have talked 
about the essence of what Republicans and Democrats are all about 
today; and I am very, very proud of what we have done and appreciate 
those who have spoken today.
  There is an amendment at the desk, Mr. Speaker. The amendment will 
strike out the language allowing States to opt out of the minimum-wage 
increase.


                   Amendment Offered by Mr. Sessions

  Mr. SESSIONS. Mr. Speaker, I ask unanimous consent that the amendment 
at the desk be considered as adopted.
  The SPEAKER pro tempore (Mr. LaHood). The Clerk will report the 
amendment.
  The Clerk read as follows:

       Amendment offered by Mr. Sessions:
       Strike section 2 and insert the following:
       Sec. 2. Upon the adoption of this resolution it shall be in 
     order to consider in the House the bill (H.R. 3846) to amend 
     the Fair Labor Standards Act of 1938 to increase the minimum 
     wage, and for other purposes. An amendment striking section 5 
     shall be considered adopted. The bill, as amended, shall be 
     considered as read for amendment. The previous question shall 
     be considered as ordered on the bill, as amended, and any 
     further amendment thereto to final passage without 
     intervening motion except: (1) one hour of debate equally 
     divided and controlled by the chairman and ranking minority 
     member of the Committee on Education and the Workforce; (2) 
     the amendment numbered 2 in House Report 106-516, which shall 
     be in order without intervention of any point of order 
     (except those arising under section 425 of the Congressional 
     Budget Act of 1974) and which may be offered only by a Member 
     designated in the report, shall be considered as read, and 
     shall be separately debatable for the time specified in the 
     report equally divided and controlled by the proponent and an 
     opponent; and (3) one motion to recommit with or without 
     instructions.

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  The SPEAKER pro tempore. The amendment is agreed to.
  Mr. SESSIONS. Mr. Speaker, I move the previous question on the 
resolution, as amended.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. MOAKLEY. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to clause 9 of rule XX, the Chair announces that he will 
reduce to a minimum of 5 minutes the period of time within which a vote 
by electronic device, if ordered, will be taken on the question of 
agreeing to the resolution, as amended.
  The vote was taken by electronic device, and there were--yeas 216, 
nays 208, not voting 10, as follows:

                             [Roll No. 38]

                               YEAS--216

     Aderholt
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cox
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ewing
     Fletcher
     Foley
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Green (WI)
     Greenwood
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     Martinez
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanford
     Saxton
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--208

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Capps
     Capuano
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Forbes
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hooley
     Hoyer
     Inslee
     Jackson (IL)

[[Page H792]]


     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pickett
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Shows
     Sisisky
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Weygand
     Wise
     Woolsey
     Wu
     Wynn

                             NOT VOTING--10

     Brown (OH)
     Cooksey
     Granger
     McCollum
     Meek (FL)
     Myrick
     Scarborough
     Schaffer
     Spence
     Vento

                              {time}  1516

  Messrs. JEFFERSON, JOHN and POMEROY changed their vote from ``yea'' 
to ``nay.''
  Mr. PITTS and Mr. GILMAN changed their vote from ``nay'' to ``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the 
resolution, as amended.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. MOAKLEY. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 214, 
noes 211, not voting 10, as follows:

                             [Roll No. 39]

                               AYES--214

     Aderholt
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cox
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ewing
     Fletcher
     Foley
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Green (WI)
     Greenwood
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     Martinez
     McCrery
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanford
     Saxton
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NOES--211

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Capps
     Capuano
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Forbes
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hefley
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hooley
     Hoyer
     Inslee
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E.B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Klink
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Pickett
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Shows
     Sisisky
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Weygand
     Wise
     Woolsey
     Wu
     Wynn

                             NOT VOTING--10

     Brown (OH)
     Cooksey
     Granger
     McCollum
     Myrick
     Scarborough
     Schaffer
     Spence
     Terry
     Vento

                              {time}  1527

  So the resolution, as amended, was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mr. TERRY. Mr. Speaker, on rollcall No. 39, I was inadvertently 
detained. Had I been present, I would have voted ``yes.''

                          ____________________