[Congressional Record Volume 146, Number 91 (Friday, July 14, 2000)]
[Senate]
[Pages S6820-S6828]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MARRIAGE TAX PENALTY RELIEF RECONCILIATION ACT OF 2000--Continued
Mr. BUNNING. Mr. President, I will talk just a little bit about the
marriage penalty bill that we have before us.
I rise in strong support of this legislation to repeal the marriage
penalty.
I am going to vote for this bill because it restores fairness and
equity to married Americans under the Tax Code. It is the right and
honorable thing to do.
By now I think all of my colleagues know the sad facts about the
marriage penalty, and how it cruelly punishes married couples by
forcing them to pay higher taxes on their income than if they were
single.
For example, a married couple where both spouses earned $30,000 in
1999 would pay $7,655 in federal income taxes. Two individuals earning
$30,000 each but filing single returns would pay only $6,892 combined.
The $763 difference in tax liability is the marriage penalty.
In fact, the Congressional Budget Office estimates that overall
almost half of all married couples--22 million--suffered under the
marriage penalty last year. The average penalty paid by these couples
was $1,400. Cumulatively, the marriage penalty increases taxes on
affected couples by $32 billion per year.
That is 44 million Americans who are paying a total of $32 billion in
higher taxes each year simply because they took the walk down the
aisle.
In my home State of Kentucky alone, there are over 800,000 married
couples, many of whom are punished by the marriage penalty.
I can't think of one good reason why they should have to send more of
their money to the Federal Government for the simple reason that they
decided to get married. It is about the most unfair and unjust thing I
have ever heard of.
This bill provides real relief by making four simple changes to the
code.
It increases the standard deduction for married couples to twice the
standard reduction for single taxpayers.
It expands 15-percent and 28-percent income tax brackets for married
couples filing a joint return to twice the size of the corresponding
brackets for individuals.
It updates the rule to eliminate the marriage penalty for low-income
couples who qualify for the earned income credit.
And it corrects a glaring oversight in the Code whereby couples who
have to pay the alternative minimum tax are denied the ability to fully
claim family tax credits, such as the $500 per child tax credit, hope
and lifetime learning credits, and the dependent care credit.
The marriage penalty is an outdated relic from the days when families
primarily relied on one breadwinner.
The penalty principally occurs because the Tax Code provides a higher
combined standard deduction for two workers filing as singles than for
married couples, and the income tax bracket thresholds for married
couples are less than twice that for single taxpayers.
As recently as several decades ago when most mothers stayed home and
fathers trudged off to work at the factory each day, this might have
made sense.
Back then it did not matter nearly as much if the Tax Code's standard
deduction for a married couple wasn't twice as much as for an
individual, or if the income brackets for couples weren't double that
for individuals.
Few families had to account for a second income, and had never heard
of the marriage penalty.
But times change, and now in many families both parents do work. And
I can guarantee you that they know their money is being wrongly taken
from them by our immoral tax laws.
Congress and the Tax Code haven't kept pace with the American family.
It is time to change that and to make sure that our code meets the
needs of the modern family in the 21st century in America.
Even worse, the marriage penalty is a cancer that has spread
throughout the Tax Code, and which goes beyond simply affecting
standard deductions and income brackets.
There are at least 65 more provisions in our tax laws where married
couples are unjustly penalized. Frankly, I think the bill before us
today should be just the first step toward completely rooting the
marriage penalty out of our Tax Code.
The adoption tax credit, the student loan interest deduction,
retirement savings incentives, and dozens of other parts of the Code
have all been afflicted by the marriage penalty, and are less available
to married couples than if they were single earners trying to take
advantage of this tax relief.
This means that the marriage penalty not only punishes Americans who
have to foot the bill, it further undermines the good public policy
goals that Congress has tried to implement when it passed these changes
to the Tax Code.
This isn't the first time Congress has tried to fix the insidious
marriage penalty. In 1995, Congress tried to increase the standard
deduction for married couples to offset some of the marriage penalty.
President Clinton vetoed that bill.
Again in 1999, Congress passed marriage penalty relief. Again the
President vetoed it.
Both times the President said he liked the idea of marriage penalty
relief, but didn't like other provisions in the legislation. So this
year the House passed what I call a ``clean'' marriage penalty bill to
try to answer his concerns. But, of course, he issued a strong
statement in opposition to that bill.
However, that did not stop him from recently proposing a little horse
trading, and telling Congress that he would reconsider and sign
marriage penalty relief legislation if we would also pass his Medicare
prescription drug plan.
If all that does is confuse you, I know it confuses me. But I think
it means the President can't decide what he thinks about ending the
marriage penalty.
So I believe that Congress should help clarify his thinking and send
him a bill soon so he can make up his mind and decide if he really
wants to help provide tax relief to the 44 million Americans who are
unfairly punished by the marriage penalty.
It is time for the Senate to act and to send marriage penalty relief
to the President. Until we do we are not going to be able to escape the
fact that the marriage penalty causes a vicious cycle.
It imposes higher taxes on millions of families, and it unfairly
takes away billions of dollars of income from married couples. That
money is then sent to Washington and used to help pay for child care
and other programs that families might not have needed in the first
place if they had been able to keep the money that was stolen from them
by the marriage penalty.
Mr. President, the marriage penalty is an evil that is eating away at
our families. The American people want a divorce from the marriage
penalty, and we can give it to them by passing this bill today.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. NICKLES. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. NICKLES. Mr. President, for the information of my colleague, I
will speak on the marriage penalty for a few minutes and then go into
the wrap-up.
Mr. President, I compliment my colleagues, several of whom have
worked very hard to make sure we eliminate the marriage penalty. Kay
Bailey Hutchison of Texas, Sam Brownback, Senator Ashcroft, and Senator
Santorum have been pushing and pushing to eliminate one of the most
unfair
[[Page S6821]]
penalties in the Tax Code, the marriage penalty. Now we have a chance
to do that. We are going to vote on that on Monday. We are going to
pass it--at least I hope we do--and I hope the President will sign it.
The President said in his State of the Union Address that we need to
eliminate the marriage penalty. He didn't propose it. He had a little
something in his budget but very little. We have taken that and we are
now considering a bill to basically eliminate the marriage penalty. A
lot of people don't know what that is. It says that if people file a
joint return, they pay more than they would have paid as single
individuals. Some people say: Wait a minute. The Republican proposal,
or the proposal we passed out of the Finance Committee, does more than
that; it has a marriage bonus.
We say that we should basically double the income tax brackets for
individuals and for couples. So if they are married and file jointly,
they end up getting twice the income tax bracket before you step into
the next bracket as individuals. That is really pretty simple. But it
is as fair as it can get. It is the right thing to do.
To give an example, we have several brackets in our Tax Code: 0, 15,
28, 31, 36, and 39.6. Actually, the maximum rate was 31 percent before
President Clinton came into office. In 1993, he and Vice President Gore
passed a tax increase to move the maximum rate up to 39.6. They also
eliminated deductions and also took off the cap on the Medicare tax,
which is another 2.9 percent. So they basically raised the maximum rate
up to 43, 44 percent.
As you jump into higher tax brackets, each income level, you are
penalized under the marriage penalty. As an individual, you pay 15
percent up to $26,000. You would think a couple would go into the next
bracket until it is double that amount. That would be $52,000. An
individual pays 15 percent up to $26,000. So for a couple, when they go
into the next higher bracket at 28 percent, that should be at $52,000.
That is not the case.
If you look at the Tax Code, a married couple filing a joint return
goes into 28 percent not at $52,000 or $50,000 but at $43,000. So what
that means is that the married couple is paying an additional rate of
28 percent on all income between $43,000 and $52,000. That is the
marriage penalty. We would eliminate that. Whether there is one wage
earner or two wage earners in the married couple, we eliminate that
penalty. Another way of saying it is, we take the $26,000, on which you
are paying 15 percent, and we double it. So if it is $26,000 for an
individual, it is $52,000 for a couple. We do the same thing on the 28
percent bracket. So we eliminate this penalty.
Another way of looking at it would be, if you have a principal wage
earner and, say, he or she makes $40,000, and a spouse makes $20,000,
under present law, the spouse that makes $20,000 pays the same income
tax rate as the principal wage earner. That is not right. They should
not be paying a tax rate of 28 percent. They should be paying at the
15-percent rate. So we are doubling the tax. The present Tax Code
almost charges double for the wage earner that is making $20,000 just
because they happen to be married to a spouse who makes $40,000. That
is wrong. It needs to be eliminated, and we do eliminate that in this
proposal.
I have heard some of my colleagues say they are going to offer a
Democrat substitute and change that Democrat proposal.
I compliment my friend and colleague from New York, Senator Moynihan.
I have the greatest respect for him. He says the way to solve it is to
make individuals file as if they have individual returns. What does
that mean?
If you have an income of $40,000 or $20,000, there would be some tax
relief. But what if you have a situation where somebody earns $60,000?
There is no tax relief. Or if you have an income that is $50,000, there
is no tax relief. You are paying a 28-percent bracket on any income
between $43,000 and $52,000. So they get penalized. They doesn't solve
that problem.
I hope I am not being too confusing. Maybe it is kind of wonkish, but
we are penalizing couples in the U.S. today for being married to the
tune of an average $1,200 to $1,400. That is wrong. We have a chance to
fix it. We should. I believe we will fix it on Monday.
I am pleased. This week was a good week. We passed a bill to
eliminate the death tax. That is good news for small business. It is
good news for farmers and ranchers or anybody who is trying to build a
business. They would like to know they can build the business and not
lose half of it when they die.
The tax rates right now on the death tax range from 37 percent once
you get past the deductible to 55 percent and in some cases 60 percent.
If you have a taxable estate of $10 million, you have a marginal rate
of 60 percent. That is too high. A lot of people do not know that. Some
press people said to me: I think you misstated it.
The facts are, if you have a taxable estate of $10 million to $17
million, you pay a rate of 60 percent. That is way too high. We have
taken care of that today. The only thing that will stop that from
becoming law is President Clinton. He can sign it and we can eliminate
the death tax and replace it with a capital gains tax. That is fair and
equitable across the board. It is something we ought to do. It is the
fair and right thing to do.
Next Monday we can eliminate the marriage penalty. People shouldn't
have to pay more taxes because they happen to be married. People
shouldn't be bumped into higher categories because they happen to be
married. We shouldn't be charging couples for marriage. They shouldn't
be penalized for being married.
We basically double the tax schedule for couples. To me, it is the
fairest thing to do. You don't penalize somebody because they are
working or not working. We don't penalize married couples. We have a
chance to eliminate this gross inequity.
We have taken care of one today on the floor of the Senate by
eliminating the death penalty. On Monday, we can eliminate the marriage
penalty.
I compliment my colleagues, and especially several of our Democrat
colleagues who were with us. Nine Democrats voted with us on final
passage. We passed a bipartisan bill. It was bipartisan in the House
with an overwhelming vote of a 2-to-1 margin. There was a good margin
today in the Senate--59-39. Frankly, I hope that number will grow. We
had several Members absent today, several of whom maybe would join us.
Again, I compliment Senator Lott, and also Senator Roth, for bringing
the bill forward this week. Next week, we have the opportunity to
provide real tax relief for businesses, for families, and for married
couples. I think that is some of the most positive news for taxpayers
in a long, long time.
I am going to proceed to several unanimous consent requests to help
expedite consideration of these matters before the Senate next week.
Amendment No. 3881
Mr. NICKLES. Mr. President, I send an amendment to the desk to the
pending bill on behalf of the majority leader.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Oklahoma (Mr. Nickles), for Mr. Lott,
proposes an amendment numbered 3881.
Mr. NICKLES. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To provide a substitute)
Strike all after the first word and insert:
1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Marriage
Tax Relief Reconciliation Act of 2000''.
(b) Section 15 Not To Apply.--No amendment made by this Act
shall be treated as a change in a rate of tax for purposes of
section 15 of the Internal Revenue Code of 1986.
SEC. 2. ELIMINATION OF MARRIAGE PENALTY IN STANDARD
DEDUCTION.
(a) In General.--Paragraph (2) of section 63(c) of the
Internal Revenue Code of 1986 (relating to standard
deduction) is amended--
(1) by striking ``$5,000'' in subparagraph (A) and
inserting ``200 percent of the dollar amount in effect under
subparagraph (C) for the taxable year'';
(2) by adding ``or'' at the end of subparagraph (B);
(3) by striking ``in the case of'' and all that follows in
subparagraph (C) and inserting ``in any other case.''; and
(4) by striking subparagraph (D).
(b) Technical Amendments.--
(1) Subparagraph (B) of section 1(f )(6) of such Code is
amended by striking ``(other
[[Page S6822]]
than with'' and all that follows through ``shall be applied''
and inserting ``(other than with respect to sections 63(c)(4)
and 151(d)(4)(A)) shall be applied''.
(2) Paragraph (4) of section 63(c) of such Code is amended
by adding at the end the following flush sentence:
``The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT AND 28-
PERCENT RATE BRACKETS.
(a) In General.--Subsection (f ) of section 1 of the
Internal Revenue Code of 1986 (relating to adjustments in tax
tables so that inflation will not result in tax increases) is
amended by adding at the end the following new paragraph:
``(8) Phaseout of marriage penalty in 15-percent and 28-
percent rate brackets.--
``(A) In general.--With respect to taxable years beginning
after December 31, 2001, in prescribing the tables under
paragraph (1)--
``(i) the maximum taxable income amount in the 15-percent
rate bracket, the minimum and maximum taxable income amounts
in the 28-percent rate bracket, and the minimum taxable
income amount in the 31-percent rate bracket in the table
contained in subsection (a) shall be the applicable
percentage of the comparable taxable income amounts in the
table contained in subsection (c) (after any other adjustment
under this subsection), and
``(ii) the comparable taxable income amounts in the table
contained in subsection (d) shall be \1/2\ of the amounts
determined under clause (i).
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined in
accordance with the following table:
``For taxable years beginning in calendarThe applicable percentage is--
2002.......................................................170.3
2003.......................................................173.8
2004.......................................................180.0
2005.......................................................183.2
2006.......................................................185.0
2007 and thereafter........................................200.0.
``(C) Rounding.--If any amount determined under
subparagraph (A)(i) is not a multiple of $50, such amount
shall be rounded to the next lowest multiple of $50.''.
(b) Technical Amendments.--
(1) Subparagraph (A) of section 1(f )(2) of such Code is
amended by inserting ``except as provided in paragraph (8),''
before ``by increasing''.
(2) The heading for subsection (f ) of section 1 of such
Code is amended by inserting ``Phaseout of Marriage Penalty
in 15-Percent and 28-Percent Rate Brackets;'' before
``Adjustments''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 4. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.
(a) In General.--Paragraph (2) of section 32(b) of the
Internal Revenue Code of 1986 (relating to percentages and
amounts) is amended--
(1) by striking ``Amounts.--The earned'' and inserting
``Amounts.--
``(A) In general.--Subject to subparagraph (B), the
earned''; and
(2) by adding at the end the following new subparagraph:
``(B) Joint returns.--In the case of a joint return, the
phaseout amount determined under subparagraph (A) shall be
increased by $2,500.''.
(b) Inflation Adjustment.--Paragraph (1)(B) of section 32(
j) of such Code (relating to inflation adjustments) is
amended to read as follows:
``(B) the cost-of-living adjustment determined under
section 1(f )(3) for the calendar year in which the taxable
year begins, determined--
``(i) in the case of amounts in subsections (b)(2)(A) and
(i)(1), by substituting `calendar year 1995' for `calendar
year 1992' in subparagraph (B) thereof, and
``(ii) in the case of the $2,500 amount in subsection
(b)(2)(B), by substituting `calendar year 2000' for `calendar
year 1992' in subparagraph (B) of such section 1.''.
(c) Rounding.--Section 32( j)(2)(A) of such Code (relating
to rounding) is amended by striking ``subsection (b)(2)'' and
inserting ``subsection (b)(2)(A) (after being increased under
subparagraph (B) thereof)''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 5. PRESERVE FAMILY TAX CREDITS FROM THE ALTERNATIVE
MINIMUM TAX.
(a) In General.--Subsection (a) of section 26 of the
Internal Revenue Code of 1986 (relating to limitation based
on tax liability; definition of tax liability) is amended to
read as follows:
``(a) Limitation Based on Amount of Tax.--The aggregate
amount of credits allowed by this subpart for the taxable
year shall not exceed the sum of--
``(1) the taxpayer's regular tax liability for the taxable
year reduced by the foreign tax credit allowable under
section 27(a), and
``(2) the tax imposed for the taxable year by section
55(a).''.
(b) Conforming Amendments.--
(1) Subsection (d) of section 24 of such Code is amended by
striking paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(2) Section 32 of such Code is amended by striking
subsection (h).
(3) Section 904 of such Code is amended by striking
subsection (h) and by redesignating subsections (i), (j), and
(k) as subsections (h), (i), and (j), respectively.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 6. COMPLIANCE WITH BUDGET ACT.
(a) In General.--Except as provided in subsection (b), all
amendments made by this Act which are in effect on September
30, 2005, shall cease to apply as of the close of September
30, 2005.
(b) Sunset for Certain Provisions Absent Subsequent
Legislation.--The amendments made by sections 2, 3, 4, and 5
of this Act shall not apply to any taxable year beginning
after December 31, 2004.
Mr. NICKLES. Mr. President, I ask unanimous consent that all time be
yielded and the amendment be laid aside.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3882
Mr. NICKLES. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Oklahoma (Mr. Nickles) proposes an
amendment numbered 3882.
Mr. NICKLES. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To provide a substitute)
Strike all after the first word and insert:
1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Marriage
Tax Relief Reconciliation Act of 2000''.
(b) Section 15 Not To Apply.--No amendment made by this Act
shall be treated as a change in a rate of tax for purposes of
section 15 of the Internal Revenue Code of 1986.
SEC. 2. ELIMINATION OF MARRIAGE PENALTY IN STANDARD
DEDUCTION.
(a) In General.--Paragraph (2) of section 63(c) of the
Internal Revenue Code of 1986 (relating to standard
deduction) is amended--
(1) by striking ``$5,000'' in subparagraph (A) and
inserting ``200 percent of the dollar amount in effect under
subparagraph (C) for the taxable year'';
(2) by adding ``or'' at the end of subparagraph (B);
(3) by striking ``in the case of'' and all that follows in
subparagraph (C) and inserting ``in any other case.''; and
(4) by striking subparagraph (D).
(b) Technical Amendments.--
(1) Subparagraph (B) of section 1(f )(6) of such Code is
amended by striking ``(other than with'' and all that follows
through ``shall be applied'' and inserting ``(other than with
respect to sections 63(c)(4) and 151(d)(4)(A)) shall be
applied''.
(2) Paragraph (4) of section 63(c) of such Code is amended
by adding at the end the following flush sentence:
``The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT AND 28-
PERCENT RATE BRACKETS.
(a) In General.--Subsection (f ) of section 1 of the
Internal Revenue Code of 1986 (relating to adjustments in tax
tables so that inflation will not result in tax increases) is
amended by adding at the end the following new paragraph:
``(8) Phaseout of marriage penalty in 15-percent and 28-
percent rate brackets.--
``(A) In general.--With respect to taxable years beginning
after December 31, 2001, in prescribing the tables under
paragraph (1)--
``(i) the maximum taxable income amount in the 15-percent
rate bracket, the minimum and maximum taxable income amounts
in the 28-percent rate bracket, and the minimum taxable
income amount in the 31-percent rate bracket in the table
contained in subsection (a) shall be the applicable
percentage of the comparable taxable income amounts in the
table contained in subsection (c) (after any other adjustment
under this subsection), and
``(ii) the comparable taxable income amounts in the table
contained in subsection (d) shall be \1/2\ of the amounts
determined under clause (i).
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined in
accordance with the following table:
``For taxable years beginning in calendarThe applicable percentage is--
2002.......................................................170.3
2003.......................................................173.8
2004.......................................................180.0
2005.......................................................183.2
2006.......................................................185.0
2007 and thereafter........................................200.0.
``(C) Rounding.--If any amount determined under
subparagraph (A)(i) is not a multiple of $50, such amount
shall be rounded to the next lowest multiple of $50.''.
(b) Technical Amendments.--
[[Page S6823]]
(1) Subparagraph (A) of section 1(f )(2) of such Code is
amended by inserting ``except as provided in paragraph (8),''
before ``by increasing''.
(2) The heading for subsection (f ) of section 1 of such
Code is amended by inserting ``Phaseout of Marriage Penalty
in 15-Percent and 28-Percent Rate Brackets;'' before
``Adjustments''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 4. PRESERVE FAMILY TAX CREDITS FROM THE ALTERNATIVE
MINIMUM TAX.
(a) In General.--Subsection (a) of section 26 of the
Internal Revenue Code of 1986 (relating to limitation based
on tax liability; definition of tax liability) is amended to
read as follows:
``(a) Limitation Based on Amount of Tax.--The aggregate
amount of credits allowed by this subpart for the taxable
year shall not exceed the sum of--
``(1) the taxpayer's regular tax liability for the taxable
year reduced by the foreign tax credit allowable under
section 27(a), and
``(2) the tax imposed for the taxable year by section
55(a).''.
(b) Conforming Amendments.--
(1) Subsection (d) of section 24 of such Code is amended by
striking paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(2) Section 32 of such Code is amended by striking
subsection (h).
(3) Section 904 of such Code is amended by striking
subsection (h) and by redesignating subsections (i), (j), and
(k) as subsections (h), (i), and (j), respectively.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 5. COMPLIANCE WITH BUDGET ACT.
(a) In General.--Except as provided in subsection (b), all
amendments made by this Act which are in effect on September
30, 2005, shall cease to apply as of the close of September
30, 2005.
(b) Sunset for Certain Provisions Absent Subsequent
Legislation.--The amendments made by sections 2, 3, and 4 of
this Act shall not apply to any taxable year beginning after
December 31, 2004.
Mr. NICKLES. Mr. President, I ask unanimous consent that all time be
yielded and the amendment be laid aside.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3849, As Modified
Mr. NICKLES. Mr. President, I ask unanimous consent that the
Brownback amendment numbered 3849 be modified with the text that is now
at the desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment as modified is as follows:
(Purpose: To provide tax relief for farmers, and for other purposes)
At the end of the bill, add the following:
TITLE VI--TAX RELIEF FOR FARMERS
SEC. 601. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.
(a) In General.--Subpart C of part II of subchapter E of
chapter 1 (relating to taxable year for which deductions
taken) is amended by inserting after section 468B the
following:
``SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGEMENT
ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual
engaged in an eligible farming business or commercial
fishing, there shall be allowed as a deduction for any
taxable year the amount paid in cash by the taxpayer during
the taxable year to a Farm, Fishing, and Ranch Risk
Management Account (hereinafter referred to as the `FFARRM
Account').
``(b) Limitation.--
``(1) Contributions.--The amount which a taxpayer may pay
into the FFARRM Account for any taxable year shall not exceed
20 percent of so much of the taxable income of the taxpayer
(determined without regard to this section) which is
attributable (determined in the manner applicable under
section 1301) to any eligible farming business or commercial
fishing.
``(2) Distributions.--Distributions from a FFARRM Account
may not be used to purchase, lease, or finance any new
fishing vessel, add capacity to any fishery, or otherwise
contribute to the overcapitalization of any fishery. The
Secretary of Commerce shall implement regulations to enforce
this paragraph.
``(c) Eligible Businesses.--For purposes of this section--
``(1) Eligible farming business.--The term `eligible
farming business' means any farming business (as defined in
section 263A(e)(4)) which is not a passive activity (within
the meaning of section 469(c)) of the taxpayer.
``(2) Commercial Fishing.--The term `commercial fishing'
has the meaning given such term by section (3) of the
Magnuson-Stevens Fishery Conservation and Management Act (16
U.S.C. 1802) but only if such fishing is not a passive
activity (within the meaning of section 469(c)) of the
taxpayer.
``(d) FFARRM Account.--For purposes of this section--
``(1) In general.--The term `FFARRM Account' means a trust
created or organized in the United States for the exclusive
benefit of the taxpayer, but only if the written governing
instrument creating the trust meets the following
requirements:
``(A) No contribution will be accepted for any taxable year
in excess of the amount allowed as a deduction under
subsection (a) for such year.
``(B) The trustee is a bank (as defined in section 408(n))
or another person who demonstrates to the satisfaction of the
Secretary that the manner in which such person will
administer the trust will be consistent with the requirements
of this section.
``(C) The assets of the trust consist entirely of cash or
of obligations which have adequate stated interest (as
defined in section 1274(c)(2)) and which pay such interest
not less often than annually.
``(D) All income of the trust is distributed currently to
the grantor.
``(E) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
``(2) Account taxed as grantor trust.--The grantor of a
FFARRM Account shall be treated for purposes of this title as
the owner of such Account and shall be subject to tax thereon
in accordance with subpart E of part I of subchapter J of
this chapter (relating to grantors and others treated as
substantial owners).
``(e) Inclusion of Amounts Distributed.--
``(1) In general.--Except as provided in paragraph (2),
there shall be includible in the gross income of the taxpayer
for any taxable year--
``(A) any amount distributed from a FFARRM Account of the
taxpayer during such taxable year, and
``(B) any deemed distribution under--
``(i) subsection (f )(1) (relating to deposits not
distributed within 5 years),
``(ii) subsection (f )(2) (relating to cessation in
eligible farming business), and
``(iii) subparagraph (A) or (B) of subsection (f )(3)
(relating to prohibited transactions and pledging account as
security).
``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
``(A) any distribution to the extent attributable to income
of the Account, and
``(B) the distribution of any contribution paid during a
taxable year to a FFARRM Account to the extent that such
contribution exceeds the limitation applicable under
subsection (b) if requirements similar to the requirements of
section 408(d)(4) are met.
For purposes of subparagraph (A), distributions shall be
treated as first attributable to income and then to other
amounts.
``(f ) Special Rules.--
``(1) Tax on deposits in account which are not distributed
within 5 years.--
``(A) In general.--If, at the close of any taxable year,
there is a nonqualified balance in any FFARRM Account--
``(i) there shall be deemed distributed from such Account
during such taxable year an amount equal to such balance, and
``(ii) the taxpayer's tax imposed by this chapter for such
taxable year shall be increased by 10 percent of such deemed
distribution.
The preceding sentence shall not apply if an amount equal to
such nonqualified balance is distributed from such Account to
the taxpayer before the due date (including extensions) for
filing the return of tax imposed by this chapter for such
year (or, if earlier, the date the taxpayer files such return
for such year).
``(B) Nonqualified balance.--For purposes of subparagraph
(A), the term `nonqualified balance' means any balance in the
Account on the last day of the taxable year which is
attributable to amounts deposited in such Account before the
4th preceding taxable year.
``(C) Ordering rule.--For purposes of this paragraph,
distributions from a FFARRM Account (other than distributions
of current income) shall be treated as made from deposits in
the order in which such deposits were made, beginning with
the earliest deposits.
``(2) Cessation in eligible business.--At the close of the
first disqualification period after a period for which the
taxpayer was engaged in an eligible farming business or
commercial fishing, there shall be deemed distributed from
the FFARRM Account of the taxpayer an amount equal to the
balance in such Account (if any) at the close of such
disqualification period. For purposes of the preceding
sentence, the term `disqualification period' means any period
of 2 consecutive taxable years for which the taxpayer is not
engaged in an eligible farming business or commercial
fishing.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 220(f )(8) (relating to treatment on death).
``(B) Section 408(e)(2) (relating to loss of exemption of
account where individual engages in prohibited transaction).
``(C) Section 408(e)(4) (relating to effect of pledging
account as security).
``(D) Section 408(g) (relating to community property laws).
``(E) Section 408(h) (relating to custodial accounts).
``(4) Time when payments deemed made.--For purposes of this
section, a taxpayer shall be deemed to have made a payment to
a FFARRM Account on the last day of a taxable year if such
payment is made on account of such taxable year and is made
on or before the due date (without regard to extensions) for
filing the return of tax for such taxable year.
[[Page S6824]]
``(5) Individual.--For purposes of this section, the term
`individual' shall not include an estate or trust.
``(6) Deduction not allowed for self-employment tax.--The
deduction allowable by reason of subsection (a) shall not be
taken into account in determining an individual's net
earnings from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.
``(g) Reports.--The trustee of a FFARRM Account shall make
such reports regarding such Account to the Secretary and to
the person for whose benefit the Account is maintained with
respect to contributions, distributions, and such other
matters as the Secretary may require under regulations. The
reports required by this subsection shall be filed at such
time and in such manner and furnished to such persons at such
time and in such manner as may be required by such
regulations.''.
(b) Tax on Excess Contributions.--
(1) Subsection (a) of section 4973 (relating to tax on
excess contributions to certain tax-favored accounts and
annuities) is amended by striking ``or'' at the end of
paragraph (3), by redesignating paragraph (4) as paragraph
(5), and by inserting after paragraph (3) the following:
``(4) a FFARRM Account (within the meaning of section
468C(d)), or''.
(2) Section 4973 is amended by adding at the end the
following:
``(g) Excess Contributions to FFARRM Accounts.--For
purposes of this section, in the case of a FFARRM Account
(within the meaning of section 468C(d)), the term `excess
contributions' means the amount by which the amount
contributed for the taxable year to the Account exceeds the
amount which may be contributed to the Account under section
468C(b) for such taxable year. For purposes of this
subsection, any contribution which is distributed out of the
FFARRM Account in a distribution to which section
468C(e)(2)(B) applies shall be treated as an amount not
contributed.''.
(3) The section heading for section 4973 is amended to read
as follows:
``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS,
ANNUITIES, ETC.''.
(4) The table of sections for chapter 43 is amended by
striking the item relating to section 4973 and inserting the
following:
``Sec. 4973. Excess contributions to certain accounts, annuities,
etc.''.
(c) Tax on Prohibited Transactions.--
(1) Subsection (c) of section 4975 (relating to tax on
prohibited transactions) is amended by adding at the end the
following:
``(6) Special rule for ffarrm accounts.--A person for whose
benefit a FFARRM Account (within the meaning of section
468C(d)) is established shall be exempt from the tax imposed
by this section with respect to any transaction concerning
such account (which would otherwise be taxable under this
section) if, with respect to such transaction, the account
ceases to be a FFARRM Account by reason of the application of
section 468C(f )(3)(A) to such account.''.
(2) Paragraph (1) of section 4975(e) is amended by
redesignating subparagraphs (E) and (F) as subparagraphs (F)
and (G), respectively, and by inserting after subparagraph
(D) the following:
``(E) a FFARRM Account described in section 468C(d),''.
(d) Failure To Provide Reports on FFARRM Accounts.--
Paragraph (2) of section 6693(a) (relating to failure to
provide reports on certain tax-favored accounts or annuities)
is amended by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively, and by inserting
after subparagraph (B) the following:
``(C) section 468C(g) (relating to FFARRM Accounts),''.
(e) Clerical Amendment.--The table of sections for subpart
C of part II of subchapter E of chapter 1 is amended by
inserting after the item relating to section 468B the
following:
``Sec. 468C. Farm, Fishing and Ranch Risk Management Accounts.''.
(f ) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 602. WRITTEN AGREEMENT RELATING TO EXCLUSION OF CERTAIN
FARM RENTAL INCOME FROM NET EARNINGS FROM SELF-
EMPLOYMENT.
(a) Internal Revenue Code.--Section 1402(a)(1)(A) (relating
to net earnings from self-employment) is amended by striking
``an arrangement'' and inserting ``a lease agreement''.
(b) Social Security Act.--Section 211(a)(1)(A) of the
Social Security Act is amended by striking ``an arrangement''
and inserting ``a lease agreement''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 603. TREATMENT OF CONSERVATION RESERVE PROGRAM PAYMENTS
AS RENTALS FROM REAL ESTATE.
(a) In General.--Section 1402(a)(1) (defining net earnings
from self-employment) is amended by inserting ``and including
payments under section 1233(2) of the Food Security Act of
1985 (16 U.S.C. 3833(2))'' after ``crop shares''.
(b) Effective Date.--The amendment made by this section
shall apply to payments made before, on, or after the date of
the enactment of this Act.
SEC. 604. EXEMPTION OF AGRICULTURAL BONDS FROM STATE VOLUME
CAP.
(a) In General.--Section 146(g) (relating to exception for
certain bonds) is amended by striking ``and'' at the end of
paragraph (3), by striking the period at the end of paragraph
(4) and inserting ``, and'', and by inserting after paragraph
(4) the following:
``(5) any qualified small issue bond described in section
144(a)(12)(B)(ii).''.
(b) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of enactment of
this Act.
SEC. 605. MODIFICATIONS TO SECTION 512(B)(13).
(a) In General.--Paragraph (13) of section 512(b) is
amended by redesignating subparagraph (E) as subparagraph (F)
and by inserting after subparagraph (D) the following new
paragraph:
``(E) Paragraph to apply only to excess payments.--
``(i) In general.--Subparagraph (A) shall apply only to the
portion of a specified payment received by the controlling
organization that exceeds the amount which would have been
paid if such payment met the requirements prescribed under
section 482.
``(ii) Addition to tax for valuation misstatements.--The
tax imposed by this chapter on the controlling organization
shall be increased by an amount equal to 20 percent of such
excess.''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to payments received or accrued after December 31,
2000.
(2) Payments subject to binding contract transition rule.--
If the amendments made by section 1041 of the Taxpayer Relief
Act of 1997 do not apply to any amount received or accrued
after the date of the enactment of this Act under any
contract described in subsection (b)(2) of such section, such
amendments also shall not apply to amounts received or
accrued under such contract before January 1, 2001.
SEC. 606. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD
INVENTORY.
(a) In General.--Subsection (e) of section 170 (relating to
certain contributions of ordinary income and capital gain
property) is amended by adding at the end the following new
paragraph:
``(7) Special rule for contributions of food inventory.--
For purposes of this section--
``(A) Contributions by non-corporate taxpayers.--In the
case of a charitable contribution of food, paragraph (3)(A)
shall be applied without regard to whether or not the
contribution is made by a corporation.
``(B) Limit on reduction.--In the case of a charitable
contribution of food which is a qualified contribution
(within the meaning of paragraph (3)(A), as modified by
subparagraph (A) of this paragraph)--
``(i) paragraph (3)(B) shall not apply, and
``(ii) the reduction under paragraph (1)(A) for such
contribution shall be no greater than the amount (if any) by
which the amount of such contribution exceeds twice the basis
of such food.
``(C) Determination of basis.--For purposes of this
paragraph, if a taxpayer uses the cash method of accounting,
the basis of any qualified contribution of such taxpayer
shall be deemed to be 50 percent of the fair market value of
such contribution.
``(D) Determination of fair market value.--In the case of a
charitable contribution of food which is a qualified
contribution (within the meaning of paragraph (3), as
modified by subparagraphs (A) and (B) of this paragraph) and
which, solely by reason of internal standards of the
taxpayer, lack of market, or similar circumstances, or which
is produced by the taxpayer exclusively for the purposes of
transferring the food to an organization described in
paragraph (3)(A), cannot or will not be sold, the fair market
value of such contribution shall be determined--
``(i) without regard to such internal standards, such lack
of market, such circumstances, or such exclusive purpose, and
``(ii) if applicable, by taking into account the price at
which the same or similar food items are sold by the taxpayer
at the time of the contribution (or, if not so sold at such
time, in the recent past).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2000.
SEC. 607. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO
INCREASE ALTERNATIVE MINIMUM TAX LIABILITY.
(a) In General.--Section 55(c) (defining regular tax) is
amended by redesignating paragraph (2) as paragraph (3) and
by inserting after paragraph (1) the following:
``(2) Coordination with income averaging for farmers and
fishermen.--Solely for purposes of this section, section 1301
(relating to averaging of farm and fishing income) shall not
apply in computing the regular tax.''.
(b) Allowing Income Averaging for Fishermen.--
(1) In general.--Section 1301(a) is amended by striking
``farming business'' and inserting ``farming business or
fishing business,''.
(2) Definition of elected farm income.--
(A) In general.--Clause (i) of section 1301(b)(1)(A) is
amended by inserting ``or fishing business'' before the
semicolon.
(B) Conforming amendment.--Subparagraph (B) of section
1301(b)(1) is amended by inserting ``or fishing business''
after ``farming business'' both places it occurs.
(3) Definition of fishing business.--Section 1301(b) is
amended by adding at the end the following new paragraph:
``(4) Fishing business.--The term `fishing business' means
the conduct of commercial
[[Page S6825]]
fishing as defined in section 3 of the Magnuson-Stevens
Fishery Conservation and Management Act (16 U.S.C. 1802).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 608. 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 such subsection (and the
amendments made by such subsection) had not been enacted.
SEC. 609. COOPERATIVE MARKETING INCLUDES VALUE-ADDED
PROCESSING THROUGH ANIMALS.
(a) In General.--Section 1388 (relating to definitions and
special rules) is amended by adding at the end the following:
``(k) Cooperative Marketing Includes Value-Added Processing
Through Animals.--For purposes of section 521 and this
subchapter, `marketing the products of members or other
producers' includes feeding the products of members or other
producers to cattle, hogs, fish, chickens, or other animals
and selling the resulting animals or animal products.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 610. DECLARATORY JUDGMENT RELIEF FOR SECTION 521
COOPERATIVES.
(a) In General.--Section 7428(a)(1) (relating to
declaratory judgments of tax exempt organizations) is amended
by striking ``or'' at the end of subparagraph (B) and by
adding at the end the following:
``(D) with respect to the initial qualification or
continuing qualification of a cooperative as described in
section 521(b) which is exempt from tax under section 521(a),
or''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to pleadings filed after the date of
the enactment of this Act but only with respect to
determinations (or requests for determinations) made after
January 1, 2000.
SEC. 611. SMALL ETHANOL PRODUCER CREDIT.
(a) Allocation of Alcohol Fuels Credit to Patrons of a
Cooperative.--Section 40(g) (relating to alcohol used as
fuel) is amended by adding at the end the following:
``(6) Allocation of small ethanol producer credit to
patrons of cooperative.--
``(A) Election to allocate.--
``(i) In general.--In the case of a cooperative
organization described in section 1381(a), any portion of the
credit determined under subsection (a)(3) for the taxable
year may, at the election of the organization, be apportioned
pro rata among patrons of the organization on the basis of
the quantity or value of business done with or for such
patrons for the taxable year.
``(ii) Form and effect of election.--An election under
clause (i) for any taxable year shall be made on a timely
filed return for such year. Such election, once made, shall
be irrevocable for such taxable year.
``(iii) Special rule for 1998 and 1999.--Notwithstanding
clause (ii), an election for any taxable year ending prior to
the date of the enactment of the Death Tax Elimination Act of
2000 may be made at any time before the expiration of the 3-
year period beginning on the last date prescribed by law for
filing the return of the taxpayer for such taxable year
(determined without regard to extensions) by filing an
amended return for such year.
``(B) Treatment of organizations and patrons.--The amount
of the credit apportioned to patrons under subparagraph (A)--
``(i) shall not be included in the amount determined under
subsection (a) with respect to the organization for the
taxable year,
``(ii) shall be included in the amount determined under
subsection (a) for the taxable year of each patron for which
the patronage dividends for the taxable year described in
subparagraph (A) are included in gross income, and
``(iii) shall be included in gross income of such patrons
for the taxable year in the manner and to the extent provided
in section 87.
``(C) Special rules for decrease in credits for taxable
year.--If the amount of the credit of a cooperative
organization determined under subsection (a)(3) for a taxable
year is less than the amount of such credit shown on the
return of the cooperative organization for such year, an
amount equal to the excess of--
``(i) such reduction, over
``(ii) the amount not apportioned to such patrons under
subparagraph (A) for the taxable year,
shall be treated as an increase in tax imposed by this
chapter on the organization. Such increase shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this subpart or
subpart A, B, E, or G.''.
(b) Improvements to Small Ethanol Producer Credit.--
(1) Small ethanol producer credit not a passive activity
credit.--Clause (i) of section 469(d)(2)(A) is amended by
striking ``subpart D'' and inserting ``subpart D, other than
section 40(a)(3),''.
(2) Allowing credit against minimum tax.--
(A) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax) is amended by
redesignating paragraph (3) as paragraph (4) and by inserting
after paragraph (2) the following new paragraph:
``(3) Special rules for small ethanol producer credit.--
``(A) In general.--In the case of the small ethanol
producer credit--
``(i) this section and section 39 shall be applied
separately with respect to the credit, and
``(ii) in applying paragraph (1) to the credit--
``(I) subparagraphs (A) and (B) thereof shall not apply,
and
``(II) the limitation under paragraph (1) (as modified by
subclause (I)) shall be reduced by the credit allowed under
subsection (a) for the taxable year (other than the small
ethanol producer credit).
``(B) Small ethanol producer credit.--For purposes of this
subsection, the term `small ethanol producer credit' means
the credit allowable under subsection (a) by reason of
section 40(a)(3).''.
(B) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ``or the small
ethanol producer credit'' after ``employment credit''.
(3) Small ethanol producer credit not added back to income
under section 87.--Section 87 (relating to income inclusion
of alcohol fuel credit) is amended to read as follows:
``SEC. 87. ALCOHOL FUEL CREDIT.
``Gross income includes an amount equal to the sum of--
``(1) the amount of the alcohol mixture credit determined
with respect to the taxpayer for the taxable year under
section 40(a)(1), and
``(2) the alcohol credit determined with respect to the
taxpayer for the taxable year under section 40(a)(2).''.
(c) Conforming Amendment.--Section 1388 (relating to
definitions and special rules for cooperative organizations)
is amended by adding at the end the following:
``(k) Cross Reference.--For provisions relating to the
apportionment of the alcohol fuels credit between cooperative
organizations and their patrons, see section 40(d) (6).''
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by subsection (b) of this section shall apply
to taxable years ending after the date of enactment.
(2) Provisions affecting cooperatives and their patrons.--
The amendments made by subsections (a) and (c), and the
amendments made by paragraphs (2) and (3) of subsection (b),
shall apply to taxable years beginning after December 31,
1997.
Mr. MACK. Mr. President, I urge all of my colleagues to join us to
reduce the marriage penalties in the tax code. This bill will provide
married couples the relief that President Clinton denied them last year
with his veto of the Taxpayer Refund and Relief Act of 1999. President
Clinton's action last year increased taxes by close to $800 billion and
imposed a marriage penalty on middle class American families.
There is no place in the Tax Code for marriage penalties. Marriage
penalties are caused by tax laws that treat joint filers relatively
worse than single filers with half the income. It has of late become
common practice to use the Tax Code for purposes of social engineering,
discouraging some actions with the stick of tax penalties and
encouraging others with the carrot of tax preferences. But there is no
legitimate policy reason for punishing taxpayers with higher taxes just
because they happen to be married. The marriage penalties in the Tax
Code undermine the family, the institution that is the foundation of
our society.
I view this bill as just a start. Our Tax Code will not truly be
family-friendly until every single marriage penalty is rooted out and
eliminated, so that married couples with twice the income of single
individuals are taxed at the same rates, and are eligible for the same
tax preferences--including deductions, exemptions, use of IRAs and
other savings vehicles--as those single filers. This bill is an
important step toward that ultimate goal.
The Democrat criticisms of our bill are misplaced. They argue that
our bill contains complicated phase-ins, in contrast to their simple
approach. But anyone who reads the bill and their alternative would see
that this is false. The Finance Committee bill contains percentages in
it, sure enough. And it phases in the relief, that is true. But the
percentages and the phase-ins are instructions to the Treasury and the
IRS, to make adjustments to the tax brackets. The only people who have
to make any new calculations under the Finance Committee bill are the
bureaucrats who make up the tax tables, not the taxpayer.
[[Page S6826]]
By contrast, the Democrat alternative, in phasing in its relief,
requires taxpayers to calculate their taxes as joint filers, then
calculate their taxes as if they were single--a complicated process
that requires the allocation of various deductions and credits. Next,
the taxpayer would have to determine the difference between these two
calculations and then reduce this by a certain percentage. That is
supposed to be simple? The Democrat substitute adds to the headaches of
tax filing and the demand for tax preparers and tax preparation
software.
The Democrats also complain that the Finance Committee bill does more
than address their narrow definition of the marriage penalty. They
invoke the so-called ``marriage bonus.'' But the ``marriage bonus'' is
a red herring. What they call a ``marriage bonus'' results from
adjusting tax brackets for joint filers to reflect the fact that two
adults are sharing the household income. Under the Democrat approach,
single taxpayers who marry a non-working or low-earning spouse should
pay the same amount of taxes as when they were single, even though this
income must be spread over the needs of two adults.
This approach is fundamentally flawed. The Democrat approach would
enshrine in the law a new ``homemaker penalty.'' The Democrats would
make families with one earner and one stay-at-home spouse pay higher
taxes than families with the same household income and two earners.
But why discriminate against one-earner families? Why would we want a
tax code that penalized families just because one of the spouses
chooses the hard work of the household over the role of breadwinner?
The Democrat alternative discourages parents from staying home with
their infant children, and penalizes a person who works longer hours so
that a spouse can care for elderly parents. That is just plain wrong.
The Finance Committee bill reduces the marriage penalty in a
rational, sensible way, by making the standard deduction for joint
filers twice what it is for single filers, and by making the ranges at
which income is taxed at the 15 percent and 28 percent rates twice for
joint filers what they are for single filers. This recognizes that
marriage is a partnership in which two adults share the household
income. Our approach cuts taxes for all American families. The
Democrats call this a ``bonus.'' We call it common sense.
Mr. GRAMS. Mr. President, today the Senate begins consideration of
the first tax reconciliation bill, which would correct the injustice of
the marriage penalty. As a long-time advocate of repealing the marriage
penalty, I rise to strongly support this legislation and support
elimination of the marriage penalty entirely.
First, I'd like to take this opportunity to commend our leaders for
bringing up this important legislation. I'd particularly like to
commend Chairman Roth for his leadership on tax relief. He has
consistently championed critically needed tax relief that will restore
fairness for millions of American families.
This marriage penalty tax relief legislation would increase the
standard deduction so that married couples filing jointly get the same
deduction as single taxpayers. It expands the 15 percent and 28 percent
tax brackets to ensure that 21 million American couples--including 3
million American seniors--pay the same tax rate as unmarried taxpayers.
The bill makes Alternative Minimum Tax exemption for family-related tax
credits permanent, so families won't be pushed into higher tax
brackets.
This bill also takes care of low-income married couples by increasing
the threshold of the Earned Income Credit to allow them to enjoy this
tax relief. Mr. President, in my view, this is fair, well-balanced
legislation by any standard.
There are compelling reasons to eliminate the marriage penalty tax
and provide immediate tax relief for millions of married couples:
As I have said many times before in this Chamber, the family has been
and will continue to be the bedrock of American society. Strong
families make strong communities; strong communities make for a strong
America. We all agree that this marriage penalty tax treats married
couples unfairly. Even President Clinton agrees the marriage penalty is
unfair.
But our tax policy reflects just the opposite. It discourages
marriage, punishes married couples, and damages the family--the basic
institution of our society.
The Congressional Budget Office reports that 22 million American
couples suffered from the marriage penalty in 1999. The average penalty
paid by these couples was $1,500.
This wasn't always the case. For over half a century--from 1913, when
Washington first imposed the federal income tax, to 1969--the federal
income tax treated married couples as well as, or better than, single
individuals. Since 1996, however, many married couples every year have
had to pay a penalty just for saying ``I do.'' At the time they
exchanged their vows, I'll bet most of those couples didn't realize
they were also saying ``I do'' to Uncle Sam.
The tax hike of 1993 further aggravated the problem because it added
new, higher tax rates. In addition, now that a greater number of
households are dual income, that means that more couples are subject to
this penalty.
Mr. President, the consequence of this unjust penalty is devastating.
It has put an additional financial burden on already overtaxed American
families. Here is an example of how this penalty hits the average
American:
Alicia Jones from my state of Minnesota and her husband graduated
from college and had just begun working full-time two years ago, in
professional careers. They had no children and were renting an
apartment, saving to buy a house. They had to pay at least an
additional $1,500 for simply being married. As a result, on top of the
over $10,000 tax they already paid, they had to take an additional $700
from their limited savings account to pay for federal taxes--taxes that
they wouldn't have had to pay if they weren't married.
She wrote, ``I am frustrated by this, I'm frustrated for the future--
how do we get ahead, when each year we have to take money from our
savings to pay more for our taxes. I hope that you will remember my
concern.''
Millions of married couples similarly suffer because of this penalty.
This is extremely unfair. This was not the intention of Congress when
it created the marriage penalty tax in the 1960s by separating tax
schedules for married and unmarried people. This unjust marriage
penalty also has an adverse social impact, as more and more people
delay their wedding just for tax purposes. I have an example of that in
my own office. Research also shows that the marriage penalty has
discouraged couples from getting married. It has also encouraged some
married couples to get friendly divorces. They continue to live
together, but save on their taxes.
Clearly, this tax policy has interrupted and distorted the normal
lives of many Americans. It should not be allowed to continue.
Repealing the marriage penalty will provide immediate, meaningful tax
relief to American families and allow them to keep $1,500 or more each
year of their own money to pay for health insurance, groceries, child
care, or other family necessities.
In my state of Minnesota alone, over 550,000 couples will benefit
from this tax relief and will no longer suffer from this unfair tax.
However, the biggest beneficiaries of the elimination of the marriage
penalty tax are working women and low-income families.
Federal tax policy penalizes working women by taxing their income at
the highest rate imposed on their husbands' income. Our legislation
addresses this injustice by allowing married working women to keep
significantly more of their hard-earned money for family needs.
The elimination of the marriage penalty will primarily benefit
minority, and low and middle income families. Government data suggest
the marriage penalty hits African-Americans and lower-income working
families hardest. Couples at the bottom end of the income scale who
incur penalties paid an average of nearly $800 in additional taxes,
which represented 8 percent of their income. Eight percent, Mr.
President. Repeal the penalty, and those low-income families will
immediately have an 8 percent increase in their income, larger than for
all other income levels.
[[Page S6827]]
Despite these facts, some of our colleagues from the other side of
aisle still call this a ``tax cut for the rich.'' They seem to have
gotten into the habit, whenever they hear the phrase ``tax relief,'' of
jumping up and shouting ``tax cut for the rich!'' That's not fair to
working Americans who are hit hard by these taxes.
Mr. President, some also argue that marriage penalty tax relief will
go to those families who already receive marriage bonuses. The argument
does not fold true either. While about 51 percent, or 25 million
couples, receive marriage bonuses, this doesn't justify the federal
government penalizing another 22 million couples just for being married
or for choosing to work.
In addition, most of those who receive marriage bonuses are likely to
receive this due to family-related tax credits, such as the $500 per-
child credit I passed into law to help a family afford raising
children. It is contradictory to allow married couples to receive these
credits and then turn around and require them to pay more income taxes
for receiving the tax credits. We should give more bonuses to all
American families whether both spouses or only one of them are working.
More importantly, the trends show that more couples under age 55 are
working, and the earnings between husbands and wives are more evenly
divided since 1969. This means more and more couples have received, and
will continue to receive, marriage penalties and fewer couples will
have bonuses.
Another conventional argument of our Democratic colleagues against
tax relief is that the tax relief costs too much. This is a typical
Washington way of thinking. They forget the fact that it is the
taxpayer's, not Washington's, money in the first place.
Mr. President, it is hard to justify under any circumstances
continued punishment of married couples in this country regardless of
the costs. Moreover, in this era of record budget surpluses, the so
called ``costs'' associated with the repeal of the marriage penalty are
just a fraction of the tax overpayments made by working Americans. Over
the next 10 years, the federal government will collect over $1.9
trillion in tax overpayments from taxpayers, while the total tax relief
in the reconciliation instruction adopted under the FY 2001 budget
resolution is merely $150 billion. This is less than 8 cents of every
dollar of non-Social Security surpluses collected by the government.
We have also heard some argue that Washington needs tax overpayments
to save Social Security and Medicare with an addition of prescription
drug benefits. President Clinton has also said that he will support the
marriage penalty repeal if prescription drug benefits are added.
Mr. President, I support saving and strengthening Social Security and
Medicare, and I support prescription drug benefits for seniors. I have
my own plan to do that. I support repealing the marriage penalty tax,
the death tax, and the tax on seniors' retirement benefits. But I
believe they all should be passed and signed into law on their own
merits, and shouldn't be traded against each other.
As a matter of fact, the Administration has never come up with a
viable plan to save Social Security. It has blocked bipartisan efforts
to strengthen Medicare, including prescription drug benefits. Now it
uses this as a cover to deny working Americans the moderate tax refund
they deserve.
Mr. President, this is not acceptable.
I have repeatedly argued that American families today are overtaxed,
and the surplus comes directly from taxes paid by the American people.
It is only fair to return it to the taxpayers. With a huge budget
surplus, we can reduce working Americans' tax burden, pay down the
national debt, save Social Security, and provide prescription drug
benefits for seniors--if the Administration and the Congress have the
political will to do so.
In closing, Mr. President, the marriage penalty is simply bad tax
policy and we must end it once and for all to restore equity and
fairness for working Americans.
Mr. ASCHCROFT. Mr. President, the current tax code is at war with our
values--the tax code penalizes the basic social institution: marriage.
The American people know that this is unfair--they know it is not right
that the code penalizes marriage. Now the Senate is prepared to end
this long-standing problem.
25 million American couples pay an average of approximately $1,400 in
marriage penalty annually as a result of the marriage penalty. Ending
this penalty gives couples the freedom to make their own choices with
their money. Couples could use the $1,400 for: retirement, education,
home, children's needs.
This bill will also provide needed tax relief to American families--
39 million American married couples, 830,000 in Missouri. Couples like
Bruce and Kay Morton, from Camdenton, MO, who suffer from this unfair
penalty. Mr. Morton wrote me a note so simple that even a Senator could
understand it: ``Please vote yes for the Marriage Tax relief of 2000.''
Another Missourian, Travis Harms, of Independence, Missouri, wrote to
tell me that the marriage penalty hits him and his wife, Laura. Mr.
Harms graciously offered me his services in ending the marriage
penalty. ``I would like to thank you for your support and effort
towards the elimination of the unfair `marriage tax.' If there is any
way I can support or encourage others to help this dream become a
reality, I would be honored to help.''
I am grateful to Travis Harms and Bruce Morton for their support. And
I want to repay them by making sure we end this unfair penalty on
marriage.
The marriage penalty places an undue burden on American families.
According to the Tax Foundation, an American family spends more of
their family budget on taxes than on health care, food, clothing, and
shelter combined. The tax bill should not be the biggest bill families
like the Morton's and Harms' face.
And families certainly should not be taxed extra because they are
married. Couples choosing marriage are making the right choice for
society. It is in our interest to encourage them to make this choice.
Unfortunately, the marriage penalty discourages this choice. The
marriage penalty may actually contribute to one of society's most
serious and enduring problems. There are now twice as many single
parent households in America than there were when this penalty was
first enacted.
In its policies, the government should uphold the basic values that
give strength and vitality to our culture. Marriage and family are a
cornerstone of civilization, but are heavily penalized by the federal
tax system.
The marriage penalty is so patently unfair no one will defend it.
Those on the other side of the aisle are making a stab at addressing
the marriage penalty, even though they are not willing to provide
relief to all couples who face this unfair penalty. Their bill
implements a choose or lose system for some couples who are subject to
the marriage penalty. Their bill phases out marriage penalty relief,
and does not cover all of the couples who face this unfair penalty.
This issue, however, is not about income, it's about fairness. It us
unfair to tax married couples more than single people, no matter what
their income. The Finance Committee bill provides tax relief to all
married couples.
In addition, the Finance Committee bill makes sure that couples do
not face the risk of differential treatment. Under the minority bill,
one family with a husband earning $50,000 and a mother staying home
with her children will pay more in taxes than a family with a combined
income of $50,000, with the wife and husband each earning $25,000. This
system creates a disincentive for parents to stay at home with their
children. The Republican plan will treat all couples equally.
While the minority bill is flawed, I am encouraged that they are
finally acknowledging that the marriage penalty is a problem. I am also
encouraged that President Clinton has also acknowledged the unfair
nature of the marriage penalty. But unfortunately, Treasury Secretary
Larry Summers has announced that he would advise the President to veto
marriage penalty relief.
I say to the President and to my colleagues on the other side: being
against the marriage penalty means that you have to be willing to
eliminate it. You cannot just say you oppose the penalty, and then
fight to keep the penalty in law, or to keep part of the penalty in law
for some people. Join us to
[[Page S6828]]
vote for the elimination of the penalty, and let us bring this
important tax relief bill to the American people together.
The marriage penalty has endured for too long and harmed too many
couples. It is time to abolish the prejudice that charges higher taxes
for being married. It is time to take the tax out of saying ``I do.''
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