[Congressional Record Volume 149, Number 2 (Wednesday, January 8, 2003)]
[Extensions of Remarks]
[Page E31]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    ELIMINATION OF DOUBLE TAXATION ON DIVIDENDS, REPEAL OF THE AMT, 
   REDUCTION IN THE CAPITAL GAINS TAX, AND STUDY ON DEPRECIATION TAX 
                               SCHEDULES

                                 ______
                                 

                            HON. MAC COLLINS

                               of georgia

                    in the house of representatives

                        Tuesday, January 7, 2003

  Mr. COLLINS. Mr. Speaker, I rise today to introduce several tax-based 
reform bills which will have a positive impact on our current economy. 
They are measures which will stimulate growth, eliminate outdated, 
punitive provisions of the tax code, and prepare the way for further 
reforms which will bring our tax code more in line with the current 
market conditions.
  First, is the Capital Gains Tax Rate Reduction Act. This legislation 
will reduce the top capital gains tax rate from 20 percent to 10 
percent. Additionally, the lower rate of 10 percent would be reduced to 
5 percent. The measure would also repeal the five year holding rule.
  This legislation is needed to spur today's ailing economy. From past 
rate reductions, we know that the economy responds to the lowering of 
rates. The impact of reducing the tax burden on investments is to 
increase activity in the markets. When the tax is reduced, individuals 
have an incentive to sell assets. These sales spur economic growth, as 
well as generate revenue for the Federal coffers.
  Second is the Alternative Minimum Tax Repeal Act (AMT). This 
legislation will repeal the Alternative Minimum Tax applied to 
individual taxpayers. The domestic tax system has dramatically changed 
since the creation of the AMT regime. Consequently, this tax structure 
has long outlived its purpose. Today, the AMT is punitive in nature, 
overly cumbersome and affects taxpayers who were never intended to fall 
into this tax trap. Congress has taken action to address some of the 
concerns raised by the individual AMT. Specifically, the Economic 
Growth and Tax Relief Reconciliation Act (H.R. 1836) enacted in the 
107th Congress made permanent the ability to offset the individual AMT 
calculation with the child tax credit. The measure also increased the 
AMT exemption amount by $4,000 for joint returns ($2,000 for unmarried 
individuals) effective for tax years between 2001 and 2004. In tax year 
2005, the AMT exemption amount reverts back to its previous levels.
  Additionally, the Job Creation and Worker Assistance Act, signed into 
law on March 9, 2002, provides for another temporary extension of the 
provisions which allow individuals to use all remaining personal tax 
credits against both their regular and AMT tax. These provisions expire 
at the end of the 2003 tax year. It is time for a permanent fix to this 
escalating problem. The impact of the individual AMT structure will 
continue to grow until these issues are addressed head on. Changes 
should be made on a long-term, permanent basis.
  To provide a permanent remedy to the increasing problem of more tax 
filers falling into the AMT each year, my legislation will permanently 
extend the current-law provision which allows all personal tax credits 
to be applied against the AMT calculation. The proposal will also 
immediately increase the AMT income exemption level by 10 percent, and 
subsequently increase the exemption by 10 percent in subsequent years. 
In addition, the bill will repeal the income limitation that currently 
applies to that exemption. Finally, at the end of a ten year period, 
the individual AMT will fully be repealed.

  The bill will also repeal the corporate AMT. The U.S. is the only 
nation which imposes the Alternative Minimum Tax (AMT) on businesses. 
It is a very complex and outdated dual tax system which essentially 
imposes a tax penalty for making capital investments. The legislation 
would also allow businesses to utilize their accrued AMT credits over 
the next five years.
  Third is the Elimination of Double Taxation Act. Today dividends paid 
to investors are double taxed at the business level and then at the 
individual level. Today, investors are all across the economic 
spectrum. According to the Tax Foundation, 63.6 percent of the 
taxpayers who claimed dividends on 2000 tax returns earned less than 
$50,000 in wages and salaries. More and more, investors are men and 
women who are working on the front line of manufacturing firms or small 
businesses who have chosen to share in the benefit of their labor 
through investing in the business. This legislation will eliminate a 
cost that the government imposes on that investment.
  Finally, I am introducing legislation that will begin the process of 
reforming current depreciation schedules in the tax code. Depreciation 
tax laws provide businesses the ability to deduct the costs of capital 
investments over time. Current depreciation schedules are dramatically 
out of line with the real economic life and use of the properties that 
are being purchased in today's markets. Often the number of years 
allowed for the deduction exceeds the number of years the investor may 
finance the capital investment. The result is a higher tax cost. This 
legislation will call upon the Secretary of the Treasury to make 
specific recommendations about how to bring the depreciations schedules 
more in line with the true economic life of property.
  Mr. Speaker, I congratulate the President on his announcement of an 
economic stimulus package today. I ask my colleagues in the House of 
Representatives to join me by cosponsoring the legislation I am 
introducing. They are important first steps in addressing the need to 
change the tax code in ways that will provide economic stimulus across 
the board for American workers.

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