[Congressional Record Volume 149, Number 7 (Wednesday, January 15, 2003)]
[Senate]
[Pages S854-S856]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KYL:

[[Page S854]]

  S. 169. A bill to permanently repeal the estate and generation-
skipping transfer taxes; to the Committee on Finance.
  Mr. KYL. Mr. President, today I am introducing legislation to repeal 
the death tax permanently, effective January 1, 2005. While I strongly 
believe that Congress must make all of the tax cuts enacted in 2001 
permanent, and I have introduced S. 96, the ``Contract with 
Investors,'' that would make this and other important tax law changes, 
I want to make a separate and special case for repealing the death tax 
forever.
  It is an unfair, inefficient, economically unsound and, frankly, 
immoral tax that should not come back. In 2001, President Bush and 
Congress agreed to repeal the death tax. Repeal was tremendously 
popular. Even though most Americans may never be subject to the death 
tax, the vast majority know it is terribly unfair to allow Washington 
to seize more than half of a person's assets when he or she dies. 
According to a 2001 McLaughlin and Associates poll, 79 percent of 
respondents approve of the idea of abolishing the death tax.
  It is unfair, first of all, to the decedent and to his or her heirs. 
A person who works hard throughout his or her life, perhaps starts a 
business, and buys a home in a fast-growing metropolitan area where 
real estate values are skyrocketing. Or perhaps the person owns a farm 
or just works hard in a company owned by others, but that person saves 
and invests and eventually accumulates a small but respectable nest 
egg. The American dream is to be able to leave these assets to one's 
children so that they might enjoy a slightly better life than their 
parents. It is simply unfair and immoral for the government to take 
more than half of these assets at death.
  The impact of the death tax on small, family-owned businesses 
highlights another inequity, that small businesses often pay taxes at 
the highest individual rate, currently set at 38.6 percent, while the 
highest corporate tax rate is 35 percent. When the owner of a small 
business dies, the heirs may be forced to sell off the business to pay 
the applicable death tax. When the head of a C corporation dies, his or 
her heirs may have to sell some assets to pay the death taxes, but 
generally there is no need for the business to be sold. While Congress 
has tried to make provisions to ease the impact of the death tax on 
family businesses, the rules are so restrictive that a business owner 
can never be sure if he or she qualifies. Furthermore, the family 
business provisions restrict the size to which the business can grow 
and still quality for special treatment, creating a disincentive for 
businesses to expand and create new jobs. A far better solution is to 
repeal the death tax entirely and permanently.
  The death tax also causes collateral damage. Take our small 
entrepreneur described above. Suppose the business employs 25, maybe 30 
people, all of whom rely on the business for their livelihood, health 
insurance, and retirement savings. The entrepreneur's heirs may not 
have enough cash to pay the applicable death tax and, therefore, may be 
forced to liquidate the business. All its employees must now find other 
jobs. Or suppose the heirs cannot find a ready purchaser for the 
business and must sell it off in pieces. All of the companies that sold 
items to or bought items from this business must find other suppliers 
or customers, leaving a hole in the economy. Although the death tax 
brings in only about one-and-a-half percent of the Federal Government's 
annual revenue, it inflicts a disproportionately large and negative 
impact on the economy.

  Not only does the death tax cost jobs directly when heirs are forced 
to liquidate businesses, it actually reduces Federal revenues by 
weakening the incentive to save and invest. One of the biggest problems 
our economy is facing now is that individuals are unwilling to invest 
at sufficient levels, leading to lower profits, interest, dividends and 
capital gains, not to mention reduced productivity and lower taxable 
wages. Economists Gary and Aldona Robbins estimate that repeal of the 
death tax would increase gross domestic product to such an extent that 
in 10 years' time, Federal tax revenue would be higher than it would be 
if the tax were retained. Of course, if the tax comes back after only 
one year of repeal, this growth will go unrealized.
  Beyond lost jobs, liquidated businesses, and confiscatory tax rates, 
the death tax is inefficient because people pay tremendous sums to tax-
planners in hopes of avoiding as much of the tax as possible. Alicia 
Munnell, a former member of President Clinton's Council of Economic 
Advisors, estimates that the costs of complying with death tax laws are 
roughly equal to the revenue raised, or about $23 billion in 1998.
  In addition to being unfair and a drag on the economy, the current 
plan for repealing the death tax and then reinstating it the next year 
is incomprehensible to most Americans. Under current law, the exemption 
is $1 million in 2003, gradually raising to $3.5 million in 2009. At 
the same time, the tax rate drops from its original high of 55 percent 
down to 45 percent by 2007 and stays there until the death tax is 
repealed in 2010. In that year, heirs will only be taxed on any 
inherited property when they sell or otherwise dispose of the property, 
applying carryover basis, and then at capital gains rates and with an 
exemption of $1.3 million, and an additional $3 million for a surviving 
spouse. But, the entire death tax returns the following year at the 
2001 rate of 55 percent, with the 2001 exemption of $675,000. The 
American people know that this makes absolutely no sense. We must fix 
this problem now and fix it permanently.
  My legislation, the Permanent Death Tax Repeal Act of 2003, abolishes 
the death tax permanently, effective January 1, 2005. I suggest 2005 to 
give people time to plan for the altered date of repeal. I believe that 
fairness and sound economic policy require that we enact my legislation 
as soon as possible, so that people will know that when the death tax 
disappears, it will disappear for good. As Edward J. McCaffrey, a law 
professor from the University of Southern California and self-described 
liberal, said in testimony before the Senate Finance Committee a few 
years back: ``Polls and practices show that we like sin taxes, such as 
on alcohol and cigarettes. . . . The estate tax is an anti-sin, or a 
virtue, tax. It is a tax on work and savings without consumption, on 
thrift, on long term savings.'' We must end this tax on virtue, work, 
savings, job creation and the American dream, and we must end it 
permanently.
                                 ______
                                 
      By Mr. VOINOVICH:
  S. 170. A bill to amend the Federal Water Pollution Control Act to 
authorize appropriations for State water pollution control revolving 
funds, and further purposes; to the Committee on Environment and Public 
Works.
  Mr. VOINOVICH. Mr. President, I rise today to introduce the Clean 
Water Infrastructure Financing Act of 2003, legislation which will 
reauthorize the highly successful, but undercapitalized, Clean Water 
State Revolving Loan Fund, SRF, Program administered by the U.S. 
Environmental Protection Agency, EPA. As many of my colleagues know, 
the Clean Water SRF Program is an effective and immensely popular 
source of funding for wastewater collection and treatment projects. 
Congress created the SRF in 1987 to replace the direct grants program 
that was enacted as part of the landmark 1972 Federal Water Pollution 
Control Act, or, as it is also known, the Clean Water Act. State and 
local governments have used the Federal Clean Water SRF to help meet 
critical environmental infrastructure financing needs. The program 
operates much like a community bank, where each State determines which 
projects are built.
  The performance of the Clean Water SRF Program has been spectacular. 
Total Federal capitalization grants have been nearly doubled by non-
Federal funding sources, including State contributions, leveraged 
bonds, and principal and interest payments. Communities of all sizes 
are participating in the program, and approximately 11,000 low-interest 
loans totaling more than $34.3 billion have been approved to date. As 
in many States, Ohio has needs for public wastewater system 
improvements which greatly exceed typical Clean Water SRF funding 
levels. For instance, in fiscal year 2002, a level of $1.35 billion was 
appropriated for the Clean Water [SRF program nationwide. However, 
according to the EPA's 1996 Clean Water] Needs Survey, Ohio's 20-year 
capital investment needs for publicly owned wastewater treatment 
facilities are $7.4 billion. Of that amount,

[[Page S855]]

over $4 billion of improvements have been identified as necessary to 
address combined serve overflow, CSO, problems in over 100 communities 
in Ohio. The city of Akron, for example, has proposed to spend $377 
million over 30 years to fix the city's CSO problems.
  Due to the CSO problem, many Ohio communities face millions of 
dollars worth of wastewater infrastructure improvements and the 
likelihood of increased sewer rates without receiving outside funding. 
In recent years, Ohio cities and villages also have been spending more 
on maintaining and operating their systems in order to postpone the 
inevitable upgrades. Nevertheless, their systems are aging and will 
soon need to be replaced.
  While the Clean Water SRF Program's track record is excellent, the 
condition of our Nation's overall environmental infrastructure remains 
alarming. A 20-year needs survey conducted by the EPA in 1996 
documented $139 billion worth of wastewater capital needs nationwide. 
In 1999, the national assessment was revised upward to nearly $200 
billion, in order to more accurately account for expected sanitary 
sewer needs. Private studies demonstrate that total needs exceed $300 
billion, when anticipated replacement costs are considered. EPA's most 
recent Clean Water Gap Analysis projected a $6 billion per year capital 
payments gap for clean water over the next two decades.
  Authorization for the Clean Water SRF expired at the end of fiscal 
year 1994, and the failure of Congress to reauthorize the program sends 
an implicit message that wastewater collection and treatment is not a 
national priority. The longer we wait to re-authorize this program, the 
longer it creates uncertainty about the program's future in the eyes of 
borrowers, which could delay or in some cases prevent project 
financing. In order to allow any kind of substantial increase in 
spending, reauthorization of the Clean Water SRF program is necessary.
  The bill that I am introducing today will authorize a total of $15 
billion over the next five years for the Clean Water SRF. Not only 
would this authorization help bridge the enormous infrastructure 
funding gap, the investment also would pay for itself in perpetuity by 
protecting our environment, enhancing public health, creating jobs and 
increasing numerous tax bases across the country. Additionally, the 
bill will provide technical and planning assistance for small systems, 
expand the types of projects eligible for loan assistance, and offer 
financially-distressed communities extended loan repayment periods and 
principal subsidies. The bill also will allow states to give priority 
consideration to financially-distressed communities when making loans.
  The health and well-being of the American public depends on the 
condition of our nation's wastewater collection and treatment systems. 
Unfortunately, the facilities that comprise these systems are often 
taken for granted absent a crisis. Let me emphasize to my colleagues 
that the costs of poor environmental infrastructure cannot be ignored. 
Last year marked the 30th Anniversary of the Clean Water Act. We have 
come a long way since the Clean Water Act's implementation in 1972. 
Yet, we still have a long way to go. After 30 years since the passage 
of the Clean Water Act approximately 45 percent of U.S. waters are 
still not clean enough for fishing or swimming. The 30th Anniversary of 
the Clean Water Act is cause for celebration of our accomplishments. It 
is also an opportunity to recommit ourselves to achieving the goals of 
the Clean Water Act. The Federal Government must maintain a strong 
partnership with States and local communities and share in the 
financial burden of sustaining hard-won water quality gains and making 
additional improvements to the quality of the Nation's waters.
  In just over a decade, the Clean Water SRF Program has helped 
thousands of communities meet their wastewater treatment needs. My bill 
will help ensure that the Clean Water SRF Program remains a viable 
component in the overall development of our Nation's infrastructure for 
years to come. I urge my colleagues to join me in cosponsoring this 
legislation, and I urge its speedy consideration by the Senate.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 170

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Clean Water Infrastructure 
     Financing Act of 2003''.

     SEC. 2. GENERAL AUTHORITY FOR CAPITALIZATION GRANTS.

       Section 601(a) of the Federal Water Pollution Control Act 
     (33 U.S.C. 1381(a)) is amended by striking ``(1) for 
     construction'' and all that follows through the period at the 
     end and inserting ``to accomplish the purposes of this 
     Act.''.

     SEC. 3. CAPITALIZATION GRANTS AGREEMENTS.

       (a) Requirements for Construction of Treatment Works.--
     Section 602(b)(6) of the Federal Water Pollution Control Act 
     (33 U.S.C. 1382(b)(6)) is amended--
       (1) by striking ``before fiscal year 1995''; and
       (2) by striking ``201(b)'' and all that follows through 
     ``218,'' and inserting ``211,''.
       (b) Guidance for Small Systems.--Section 602 of the Federal 
     Water Pollution Control Act (33 U.S.C. 1382) is amended by 
     adding at the end the following:
       ``(c) Guidance for Small Systems.--
       ``(1) Simplified procedures.--Not later than 1 year after 
     the date of enactment of this subsection, the Administrator 
     shall assist the States in establishing simplified procedures 
     for small systems to obtain assistance under this title.
       ``(2) Publication of manual.--Not later than 1 year after 
     the date of enactment of this subsection, after providing 
     notice and opportunity for public comment, the Administrator 
     shall publish--
       ``(A) a manual to assist small systems in obtaining 
     assistance under this title; and
       ``(B) in the Federal Register, notice of the availability 
     of the manual.
       ``(3) Definition of small system.--In this title, the term 
     `small system' means a system for which a municipality or 
     intermunicipal, interstate, or State agency seeks assistance 
     under this title and that serves a population of 20,000 or 
     fewer inhabitants.''.

     SEC. 4. WATER POLLUTION CONTROL REVOLVING FUNDS.

       (a) Activities Eligible for Assistance.--Section 603 of the 
     Federal Water Pollution Control Act (33 U.S.C. 1383) is 
     amended by striking subsection (c) and inserting the 
     following:
       ``(c) Activities Eligible for Assistance.--
       ``(1) In general.--The water pollution control revolving 
     fund of a State shall be used only for providing financial 
     assistance for activities that have, as a principal benefit, 
     the improvement or protection of the water quality of 
     navigable waters to a municipality, intermunicipal, 
     interstate, or State agency, or other person, including 
     activities such as--
       ``(A) construction of a publicly owned treatment works;
       ``(B) implementation of lake protection programs and 
     projects under section 314;
       ``(C) implementation of a nonpoint source management 
     program under section 319;
       ``(D) implementation of an estuary conservation and 
     management plan under section 320;
       ``(E) restoration or protection of publicly or privately 
     owned riparian areas, including acquisition of property 
     rights;
       ``(F) implementation of measures to improve the efficiency 
     of public water use;
       ``(G) development and implementation of plans by a public 
     recipient to prevent water pollution; and
       ``(H) acquisition of land necessary to meet any mitigation 
     requirements related to construction of a publicly owned 
     treatment works.
       ``(2) Fund amounts.--
       ``(A) Repayments.--The water pollution control revolving 
     fund of a State shall be established, maintained, and 
     credited with repayments.
       ``(B) Availability.--The balance in the fund shall be 
     available in perpetuity for providing financial assistance 
     described in paragraph (1).
       ``(C) Fees.--Fees charged by a State to recipients of the 
     assistance may be deposited in the fund and may be used only 
     to pay the cost of administering this title.''.
       (b) Extended Repayment Period for Financially Distressed 
     Communities.--Section 603(d)(1) of the Federal Water 
     Pollution Control Act (33 U.S.C. 1383(d)(1)) is amended--
       (1) in subparagraph (A), by inserting after ``20 years'' 
     the following: ``or, in the case of a financially distressed 
     community, the lesser of 40 years or the expected life of the 
     project to be financed with the proceeds of the loan''; and
       (2) in subparagraph (B), by striking ``not later than 20 
     years after project completion'' and inserting ``on the 
     expiration of the term of the loan''.
       (c) Loan Guarantees.--Section 603(d) of the Federal Water 
     Pollution Control Act (33 U.S.C. 1383(d)) is amended by 
     striking paragraph (5) and inserting the following:
       ``(5) to provide loan guarantees for--
       ``(A) similar revolving funds established by municipalities 
     or intermunicipal agencies; and

[[Page S856]]

       ``(B) developing and implementing innovative 
     technologies;''.
       (d) Administrative Expenses.--Section 603(d)(7) of the 
     Federal Water Pollution Control Act (33 U.S.C. 1383(d)(7)) is 
     amended by inserting before the period at the end the 
     following: ``or the greater of $400,000 per year or an amount 
     equal to \1/2\ percent per year of the current valuation of 
     the fund, plus the amount of any fees collected by the State 
     under subsection (c)(2)(C)''.
       (e) Technical and Planning Assistance for Small Systems.--
     Section 603(d) of the Federal Water Pollution Control Act (33 
     U.S.C. 1383(d)) is amended--
       (1) in paragraph (6), by striking ``and'' at the end;
       (2) in paragraph (7), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(8) to provide to small systems technical and planning 
     assistance and assistance in financial management, user fee 
     analysis, budgeting, capital improvement planning, facility 
     operation and maintenance, repair schedules, and other 
     activities to improve wastewater treatment plant operations, 
     except that the amounts used under this paragraph for a 
     fiscal year shall not exceed 2 percent of all grants provided 
     to the fund for the fiscal year under this title.''.
       (f) Consistency With Planning Requirements.--Section 603(f) 
     of the Federal Water Pollution Control Act (33 U.S.C. 
     1383(f)) is amended by striking ``is consistent'' and 
     inserting ``is not inconsistent''.
       (g) Construction Assistance.--Section 603 of the Federal 
     Water Pollution Control Act (33 U.S.C. 1383) is amended by 
     striking subsection (g) and inserting the following:
       ``(g) Construction Assistance.--
       ``(1) Priority list requirement.--The State may provide 
     financial assistance from the water pollution control 
     revolving fund of the State for a project for construction of 
     a publicly owned treatment works only if the project is on 
     the priority list of the State under section 216, without 
     regard to the rank of the project on the list.
       ``(2) Eligibility of certain treatment works.--A treatment 
     works shall be treated as a publicly owned treatment works 
     for purposes of subsection (c) if the treatment works, 
     without regard to ownership, would be considered a publicly 
     owned treatment works and is principally treating municipal 
     waste water or domestic sewage.''.
       (h) Principal Subsidization.--Section 603 of the Federal 
     Water Pollution Control Act (33 U.S.C. 1383) is amended by 
     adding at the end the following:
       ``(i) Principal Subsidization.--
       ``(1) In general.--Subject to paragraph (2), in a case in 
     which a State makes a loan under subsection (d)(1) to a 
     financially distressed community, the State may provide 
     additional subsidization to the loan recipient (including 
     forgiveness of principal).
       ``(2) Limitation.--For each fiscal year, the total amount 
     of loan subsidies made by a State under this subsection shall 
     not exceed 30 percent of the amount of the capitalization 
     grant received by the State for that fiscal year.
       ``(j) Information To Assist States.--The Administrator may 
     publish information to assist States in establishing the 
     affordability criteria referred to in subsection (l).
       ``(k) Priority.--In making a loan under this section, a 
     State may give priority to a financially distressed 
     community.
       ``(l) Definition of Financially Distressed Community.--In 
     this section, the term `financially distressed community' 
     means any community that meets affordability criteria that 
     are--
       ``(1) established by the State in which the community is 
     located; and
       ``(2) developed after public review and comment.''.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       Section 607 of the Federal Water Pollution Control Act (33 
     U.S.C. 1387) is amended by striking ``the following sums:'' 
     and all that follows through the period at the end of 
     paragraph (5) and inserting ``$3,000,000,000 for each of 
     fiscal years 2003 through 2007.''.
                                 ______