[Congressional Record Volume 150, Number 61 (Wednesday, May 5, 2004)]
[House]
[Pages H2555-H2585]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MIDDLE-CLASS ALTERNATIVE MINIMUM TAX RELIEF ACT OF 2004
Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 619 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 619
Resolved, That upon the adoption of this resolution it
shall be in order to consider in the House the bill (H.R.
4227) to amend the Internal Revenue Code of 1986 to extend to
2005 the alternative minimum tax relief available in 2003 and
2004 and to index such relief for inflation. The bill shall
be considered as read for amendment. The previous question
shall be considered as ordered on the bill and on any
amendment thereto to final passage without intervening motion
except: (1) one hour of debate on the bill equally divided
and controlled by the chairman and ranking minority member of
the Committee on Ways and Means; (2) the amendment in the
nature of a substitute printed in
[[Page H2556]]
the report of the Committee on Rules accompanying this
resolution, if offered by Representative Rangel of New York
or his designee, which shall be in order without intervention
of any point of order, shall be considered as read, and shall
be separately debatable for one hour equally divided and
controlled by the proponent and an opponent; and (3) one
motion to recommit with or without instructions.
The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Georgia (Mr.
Linder) is recognized for 1 hour.
Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the
customary 30 minutes to the gentleman from Florida (Mr. Hastings),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Mr. Speaker, H. Res. 619 is a modified, closed rule that provides for
the consideration of H.R. 4227, the Middle-Class Alternative Minimum
Tax Relief Act of 2004.
It provides for one hour of debate in the House, equally divided and
controlled by the chairman and ranking minority member of the Committee
on Ways and Means.
H. Res. 619 also provides for the consideration of the amendment in
the nature of a substitute printed in the Committee on Rules report
accompanying this resolution, if offered by the gentleman from New York
(Mr. Rangel) or his designee, which shall be considered as read, and
shall be separately debatable for one hour equally divided and
controlled by the proponent and an opponent.
It waives all points of order against the amendment printed in the
report and provides for one motion to recommit, with or without
instructions.
Mr. Speaker, this is a fair and traditional rule for the
consideration of legislation amending the Internal Revenue Code, and I
hope that the House will approve the rule in order to have the
opportunity to consider the merits of the underlying consideration.
The Alternative Minimum Tax was originally conceived as a means of
ensuring that the wealthy ``paid their fair share of taxes'' in 1969.
But, as has happened so many times in the past, the law of unintended
consequences has meant that the AMT has produced a very different
result.
Because the AMT is not currently indexed to the inflation rate, the
number of taxpayers falling into the ``AMT trap'' is growing larger and
larger every year. In 1970, 19,000 people paid the AMT. Today, this
number has risen to over 3 million taxpayers. According to some
estimates, approximately 35 million taxpayers will come under the AMT's
procedures in the next 6 years.
These taxpayers are not wealthy by any stretch of the imagination.
Increasingly, the AMT is punishing hard-working, middle class families.
With this in mind, I wanted to commend the gentleman from Connecticut
(Mr. Simmons) for bringing H.R. 4227 to the floor today. This bill
extends for 1 year the current limits on income exceptions from the AMT
that Congress and President Bush enacted in 2001 and 2003. Notably,
H.R. 4227 also indexes the limits for inflation, thereby precluding the
AMT from taking an even bigger bite out of most moderate-income
families' paychecks.
President Clinton's 1993 tax raise increased the AMT tax rate without
adjusting the AMT exemption amount for inflation. Since then, however,
the Republican majority in the Congress has repeatedly delivered AMT
relief to taxpayers.
The Economic Growth and Tax Relief Reconciliation Act of 2001
increased the AMT exemption amounts, and the Jobs and Growth Tax Relief
Reconciliation Act of 2003 further increased the AMT exemption amounts.
These steps provided some relief to families, but for procedural
reasons, the current law's AMT relief will expire next year if we do
not enact H.R. 4227. While H.R. 4227 is a good proposal that deserves
our support today because it will help provide much-needed AMT relief
to workers, it is increasingly clear to me that the current income Tax
Code is fatally flawed and in dire need of a fundamental overall.
To that end, I have introduced legislation, H.R. 25, that moves the
Federal Government from an income tax-based system to a personal
consumption system by abolishing all Federal income taxes and the IRS
and replacing the Tax Code with a national retail sales tax on
consumers buying new goods and services. Enacting the Fair Tax would,
as just one example, solve the AMT problem for all families in the
United States.
Mr. Speaker, I urge my colleagues to join me in supporting this rule
so we may proceed with the debate on the underlying legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I thank the gentleman from Georgia (Mr. Linder) for the
time, and I rise today in opposition to the underlying bill and the
closed rule providing for its consideration.
Once again, my friends on the Republican side have come to this floor
in a restrictive manner stifling debate before it is even allowed to
begin. The majority preaches fairness and inclusiveness while
practicing and maintaining an agenda that divides and obstructs.
The gentleman from Georgia (Mr. Linder) previously suggested it is a
fair rule because it allows for a Democratic substitute. With all due
respect to the gentleman, this rule is anything but fair, and it is far
from open. The rule does make in order an amendment offered by the
gentleman from New York (Mr. Rangel), the ranking member on the
Committee on Ways and Means. The Rangel substitute is far more
encompassing than the Republican proposal, easier to understand, and
most importantly, it pays for itself.
Despite making this amendment in order, the rule blocks the gentleman
from Washington (Mr. Baird) from offering an amendment dealing with the
deductibility of State income taxes or State sales taxes. Yesterday
evening, the Baird measure came to the Committee on Rules. The
gentleman from Washington asked that his amendment be made in order
under the rule. In typical fashion, Republicans are blocking what they
may not be able to defeat. Just like Shakespeare wrote, a rose by any
other name would smell as sweet; a closed rule will always stink, and
not even dozens of roses could blanket this stench.
The so-called Middle-Class Alternative Minimum Tax Relief Act that
the House will consider later today is just another example of the
majority's recklessly irresponsible tax agenda, not to mention creative
naming practices. Even at first glance, this bill fails America's
middle class. Folks, it raises taxes on the middle class. I do not know
about the rest of my colleagues, but I have a pretty tough time making
the argument in the district that I am proud to represent that a
household income between $100,000 and $200,000 is middle class because
in the district I represent, the average household income is barely
$31,000.
In that district that I am proud to represent, $100,000 in household
income is upper class by any definition; yet this is the income level
that the majority continues to use as an example when making the case
to eliminate the AMT.
{time} 1045
The majority maintains that extending AMT exemptions help the middle
class. I say it neglects America's real middle class. It raises their
taxes. If Congress is serious about helping middle-class families, then
it ought to use the $18 billion we are spending on the AMT extension
this year alone and invest in the public schools which middle-class
children attend. Congress should use the $18 billion and invest in
health insurance for the 8.1 million uninsured middle-class Americans.
Furthermore, 1-year fixes do not solve our problems. Over a 10-year
period, this really will cost us $559 billion. It would be easier to
eliminate the entire income tax. It would cost us less than what the
Republicans are proposing under the AMT provisions that they offer.
Or if we really want to make a statement about our priorities,
Congress should dedicate this $18 billion to the transportation
reauthorization bill, a bill that a colleague of ours noted last week
is currently stuck in a Republican legislative traffic jam. If we take
this $18 billion and add it to the nearly $96 billion that we spent
last week in eliminating the marriage tax, we have got ourselves more
than 110 billion in
[[Page H2557]]
new dollars to invest in America's transportation and infrastructure.
At the same time, we would be creating some 4.6 million new jobs.
Congress could have the $375 billion transportation bill that America
needs without any increase in the gas tax and avoiding a Presidential
veto. Instead, the majority chooses to cut taxes at the expense of our
national priorities.
Mr. Speaker, I do not know any tax cuts that can teach high school
algebra. I certainly cannot recall ever meeting a tax cut that could
build a road. But I do know the Bush administration tax cuts, that 3
years of those have stalemated this body to the point that we are
unable to adequately address long-term unemployment, an increasing
number of uninsured people, escalating costs for health care, the
uncertainty of an aging Social Security program, and an inadequate
transportation system in this great country of ours. Three years of the
Bush administration tax cuts have resulted in the largest deficit in
the history of America, the greatest decline in household income in
nearly 40 years, and an economy that is showing no immediate signs of
recovery to help the more than 8 million unemployed Americans. Most
important, tax cuts affect our ability to provide for America's
military.
Let me send a message to President Bush and his minions. We cannot
have guns and butter and ice cream as they propose. Our country has
serious needs. Mr. Speaker, the underlying resolution neglects all of
them. For that reason and that reason alone, Members should stand up
against the interests of a few at the expense of all. I urge my
colleagues to oppose this closed rule and reject the underlying
resolution.
Mr. Speaker, I reserve the balance of my time.
Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume to
comment on the gentleman's opening statement. The gentleman from
Washington did not show up at the committee to pursue his proposed
amendment. And it is regular order for the Committee on Rules not to
allow an open amendment process in bills that come out of the Committee
on Ways and Means.
Lastly, let me just applaud the gentleman for saying we should get
rid of the IRS. I welcome him as a cosponsor on H.R. 25.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
Most respectfully, my friend from Georgia has misspoken. If he reads
my comment, he will understand that I said the Baird measure was
proposed before the Committee on Rules last night. I was there like the
gentleman from Georgia was. I do know, as a matter of fact, the
gentleman from New York (Mr. Israel) presented the measure, and it was
not accepted by us.
Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr.
Frost), the ranking member of the Committee on Rules.
(Mr. Frost asked and was given permission to revise and extend his
remarks.)
Mr. FROST. Mr. Speaker, I thank the gentleman from Florida for
yielding me this time.
The alternative minimum tax was originally intended to provide
fairness for all taxpayers by requiring wealthy individuals to pay
their fair share of taxes. Unfortunately, the alternative minimum tax
is affecting more and more middle-class families. Middle-class families
clearly should not be subject to the AMT, and I am glad we are looking
at solutions to end this unfairness today.
But there is another tax issue that affects millions of Americans and
that I think deserves the chance to be debated today, the issue of
State sales tax deductibility. Since the sales tax deduction was
eliminated in 1986, citizens from States that do not have State income
taxes, such as my home State of Texas, have been unfairly punished.
While taxpayers living in States that impose an income tax are entitled
to deduct their State income taxes from their Federal tax bill, those
living in States without income taxes do not receive an equivalent
deduction for the sales tax. The result is that citizens of States like
Texas, Florida, Washington State, and Tennessee are paying more to the
IRS than are citizens of other States.
I do not think this is fair, Mr. Speaker. All taxpayers should be
treated equally regardless of their State's tax system. A number of
Members from both sides of the aisle have introduced measures to
reinstate the sales tax deduction, and I think it is high time that
this House consider their proposals.
Last night in the Committee on Rules, I offered an amendment to the
rule brought forth by the gentleman from Washington (Mr. Baird). His
amendment would restore fairness to the Federal tax system by allowing
taxpayers who have no State income taxes to instead deduct their State
and local sales taxes. Unfortunately, the Rules Committee majority
defeated my amendment. Mr. Speaker, I do not think that is right. This
House has debated dozens of other tax bills, but the Republican
leadership will not allow this House to debate an issue that penalizes
millions of American taxpayers.
Mr. Speaker, this is not a partisan issue. It is a matter of
fairness. If this House is to be presented the tax bill of the week for
the foreseeable future, I cannot understand why the Republican
leadership will not allow the House to even consider an issue that will
provide equity for the people of my State and six others. I think the
American people deserve a full and honest debate on this matter.
Consequently, so that the House might be allowed to consider the
sales tax deduction, we will attempt to defeat the previous question.
If the previous question is defeated, we will offer an amendment to the
rule allowing for the consideration of the gentleman from Washington's
proposal to reinstate the State sales tax deduction for those States
that do not have a State income tax. This may well be the only chance
Members have to take a stand on this issue.
I urge my colleagues to vote ``no'' on the previous question so that
this House may consider reinstating the sales tax deduction and so our
constituents know where we stand on the issue of reinstating this
deduction.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I note that all of my
Republican colleagues who have such great interest in this AMT are just
showing up in great numbers to speak on this measure.
Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr.
Cooper).
(Mr. Cooper asked and was given permission to revise and extend his
remarks.)
Mr. COOPER. Mr. Speaker, I would urge all of our Members who are from
Texas, Washington, Florida, South Dakota, Tennessee, Nevada, or Wyoming
to pay close attention. This may be your best time, it may be your only
time in your congressional career to get basic Federal income tax
fairness for your State. Let me repeat. If you are from Texas or
Florida or Wyoming or South Dakota or Tennessee or Washington, this may
be your only chance to get basic tax fairness for the citizens of your
State. This is not a partisan issue. This is an issue of basic
unfairness that has existed in this country since 1986 when the tax
laws changed to deprive the citizens of our States basic tax fairness.
The citizens of those States I just named, Texas, Florida, Tennessee,
Washington, South Dakota, Nevada, Wyoming, pay more Federal income tax
per capita than citizens equally positioned in other States. Why?
Because our basic tax mechanisms are the sales tax, not the State
income tax, and we cannot deduct the State sales tax from our Federal
income. So this is your best chance, this is your only chance, and you
must vote against the previous question. That idea is anathema to some
of our colleagues, but I think we need to rise above the petty
proceduralisms of this House, rise above what your House leadership may
be telling you or not telling you; and this is a choice to stand up
with your people back home or to obey the rules of Washington.
Let us stand up for our people back home. Let us get basic tax
fairness to our citizens. To do that, you have to vote against the
previous question. This is not an ordinary vote on a regular Wednesday
in Washington, D.C. This is your best chance, this is your
[[Page H2558]]
only chance to get tax fairness for your people back home.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I would urge our colleagues who
are back in their offices and committees to come on down here and
explain to the middle class in America why this AMT is not a tax
increase on them.
Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr.
Davis).
Mr. DAVIS of Tennessee. Mr. Speaker, I compliment my colleague from
Tennessee for the remarks he has just made. Having served in the
Tennessee State legislature in both the House and the Senate, one of
the issues that was debated and discussed so often in both of those
chambers, in both the House and Senate in Tennessee, is how can we
bring tax fairness from the Federal level to those of us who live in
States that only fund education through a sales-tax-based revenue
stream. Our Speaker of the Senate was so fond of saying, ``Uncle Sam
taxes taxes.'' In fact, that is exactly what this Congress and what
this Federal tax structure does to States who choose not to have an
income tax. We tax taxes. That is certainly not what we intend, but
that is the fact. We allow States who impose an income tax, either
local or on the State level, on individuals who live in those States a
deduction for the tax that they pay in State taxes to be deducted from
the Federal income tax, but we do not allow those of us who live in
States such as Tennessee who choose to manage their governments better,
perhaps, than most by not imposing a tax on income.
In this Nation, we tax assets, a person's home. We tax purchases of
food and clothing in the State that I live in and nonprescription
drugs. Other States tax income. We have chosen not to do that. As a
result of the tax bill that passed in 1986, you are imposing a tax on
tax for those of us who choose to manage our States better, perhaps,
than other States. I ask my colleagues to vote against the previous
question.
Mr. LINDER. Mr. Speaker, I would like to just take enough time to
remind the gentleman that the 1986 tax act was called the Bradley-
Gephardt bill.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. The name of the bill, Mr. Speaker, does not
make it any more correct. The problem still exists.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr.
Lampson).
Mr. LAMPSON. Mr. Speaker, I also want to say it does not matter what
you call it. If it is inequity, it is inequity. If it is not fair, it
is not fair. That is what I want to talk about this morning in this
debate. We have lost the issue of a simple matter of equity and
fairness.
I spent 19 years as a property tax collector in the State of Texas.
My whole goal in assessing value to property was to make sure that no
property owner, no taxpayer paid an unfair burden in comparison to the
others. Our Tax Code unfairly penalizes those who live in States where
there is no local or State income tax, which includes my State of
Texas. Just as I cannot accept discrimination on how our government
treats individuals, I do not want to accept discrimination in how our
government taxes our citizens across the board. My colleague from
Washington State knows this all too well, and that is why his proposed
amendment is so important and timely, because it restores sales tax
deductibility for residents of States with no local or State income
taxes.
As current law stands, residents in States with local or State income
taxes can deduct those amounts from their Federal taxes. So I ask you,
where is the fairness for our hardworking, tax-paying citizens? Texas
is one of nine States with no income tax; and as a result of the 1986
Federal tax reform law, regardless of who wrote it and who voted for
it, that does not matter. That happened then, today is today. Sales
taxes are not deductible. As a result, we are not treating all
taxpayers in this country equally. Consider this: if Texans could
deduct what they pay in State and local sales taxes, they could keep
more than $700 million. That is a lot of money. That is money that the
hardworking citizens of southeast Texas and the gulf coast region in my
district could use to care for their senior citizens, pay their daily
bills, use for unexpected emergencies, or even help offset our rising
cost of school property taxes at home.
{time} 1100
My colleague from Washington's proposed amendment offers a smart and
simple fix and lets us remedy one part of our tax code so we can focus
on reforming the rest of it. This money belongs to the residents of
Texas, and by golly, if all other Americans get to deduct part of their
taxes, then Texans should get to keep it as well. Let us vote against
this previous question.
And this amendment would be limited to just one year, so it is not a
permanent measure--I cannot think of anything more reasonable for us to
consider.
After all, that's what equity is all about, and since it seems lately
that all we are considering are tax bills, well then we might as well
consider this one too.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, how much time remains on each
side?
The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Florida (Mr.
Hastings) has 14 minutes remaining, and the gentleman from Georgia (Mr.
Linder) has 26 minutes remaining.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
Twenty-six minutes for those people who believe in this measure to
come down here and prove to America that their provision on the AMT is
not a tax increase on middle class America, yet they are not using that
time.
Mr. Speaker, I yield three minutes to the gentleman from Texas (Mr.
Stenholm), my good friend and good student of this process.
(Mr. STENHOLM asked and was given permission to revise and extend his
remarks.)
Mr. STENHOLM. Mr. Speaker, I rise in strong opposition to the
previous question so the House might be able to consider the Baird
amendment restoring the deduction for sales tax, State sales taxes.
This is one of those issues that I wish the Committee on Ways and
Means would have brought to the floor of the House 2 years ago. The AMT
question is a very serious question of which there is a lot of concern
about. But this is not the way to handle it in the bill today and the
tax cut of the week, and obviously the lack of participation by my
friends on the majority side shows how political this is and how
substance is being thrown away.
But I want to talk about the State sales tax deduction which was
eliminated in 1986. Citizens from States that do not have State income
taxes such as my home State of Texas have been unfairly penalized.
While taxpayers living in States that have an income tax are entitled
to deduct their State sales taxes from federal taxes, folks living in
States without income taxes do not receive an equivalent deduction. And
my State is now in the process of increasing the sales tax on all
citizens of Texas, which will compound the problem that we are talking
about today. The result is that citizens of States like my State of
Texas are paying more taxes than are citizens in other States with
identical incomes, and I do not understand why the Committee on Ways
and Means does not take up the question of tax fairness.
The Baird amendment would restore fairness to the Federal tax system
by allowing taxpayers who have no State income taxes to, instead,
deduct their State and local taxes. Why not? What is wrong with that?
Why not have a discussion of that on the floor instead of the tax cut
of the week, which is purely for political purposes that will show up
in campaign ads all over the United States as evidenced by the lack of
participation in the substance of that which we are talking about
today?
I also believe that the fundamental bill, if we are going to have to,
on the floor, ought to be paid for. I agree that this exemption of
State sales taxes will cost an estimate of $1.2 billion, but it ought
to be paid for and it should be paid for in the interest of fairness.
States should be able to decide for themselves whether or not they want
to adopt an income tax instead of being pressured to do so because the
Tax Code is biased in favor of a State income tax instead of a State
sales tax.
What is wrong with that picture? Why can we not have a serious debate
[[Page H2559]]
on this floor about tax reform? Instead of just talking about it in
campaign slogans, which we do, flat tax, et cetera, a fundamental
question, why can the Committee on Ways and Means not take up the bill
that they bring to the floor today and have a serious discussion of
that within the committee? Why not let Members in a bipartisan way
participate in these issues? Instead, it is a campaign issue. If they
want a campaign issue, this is a campaign issue.
In Texas, the inability of Texans to deduct sales taxes should be an
issue on the hearts and minds of every single Texan, and the vote on
the previous question will clearly identify in this body who is in
favor of fairness and who is not.
Vote against the previous question. Allow fairness to be discussed on
the House floor.
Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, by continuing the exemption for another year, 1 year,
Republicans are incrementally trying to postpone the day of reckoning
with the AMT. At some point a decision will have to be made to, number
one, repeal some of President Bush's tax cuts or, number two, index the
AMT for inflation at a cost of roughly $370 billion or, number three,
eliminate the AMT altogether at a cost of $600 billion without the Bush
tax cuts, or $900 billion if President Bush's tax cuts remain beyond
2010.
What I just said is a part of inside baseball that at best we could
feed to the goats the language that we employ here. The mythical Ms.
Johnson and Jane and Joe Lunch Bucket understand only one thing and one
thing only, that we need to have a debate on how it affects them. No
one comes into my office talking about an AMT. But people come into my
office talking about health care. People come into the office of our
all of us talking about education. People come to our offices to talk
about supporting the military in an adequate fashion. And countless,
thousands, of Americans come to us talking about either being uninsured
or needing to have incentives for small businesses. And yet we find
ourselves unable to have a discussion in this House of Representatives
that is meaningful as far as economics are concerned. What we get are
campaign gimmicks and fancy names of things that do not become the law.
This measures has passed the House of Representatives before. If the
American people wanted it to be law, they would be in our offices
saying they want this to be the law. We cannot get ten people in most
of our communities to write a decent paragraph on what the alternative
minimum tax really is. I dare say we could not get a whole lot of
Members of the House to do likewise.
With that in mind, it is a confusing set of circumstances that is a
1-year fix. If you think so much of it, why did you stay in your
offices and not come down here and explain to the American public why
the middle class will not experience a tax increase over the haul of 10
years? What you do is you reduce the income taxes, then you eliminate
the AMT on one hand and you take from the right hand and give to the
left hand.
To correct my friend from Georgia, who will have the last word on
this subject, correctly so, because he and his Members are in the
majority, let me give him a summary of the motion that he brought to
the House of Representatives. It says ``Providing for Consideration of
H.R. 4227, Middle-Class Alternative Minimum Tax Relief Act of 2004, Mr.
Linder, from the Committee on Rules, submitted the following.''
I shall not read the entire report, but since he took it upon himself
to say that the Baird measure was not before us, I shall only refer to
the language of the motion offered by the gentleman from Texas (Mr.
Frost) last night when the gentleman from Georgia (Mr. Linder) and I
were in the Committee on Rules.
``Summary of motion: To make in order and provide the appropriate
waivers for the amendment offered by Representative Baird.'' Do not
challenge me when I say that that was what was brought to us. That
measure was defeated six to five by the majority, and I say today we
have a chance to remedy that problem if Members, particularly those
from Florida, were to see my Republican colleagues from Florida come
down here and say that this is not a sound measure when all we have is
a sales tax and right up the street somebody else with an income tax
can deduct it from their Federal tax offering and we are unable to do
this so. Fair is fair. This measure is not fair.
Mr. Speaker, I will be asking Members to vote ``no'' on the previous
question. If the previous question is defeated, I will offer an
amendment to the rule that will allow the House to vote on the Baird
sales tax equity amendment that was offered in the Committee on Rules
last night but not allowed by the Republican leadership. I think
Members deserve an opportunity to vote on this important amendment. I
want to point out that this is not a partisan amendment. It has support
from both sides of the aisle as was demonstrated in the Committee on
Rules vote yesterday.
The Baird amendment would allow taxpayers who itemize their
deductions the option to deduct their State income tax or sales taxes
paid in a given year. The option for deduction of sales taxes was
available to taxpayers until 1986 when it was eliminated. The gentleman
from Georgia (Mr. Linder) said that the gentleman from Missouri's (Mr.
Gephardt) name was on that. I remind him that it was signed by
President Ronald Reagan. However, taxpayers in those States with a
State income tax still retain the ability to deduct those taxes. The
loss of the State sales tax option was particularly tough for taxpayers
in States with no income tax like my own State of Florida.
As a result, people in my State and others similarly situated pay
more taxes than people with identical taxable incomes in States that
have a State income tax. It is very important that we equalize the tax
relief for citizens in those States without the State income taxes.
Let me emphasize that a ``no'' vote on the previous question will not
stop consideration of H.R. 4227, the Middle-Class Alternative Minimum
Tax Relief bill. But it will allow the House to vote on reinstating the
sales tax deduction option and correct the current tax inequity. But a
``yes'' vote will block Members from an up or down vote on this
important tax relief.
Again, I urge a ``no'' vote on the previous question.
Mr. Speaker, I ask unanimous consent that the text of the amendment
be printed in the Record immediately prior to the vote on the previous
question.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. HASTINGS of Florida. Mr. Speaker, I yield back the balance of my
time.
The material previously referred to by Mr. Hastings of Florida is as
follows:
In the resolution strike ``and (3)'' and insert the
following:
``(3) the amendment printed in Sec. 2 of this resolution if
offered by Representative Baird of Washington or a designee,
which shall be in order without intervention of any point of
order, shall be considered as read, and shall separately
debatable for 30 minutes equally divided and controlled by
the proponent and an opponent; and (4)''
Sec. 2. The amendment referred to in (3) follows:
At the end of the bill insert the following new section:
SEC. 3. DEDUCTION OF STATE AND LOCAL GENERAL SALES TAXES IN
LIEU OF STATE AND LOCAL INCOME TAXES.
(a) In General.--Subsection (b) of section 164 of the
Internal Revenue Code of 1986 (relating to definitions and
special rules) is amended by adding at the end the following:
``(5) General sales taxes.--In the case of taxable years
beginning during 2004, for purposes of subsection (a)--
``(A) Election to deduct state and local sales taxes in
lieu of state and local income taxes.--
``(i) In general.--At the election of the taxpayer for the
taxable year, subsection (a) shall be applied--
``(I) without regard to the reference to State and local
income taxes,
``(II) as if State and local general sales taxes were
referred to in a paragraph thereof, and
``(III) without regard to the last sentence.
``(B) Definition of general sales tax.--The term `general
sales tax' means a tax imposed at one rate with respect to
the sale at retail of a broad range of classes of items.
[[Page H2560]]
``(C) Special rules for food, etc.--In the case of items of
food, clothing, medical supplies, and motor vehicles--
``(i) the fact that the tax does not apply with respect to
some or all of such items shall not be taken into account in
determining whether the tax applies with respect to a broad
range of classes of items, and
``(ii) the fact that the rate of tax applicable with
respect to some or all of such items is lower than the
general rate of tax shall not be taken into account in
determining whether the tax is imposed at one rate.
``(D) Items taxed at different rates.--Except in the case
of a lower rate of tax applicable with respect to an item
described in subparagraph (C), no deduction shall be allowed
under this paragraph for any general sales tax imposed with
respect to an item at a rate other than the general rate of
tax.
``(E) Compensating use taxes.--A compensating use tax with
respect to an item shall be treated as a general sales tax.
For purposes of the preceding sentence, the term
`compensating use tax' means, with respect to any item, a tax
which--
``(i) is imposed on the use, storage, or consumption of
such item, and
``(ii) is complementary to a general sales tax, but only if
a deduction is allowable under this paragraph with respect to
items sold at retail in the taxing jurisdiction which are
similar to such item.
``(F) Special rule for motor vehicles.--In the case of
motor vehicles, if the rate of tax exceeds the general rate,
such excess shall be disregarded and the general rate shall
be treated as the rate of tax.
``(G) Separately stated general sales taxes.--If the amount
of any general sales tax is separately stated, then, to the
extent that the amount so stated is paid by the consumer
(other than in connection with the consumer's trade or
business) to the seller, such amount shall be treated as a
tax imposed on, and paid by, such consumer.
``(H) Amount of deduction to be determined under tables.--
``(i) In general.--The amount of the deduction allowed
under this paragraph shall be determined under tables
prescribed by the Secretary.
``(ii) Requirements for tables.--The tables prescribed
under clause (i)--
``(I) shall reflect the provisions of this paragraph,
``(II) shall be based on the average consumption by
taxpayers on a State-by-State basis, as determined by the
Secretary, taking into account filing status, number of
dependents, adjusted gross income, and rates of State and
local general sales taxation, and
``(III) need only be determined with respect to adjusted
gross incomes up to the applicable amount (as determined
under section 68(b)).''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2003.
Amend the title so as to read: ``A bill to amend the
Internal Revenue Code of 1986 to extend to 2005 the
alternative minimum tax relief available in 2003 and 2004 and
to allow a temporary election to deduct State and local
general sales taxes in lieu of deducting State and local
income taxes.''.
Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume.
I merely point out that the majority party will be here to discuss
the merits of the bill. The last debate has been on the rule,
irrespective of the debate we heard from the other side, which was
neither on the rule nor on anything in the rule nor on the merits of
the bill. So I will urge my colleagues to come and pass the previous
question, pass the rule, and get on with the debate on the bill, which
is the extension of the AMT exclusion.
Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. HASTINGS of Florida. Mr. Speaker, I object to the vote on the
ground that a quorum is not present and make the point of order that a
quorum is not present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Pursuant to clause 9 of rule XX, the Chair will reduce to 5 minutes
the minimum time for electronic voting, if ordered, on the question of
adoption of the resolution.
The vote was taken by electronic device, and there were--yeas 220,
nays 201, not voting 12, as follows:
[Roll No. 142]
YEAS--220
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NAYS--201
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Chandler
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Ford
Frank (MA)
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NOT VOTING--12
Ballance
Barton (TX)
Bono
Boyd
DeMint
Filner
Greenwood
Kaptur
Reynolds
Solis
Tauzin
Walsh
{time} 1139
Messrs. MARKEY, RAHALL, DELAHUNT, HOEFFEL, SPRATT,
[[Page H2561]]
MOLLOHAN, THOMPSON of Mississippi, and OBEY, and Ms. CARSON of Indiana
and Mrs. JONES of Ohio changed their vote from ``yea'' to ``nay.''
Mrs. CUBIN changed her vote from ``nay'' to ``yea.''
So the previous question was ordered.
The result of the vote was announced as above recorded.
Stated against:
Mr. FILNER. Mr. Speaker, on rollcall No. 142, I was unavoidably
detained, and I missed the vote. Had I been present, I would have voted
``nay.''
Mr. BALLANCE. Mr. Speaker, I was not present for rollcall vote No.
142. Had I been present, I would have voted ``nay.''
Ms. SOLIS. Mr. Speaker, during rollcall vote No. 142 on previous
question on H. Res. 619, I was unavoidably detained. Had I been
present, I would have voted ``no.''
The SPEAKER pro tempore (Mr. Kolbe). The question is on the
resolution.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. ENGLISH. Mr. Speaker, pursuant to House Resolution 619, I call up
the bill (H.R. 4227) to amend the Internal Revenue Code of 1986 to
extend to 2005 the alternative minimum tax relief available in 2003 and
2004 and to index such relief for inflation, and ask for its immediate
consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 619, the bill
is considered read for amendment.
The text of H.R. 4227 is as follows:
H.R. 4227
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 at the ``Middle-Class Alternative
Minimum Tax Relief Act of 2004''.
SEC. 2. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF TO 2005.
(a) In General.--Subparagraphs (A) and (B) of section
55(d)(1) of the Internal Revenue Code of 1986 are each
amended by striking ``and 2004'' and inserting ``, 2004, and
2005''.
(b) Inflation Adjustment.--Subsection (d) of section 55 of
such Code is amended by inserting after paragraph (3) the
following new paragraph:
``(4) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in calendar year 2005, the $58,000 amount contained
in paragraph (1)(A) and the $40,250 amount contained in
paragraph (1)(B) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2003' for `1992' in
subparagraph (B) thereof.
``(B) Rounding.--Any increase determined under subparagraph
(A) which is not a multiple of $50 shall be rounded to the
next lowest multiple of $50.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004.
The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall
be in order to consider an amendment in the nature of a substitute
printed in House Report 108-477, if offered by the gentleman from New
York (Mr. Rangel) or his designee, which shall be considered read, and
shall be debatable for 1 hour, equally divided and controlled by the
proponent and an opponent.
The gentleman from Pennsylvania (Mr. English) and the gentleman from
New York (Mr. Rangel) each will control 30 minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. English).
Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today the House will consider one of the most important
bills from the standpoint of tax equity that we will consider this
year, the Middle-Class Alternative Minimum Tax Relief Act, a bill to
make sure that the tax cuts which allowed middle-class families to keep
more of their income over the past 3 years will not be undermined by
the Alternative Minimum Tax.
There is little dispute, certainly none outside of this Chamber, that
the Republican tax cuts helped families cope with economic
uncertainties and played a significant role in stimulating the economic
growth that we are seeing today. But if we do not act now to give the
taxpayers another year of reprieve, the AMT will suddenly reappear and
11 million taxpayers will be hit with an average tax increase of
$1,520.
Mr. Speaker, by preventing middle-class Americans from claiming their
rightful exceptions from tax liability, the AMT punishes families with
children or those who live in high tax localities. If we do not act,
married couples will see their AMT exceptions snap back from a
threshold of $58,000 to $45,000. Single individuals will see their AMT
exception drop from $40,250 to $33,750.
Mr. Speaker, let us be clear about this. These are not wealthy
people. These are middle-class Americans who would be slapped with a
steep tax hike that they would not know about until tax day, when they
learn that the tax exemptions that they thought they could take, the
same tax exemptions we intended for them to take and told them we were
giving them, would no longer apply.
For example, a family of four with a household income of $58,000
would, in 2005, be hit with the AMT. I am sure that no one here would
seriously argue that that family is wealthy.
Today, the House has the opportunity, indeed, the duty, to extend AMT
relief for 1 year and to ensure that middle-class Americans are not
faced with an increase in their tax liability; and we must do this
without raising taxes someplace else and stifling growth and killing
jobs.
Mr. Speaker, this is an important measure to buy us time to truly
reform the AMT and, as I hope, to repeal this regressive tax entirely.
I have taken it upon myself to work with a number of colleagues,
including the gentleman from Louisiana (Mr. McCrery), a fellow member
of the Committee on Ways and Means, to form a Zero AMT Caucus. We will
have our day; but in order to get there, we need to pass this bill
today on behalf of working families.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me join in with the gentleman from Pennsylvania in
trying to work to eliminate this burden that has been placed on people
that it was never intended to penalize. But, Mr. Speaker, before we can
work together on this issue, the issue has to come before our
committee. Is that not a novel idea, a tax bill coming before the
Committee on Ways and Means?
{time} 1145
Why is it that we yield our authority, our jurisdiction to the
Committee on Rules? Is this not something that should not be a partisan
issue? Is this bill, this AMT, not adversely affecting Democrats and
Republicans and liberals and conservatives? Why do we have to, in the
middle of the night, shift this over to the Committee on Rules and then
come to the House floor and say we want to spend $167 billion to go
into debt but we only want to do it for 1 year? That is truly unfair.
Why do you give away tax relief for the marriage penalty and then
take it back away with the alternative minimum tax? Why do we have this
sloppy way to develop a Tax Code that is so complicated that it takes
hours for people to try to get the benefits that we say we are giving
to them?
So what I am saying to my friend from Pennsylvania, please do not
tell us how you have got to struggle to make this permanent. Tell us
how we can get the jurisdiction back in the Committee on Ways and
Means.
It would be wonderful if you were saying that we were going to
schedule hearings on this so witnesses can come forward. And while you
are doing that, would you please tell the American people whether they
are providing this tax relief at the expense of the debt that they are
giving their children and grandchildren.
Would it not be good to know how you intend to pay for this? Where do
we get the $17 billion? Do we take it away from DOD as we fight in
Iraq? Do we take it away from homeland security or do we borrow it so
the Chinese can buy our debt?
I do not know. I am 74 so it may not be my problem, but it may be the
problem of our children and our grandchildren, as we give relief, which
we should give on a permanent basis in one hand, and then we take it
back from our children and our grandchildren. This is no place to
legislate this complex legislation.
[[Page H2562]]
I just hope that no matter what happens at the end of this year, that
somebody has the guts to say that tax legislation should come from the
Committee on Ways and Means and not the distinguished Committee on
Rules.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I ask unanimous consent that the gentleman from
Washington (Mr. McDermott) be allowed to control the remainder of my
time.
The SPEAKER pro tempore (Mr. Kolbe). Is there objection to the
request of the gentleman from New York?
There was no objection.
Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds.
Mr. Speaker, I note that this issue has come up repeatedly before the
Committee on Ways and Means. The Committee on Ways and Means has
repeatedly worked its will on this issue and it has made very clear
that it is committed to this kind of exemption. The Committee on Ways
and Means is clearly in the loop in this.
Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr.
Crane), a distinguished member of the Committee on Ways and Means.
Mr. CRANE. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, in 1969 Congress enacted the individual alternative
minimum tax, AMT. The purpose of this tax was to require that all
taxpayers pay some tax on their income. We can have a debate about the
merits, or lack thereof, of the AMT and I hope that in time we will.
Many of the provisions of the Tax Code that gave rise to the AMT do
not exist today and have not existed for many years. However, today a
more immediate issue confronts us. Mr. Speaker, the Clinton tax
increase of 1993 increased the AMT tax rate but failed to adjust the
exemption numbers for inflation. As a result of this tax increase,
millions of American families, middle income families are forced to pay
the AMT each year.
President Bush's 2001 and 2003 tax relief bills increase the AMT
exemption amount from $45,000 to $58,000 for married couples and from
$33,750 to $40,250 for single individuals. These increases ensure that
the AMT is the result of the tax relief provided in the 2001 and 2003
tax relief laws do not hit middle income families. However, if we do
not act now, this relief will expire at the end of this year. As time
goes on and as inflation and costs increase, the number of taxpayers
subject to the AMT increases.
If we do not act, over one million single filers and seven million
married filers will be caught up in the AMT. The legislation before us
today will extend the 2003 tax relief through 2005 and will adjust the
exemption amount for inflation. Single filers earning up to $40,900 and
married couples earning up to $58,950 will be exempt from the AMT.
Mr. Speaker, millions of middle class Americans run the small
businesses that are the backbone of our economy. It is private
citizens, not the Federal Government, that create this Nation's wealth
and pay this Nation's taxes. If we do not act today, nearly eight
million middle class taxpayers will suffer from our inaction. That is
unconscionable and I urge my colleagues to support this legislation.
Mr. McDERMOTT. Mr. Speaker, I yield myself 5 minutes.
Mr. Speaker, this is one of those days when we come out here and try
to fix a problem the Republicans created for themselves. Ever since you
have been in charge of this place, you did not want to have regular
order. You wanted to run bills through the committees without having
any witnesses come in and talk about them. You would not listen to what
people said to you. And now you have a big problem on your hands and
you want to come out again today and put one more Band-Aid on a program
that you put a Band-Aid on last year, and you will be back next year
and next year and next year because you never understood what you were
doing.
Now, when this bill went into effect in 1987, it was designed to tax
those people who made lots of money and paid not one penny. That is
what it was about. It affected .1 percent of the payers in this
country. And the same was true even with the adjustments that we made
in 1993 when I was here. The numbers were essentially the same, around
.2 percent of taxpayers. Today we are looking at 25 percent of the
people in this country are having to figure their taxes twice, because
the Republicans made all those tax cuts in 1997 and paid absolutely no
attention to what was going on.
If you live in a high tax State like New York or like California or
like a lot of the progressive States in this country, and you have a
couple of kids, you cannot deduct the money you pay in State taxes. You
cannot deduct the money you pay in local taxes. You cannot deduct the
deductions for your children. That is why it is sweeping down into the
middle class. Half of the households who will be paying this tax are
making less than $100,000 a year and over a third of them will be
paying between 50 and $75,000.
Now, consider we made these great big tax cuts, we gave $112,000 to
people making more than a million and we gave $676 to people in the
average income range in this country. And then we turn around and slap
them with the AMT tax. Most Americans do not know what the AMT is. It
is called, for those of you watching this on television including
somebody at the White House maybe, alternative minimum tax. It means if
you are not paying enough income tax, then you have to pay this
alternative.
Now, what has happened because the Republicans messed it up so badly,
they have now swept up about a quarter of the taxpayers in the country
with it rising to a third if they do not do something about it, and
they have done that while they were busily helping their friends at the
top who were not paying taxes anyway.
Now, this bill is another, as I say, Band-Aid. We have an alternative
which will be offered by one of my colleagues from Massachusetts which
solves the problem in a much more reasonable way and gets the middle
class out of this tax trap.
Mr. Speaker, the following is an article from the Seattle Post-
Intelligencer which describes this whole program.
[From the Seattle Post-Intelligencer, Jan. 17, 2004]
Get Ready for the Alternative Minimum Tax
(By Mary Deibel)
Few Americans have heard of the alternative minimum tax,
but many taxpayers are about to find out that it's the
biggest financial setback they face, an IRS taxpayer advocate
says.
``Although the AMT was originally enacted to prevent
wealthy taxpayers from avoiding tax liability through the use
of tax avoidance techniques, it now affects substantial
numbers of middle-income taxpayers and will, absent a change
of law, affect more than 30 million taxpayers by 2010,''
taxpayer advocate Nina Olson said in her 508-page annual
report naming this parallel tax system taxpayer enemy No. 1.
Olson should know: State and local taxes pushed her into
the alternative minimum tax last year so now it is personal
as well as professional for her.
And it's about to get personal for lots of other taxpayers,
too. Absent action by Congress and President Bush, one in
four households will owe the alternative minimum tax by 2010.
Some 52 percent of them will be families making $100,000 or
less a year, including 73 percent of households making
$75,000 to $100,000 and 37 percent making $50,000 to $75,000.
Married couples--especially couples with lots of children--
are most apt to be hit by the alternative minimum tax, which
prohibits deductions for dependents along with write-offs for
mortgage interest, state and local taxes, medical expenses
and the like.
``It's a class tax that became a mass tax,'' says Urban
Institute economist Len Burman, who co-authored the study
projecting the future growth of the alternative minimum tax
unless the tax code is changed.
Congress enacted the tax in 1969 after being flooded with
mail protesting reports that 155 ultra-rich Americans gamed
the system to avoid paying a penny toward income tax.
The alternative tax has been on the books since then, never
indexed to inflation the way regular income taxes have been
since 1981.
The tax breaks President Bush and Congress enacted since
2001 expanding child tax credits, ``marriage penalty'' relief
and the like make it more likely taxpayers who try to claim
these write-offs will owe the alternative minimum tax.
The 2003 tax cut contains a temporary provision that will
help many families avoid the alternative minimum tax for just
one year.
Repealing the tax through 2010 would cost the Treasury $600
billion in revenue, according to the non-partisan Tax Policy
Center, a Washington think tank.
Meanwhile, taxpayer advocate Olson says taxpayers who might
owe the alternative minimum tax can expect to pay a higher
tax bill and spend an extra 12 hours preparing their 2003
taxes.
[[Page H2563]]
Many won't owe it, but they still must spend the extra
half-day on the paperwork, she says.
Mr. Speaker, the average citizen in this country is not aware what is
happening; and the Republicans are out here today, the reason they do
not want to have hearings in the committee is it might get on C-SPAN.
Some people might find out what was really going on in the tax
structure. But, no, we have to come out here, take it up to the
Committee on Rules in the middle of the night, slip it down on the
floor; and slam, bam, thank you, ma'am, it is out of here in an hour so
that people will not know how badly you have messed it up for the
middle class.
You have got to put these commercials on that say the middle class
have benefited immensely from our tax cuts, and then you run out here
to take the pain away that you are creating for them. And in my view,
it could all be stopped if you simply would follow the regular order
and allow this to be a debate in this House and about the issues that
you are changing. To go from .1 percent of the taxpayers to 25 percent
of the taxpayers, including people making between 50 and $75,000
without letting people ever, their representatives in the Congress, to
have an opportunity to explain that to the American people, is
absolutely unacceptable.
We will all vote for this bill, but it is another Band-Aid; and you
will be back here next year. I bet you a month of my salary on that.
Mr. Speaker, I reserve the balance of my time.
Mr. ENGLISH. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from Florida (Mr. Shaw), a member of the Committee on Ways
and Means.
Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me time.
To listen to the gentleman from Washington (Mr. McDermott) you would
think that the Republicans are the ones that invented this tax. This
was put in in the 1980s and under a Democrat Congress.
Also, I would like to remind the gentleman from Washington (Mr.
McDermott) that in 1993, I believe without a single Republican vote,
the rate was increased. We are trying now to roll some of this back. Is
it enough? No, it is not enough. We need to do more. In fact, we need
to kill this thing entirely, but until we can find the revenue, at
least this would get to the middle class people, people that it was
never intended to get, and to stop the bracket creep and the problem
that they are having.
These are folks that are struggling to educate their kids, to buy
groceries and pay their mortgages. They do not need an alternative
minimum tax. It has got to be done away with. It should be done away
with all the American taxpayers. This is a small step but it is a
meaningful step. And I would predict that we would get a unanimous or
near unanimous decision out of this House.
Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentlewoman from
New York (Mrs. Lowey).
Mrs. LOWEY. Mr. Speaker, I rise today on behalf of the more than 2
million taxpayers who are unfairly burdened by the alternative minimum
tax. As we know and it was explained today, it was designed in 1969 to
ensure that the wealthiest Americans would still pay a fair share of
taxes. The AMT now ensnares many middle income Americans in what was
once envisioned as an alternative minimum tax has become nothing short
of a mandatory maximum tax. And those it sought to protect have become
its greatest victims.
Let us be clear on what the AMT is not. It is not a technicality of
significance to only a few bureaucrats and the tax intelligentsia. It
is not a mere glitch, the repair of which would only help a handful of
disproportionately rich individuals. It is a system that affects 2.4
million families this year. A system that, if left unchecked, will
affect nearly 75 percent of families making $75,000 to $100,000. It is
a system that, in my district, can cost an individual making a good
living, but not a lavish living and taking itemized deductions,
thousands of dollars more in taxes each year.
In 2008, a family making over $50,000 with three children would be
affected. Any family with one child or more, 60,000 would be affected.
{time} 1200
Although I am pleased to see bipartisan support to act to ameliorate
the AMT, these temporary remedies will only be as valuable as the
permanent solutions developed in the interim. These measures have the
potential to help millions of families this year, but we must work
together to crack the system that protects all hardworking Americans
going forward.
I support the fiscally responsible Rangel substitute and urge my
colleagues to help put an end to the inequities of the alternative
minimum tax.
Mr. ENGLISH. Mr. Speaker, it is a great privilege for me to yield 4
minutes to the gentleman from Connecticut (Mr. Simmons), the prime
sponsor of this legislation and a real advocate for middle-class
taxpayers.
(Mr. SIMMONS asked and was given permission to revise and extend his
remarks.)
Mr. SIMMONS. Mr. Speaker, I thank my friend from Pennsylvania for
yielding me the time.
I rise today in support of the Middle-Class Alternative Minimum Tax
Relief Act of 2004, a bill that will prevent millions of middle-class,
middle-income Americans from paying higher taxes next year.
Mr. Speaker, when the IRS's national taxpayer advocate Nina Olsen
presented her annual report to Congress at the end of last year, she
deemed the AMT, or the alternative minimum tax, as ``the biggest
problem taxpayers face today.'' She did not say upper-income taxpayers.
She did not say top tax brackets. She did not say wealthy taxpayers,
but simply taxpayers. In fact, middle-class families with children are
becoming increasingly liable to come under the AMT for several reasons.
First, the baseline exemptions in this tax were never exempted for
inflation. So as more and more Americans have entered into the middle
class over the past 25 or 30 years, they have outrun the exemption and,
therefore, fallen into the AMT trap.
Secondly, the AMT has begun to fall especially hard on middle-class
families with children, the very people we in this body have aimed to
help, not hurt, with our tax laws. These Americans work hard, they play
by the rules, they pay their taxes year after year and are now sending
more of their earnings to the Federal Government because this tax does
not allow them to take the standard deduction for married couples, and
it does not allow them to enjoy individual exemptions for themselves
and their children.
What is more, as my colleague from New York has indicated, high-tax
States such as New York and Connecticut are much more likely to be
caught because the State, local, and personal property taxes are not
deductible. Connecticut is the most taxed State in the Nation; and this
year, around April 15, I heard from many of my constituents about the
AMT tax.
Just last week, on a radio call-in show, I heard from a constituent,
Rose Curran. She called in to complain about the AMT. Rose and her
husband, Dan, did not have to pay it this year, but they anticipate
that if we do not act they will pay it in the next couple of years.
Rose is a retired State employee whose only income is Social
Security. Dan is a Vietnam veteran, disabled, a retired sailor from the
U.S. Navy who now works as a civilian at the submarine base in Groton.
I do not consider Rose and Dan Curran what I would call wealthy or rich
people. They do not either, and yet they are concerned that if Dan
keeps working at the submarine base they will fall into this trap.
This is one of the reasons why I introduced the Middle-Class
Alternative Minimum Tax Relief Act of 2004, to extend through 2005 the
AMT relief provided in the 2003 law. This measure will ensure that
taxpayers who are currently exempt from the AMT will continue to be
protected because AMT will be indexed for inflation over the next year.
If this legislation is not enacted, Mr. Speaker, the number of
working families affected by the AMT will increase from over 3 million
this year to over 11 million in 2005. Here is a chart that illustrates
what will happen. We will go from 3 million to 11 million. If we enact
this legislation, we will remain at the 3 million.
Mr. Speaker, I urge all of my colleagues to join me today in support
of middle-class Americans like Dan and
[[Page H2564]]
Rose Curran of Norwich, Connecticut. I urge their support for this
legislation.
Mr. Speaker, I rise today to support my ``Middle-Class Alternative
Minimum Tax Relief Act of 2004,'' a bill that will prevent millions of
middle-class Americans from paying higher taxes next year.
In 1969, the Treasury Secretary testified before Congress that 155
individual taxpayers with incomes above $200,000 paid no Federal income
tax on their 1967 tax returns by taking advantage of the many
exemptions and deductions in the tax code. This revelation sparked an
immediate backlash from the American people. That year Congress
received more constituent letters regarding those 155 taxpayers than on
the Vietnam War.
Following this outburst from taxpaying constituents, legislation was
passed that created a minimum tax designed to ensure that wealthy
individuals could not escape income tax liability. It was termed the
alternative minimum tax or ``AMT,'' for short.
The AMT is a parallel tax system. You calculate your taxes under the
normal tax system and again under the AMT. Whichever one yields a
higher tax is the one you pay. The difference is that when calculating
the AMT you cannot take the standard deduction, child exemptions, or
deduct state, local, and personal property taxes. Without these
important deductions, the AMT often carries the higher price tag of the
two. Over three million American families discovered this just last
month when calculating their taxes. For them, the AMT became their
income tax.
Mr. Speaker, when the IRS's national taxpayer advocate, Nina Olsen,
presented her annual report to Congress at the end of last year, she
deemed the AMT to be the ``biggest problem taxpayers face today.''
I would urge my colleagues to note that Ms. Olsen said ``taxpayers.''
Not upper-income, not top bracket, not wealthy taxpayers, but simply
taxpayers. In fact, middle-class families with children are
increasingly liable to come under the AMT for several reasons.
First, the baseline exemptions in this tax were never indexed for
inflation. So as more Americans have entered the middle-class over the
past 30 years, they have ``outrun'' the exemption and therefore fallen
into the AMT trap.
Second, the AMT has begun to fall especially hard on middle-class
families with children--the very people who we in this body have aimed
to help not hurt with our tax laws. These Aemricans--who have worked
hard, played by the rules, and paid their taxes year after year--are
now sending more of their earnings to the Federal government because
this tax does not allow them to take the standard deduction for married
couples and it does not allow them to enjoy individual exemptions for
themselves and their children. The more children a family has, the more
likely they will be forced into the AMT.
What's more, if families hail from high-tax States like Connecticut
they are much more likely to be snared, as State, local, and personal
property taxes are not deductible under the AMT. I represent the most-
taxed state in the nation. This time of year I am hearing more and more
about the AMT.
Just last week while participating on a call-in radio program I heard
from a constituent of mine from Norwich, Connecticut. Rose Curran and
her husband, Dan, did not have to pay the AMT this year, but they did
owe Federal taxes for the first time in years. In going over their
return, they discovered the AMT and were curious about what it was.
Upon learning more about its current exemption levels, they realized
that this supposed ``tax for the rich'' may well affect them in future
years.
Rose is a retired State employee whose only income is social
security. Dan is a disabled Vietnam veteran and retired sailor who
works now as a civilian at the Subase in Groton. Mr. Speaker, I don't
think Dan and Rose Curran would call themselves ``rich.'' But they are
concerned that if Dan keeps working at the base they will fall into
this tax trap. During my conversation with Rose I urged her to follow
up with office and I promised that I would look into this matter.
When I did I was stunned. As one publication put it, this problem is
``growing like the monster from the tax lagoon.''
Today, the AMT exemption amount for a married couple is $58,000.
However, this relief is scheduled to expire at the end of the year.
Without action, the exemption amount will drop from $58,000 to $45,000
in 2005--raisinig taxes on millions of hard-working, middle-income
families beginning next year. The exemption for individual payers will
drop from $40,250 to $33,750 with the same result.
Therefore I have introduced the ``Middle-Class Alternative Minimum
Tax Relief Act of 2004,'' to extend through 2005 the AMT relief
provided in the 2003 law. This measure will also ensure that those
taxpayers that are currently exempt from the AMT will continue to be
protected from the AMT because it will be indexed for inflation over
the next year.
If my legislation is not enacted, Mr. Speaker, the number of working
families affected by the AMT will increase from over 3 million this
year to over 11 million in 2005. Let me repeat that--over 11 million
Americans will face this surtax next year without action on my bill
today. What's more, the 8 million new families paying the AMT will face
an average tax increase of $1,520 according to the Joint Committee on
Taxation.
I'm sure that many of my friends here today will say that this won't
solve the greater structural problems of this tax and that this is just
a temporary fax. There is some truth to that. Thanks in part to the
diligent work of people like my colleague from just next door, the
gentleman from Massachusetts, Mr. Neal, we all recognize the
seriousness of this issue and the need for a long-term solution. But
lets not get so mired in debating how to address the long-range
consequences of this problem that we fail to provide this critical
extension.
Mr. Speaker, what began as a way to make sure that high-income
Americans payed their fair share has today become little more than an
unfair surcharge on people who choose to get married, have children and
work their way into the middle class. My friends, the fireman and the
teacher making around $65,000 together are not rich. They work hard
every day to put food on the table, pay the mortgage, and save for
their children's education. They cannot afford high-priced accountants
to help them reduce their tax bill. But if this couple has three
children and takes the standard deduction, they WILL--according to
CRS--pay the AMT next year if we don't act. Lets make sure--with this
legislation--that next April people like Rose and Dan Curran do not pay
the considerable price of the alternative minimum tax because we failed
to act on their behalf today.
Mr. Speaker, I urge all of my colleagues to join me in support of
middle-class Americans like Dan and Rose Curran of Norwich, Connecticut
and support the ``Middle-Class Alternative Minimum Tax Relief Act of
2004.''
Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentleman from
New Jersey (Mr. Pascrell).
Mr. PASCRELL. Mr. Speaker, my friend from Connecticut has spoken
somewhat of the truth, but the anecdotal stories that have been
presented on the floor are only an indication of all of the things that
are happening throughout the United States, and if we really care about
shifting the burden of the alternative minimum tax right now up the
scale rather than trying to burden the middle class, then we should do
this and be honest with the American people and tell us what the
effects are of all the taxes, because we are giving with one hand and
we are taking back with the other hand.
Today presents us with yet another cynical ploy of gimmicks and
illusions masquerading as long-term tax policy. Indeed, despite the
widespread acknowledgment of the urgency for preventing large swaths of
the middle class from being sucked into the alternative minimum tax
over the next decade, neither the administration nor the leaders in the
House or the Senate are willing to propose permanent relief.
Why is that? Is it because some of my friends do not want to
acknowledge the overall cost of the AMT? Is it because some of my
friends want to make our tragic budget situation seem less grim? Was
the decision to provide AMT relief for only 1 year designed to
understate the cost of other tax cuts enacted, as well as various
pending tax cut proposals, including those to make 2001 and 2003 tax
cuts permanent?
I think we all know the answers to the questions. We should. It is
unfortunate. For over 3 years, this body has employed deceptive budget
stratagems to force through politically infused tax cuts that threaten
our Nation's long-term fiscal health, and so it continues.
We should all vote for the Rangel substitute. We should all say
enough burden on the middle class. This bill is reported to cost a
relatively modest $17 million, but if we extend it as expected, its
actual long-term costs are much higher. Why do we not tell the American
public what it will cost, since we want to stretch out the permanent
tax cuts for another 10 years? Why do we not tell them what it is going
to cost? We do not want to do that because folks are going to ring back
and say, oh, my God, that is a lot of money.
Indeed, by proposing a 1-year fix to a perpetual problem, H.R. 4227
purposely obscures not just the long-term costs but also the other tax
cuts recently enacted.
Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds just to say to
the gentleman what is fairly clear and Chairman Greenspan recently
indicated to us before the Joint Economic
[[Page H2565]]
Committee that the tax cuts are working as a tonic for the economy.
Clearly they are helping us to expand our tax base and move back toward
a balanced budget, and that is fairly clear.
Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Sam
Johnson), a member of the Committee on Ways and Means.
Mr. SAM JOHNSON of Texas. Mr. Speaker, the AMT is a sneaky tax. It is
a parallel tax system where normal rules of income and deductions do
not apply. You lose most of your deductions and your children become a
liability.
The bill we are debating today will keep this sneaky tax from taking
away the benefit of many of the 2001 tax cuts. However, we are just
holding back the tide of the AMT that in 2008 will swamp the tax system
and actually collect more money than the rest of the income tax system
combined.
Yes, it is going to be cheaper to repeal the entire income tax system
than to repeal the AMT. I think this sneaky, destructive tax will
finally cause the income tax system to implode.
This bill today will buy us some more time so we can get on with
building a consensus on replacing the income tax system. We need to
replace our income tax system that is, as my colleagues know,
economically destructive, impossibly complex, and overly intrusive. It
has impeded our ability to create jobs, encourage savings and
investment, and realize the American dream.
When I speak with constituents, the biggest applause line I get is
about abolishing the IRS. I think that the system, any replacement, any
new system, should reduce the role of the Federal Government, encourage
savings and investment, be simple, and most of all, it must be fair.
AMT does none of this, and we must repeal it; but until we can repeal
it, we must hold harmless those Americans whose taxes are being raised
in the next year.
One additional interim step we need to take is to help those trapped
in AMT through exercise of incentive stock options or ISOS. In this
instance, the AMT requires people who exercise options on their
employer's stock to pay tax on phantom profits. Many people stuck in
AMT owe tens of thousands or hundreds of thousands of dollars in AMT on
phantom profits never realized because the bottom fell out of the
market. We cannot justify a tax system where taxes are owed when no
gain was ever realized.
I hope we will also be able to fix this inequity as this bill moves
through the process; but for sure, we need to get rid of this sneaky
tax now.
Mr. McDERMOTT. Mr. Speaker, I yield myself 15 seconds.
The gentleman from Texas talks about this being a sneaky tax sneaking
up on people. It is only sneaky because my colleagues would not have
hearings. If they would have listened to us when they were passing
these tax bills in 1997 and 1998 and 1999 and 2000, we told them over
and over again, we offered these changes that were necessary then and
it all happens now. They say we snuck up on them.
Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr.
Engel).
Mr. ENGEL. Mr. Speaker, I thank the gentleman for yielding time to
me; and I, too, rise in strong support of the alternative minimum tax
reform. In fact, I would go so far as to say, if there was one tax that
should be permanently reformed, it would be this one.
First of all, as everyone has mentioned, many middle-income people
find themselves caught with this tax. They have plenty of deductions,
but they are not allowed to deduct it because they have met the
threshold, and it certainly is regressive and should be changed.
In 1969, the tax was put into effect. It has not been modified since
it makes no sense whatsoever not to have it indexed to inflation; and
again, if there was any tax reform that ought to be made permanent, it
should be this tax.
We have heard about other taxes. The estate tax is one with which I
do not agree that that tax should be permanently repealed. The estate
tax repeal would only benefit the very, very high-income people, and I
think they should pay their fair share; but this alternative minimum
tax really hits a lot of working people, a lot of middle-class people
and is really grossly unfair.
If a person lives in a high-tax State, as was mentioned by my friends
from New York and Connecticut, it even hurts and hits them even more
so. This tax, as it is currently written, makes no sense at all. I
would hope that after this 1-year extension we could put our heads
together and come back with something that makes sense, a permanent
reform.
While this bill is a step in the right direction many middle class
families that are hurt by the AMT, will not be helped by this and will
only be helped by a total re-write of the AMT and a permanent reform.
I think on this side of the aisle the point had been made that the
Committee Ways and Means, which is the tax-writing committee, ought to
have hearings. And after we can finally put together a plan that would
reform the AMT permanently for good.
Right now, I will take this quick fix, but we ought to build on to
it. We should permanently reform the AMT. It makes no sense whatsoever
to keep doing short-term extensions on tax policy that hurts a lot of
hardworking families.
Mr. ENGLISH. Mr. Speaker, I first yield myself 15 seconds to thank
the gentleman from New York for his presentation. It was very
thoughtful. I want to associate myself with his remarks. We appreciate
his making this debate very bipartisan, and I welcome him to get
involved in our Zero AMT Caucus and try to work on a bipartisan basis
to deal with this problem.
Mr. Speaker, it is a great privilege for me to yield 5 minutes to
another gentleman from New York (Mr. Houghton), who has put an
extraordinary amount of time in on this issue, the chairman of the
Subcommittee on Oversight of the Committee on Ways and Means, my
colleague.
{time} 1215
Mr. HOUGHTON. Mr. Speaker, I thank the gentleman for yielding me this
time, and say to the gentleman from New York (Mr. Engel) that we have
fought a good fight on many issues, and I am delighted to be associated
with the gentleman on this.
Mr. Speaker, I am not going to talk about the alternative minimum
tax. People have described it, nobody wants it, we want to get rid it.
The question is how. Do we do it the Democratic way or the Republican
way. I happen to believe that H.R. 4227, the bill of the gentleman from
Connecticut (Mr. Simmons), is the right approach.
I guess the only thing I would hope is that we would not get tangled
up in two things: One is we not get tangled up in the politics of this
thing. This is a national interest. We could argue back and forth and
criticize each other, but the point is people are going to get hurt and
we have to stop that. The other thing, I hope we do not get tangled up
in procedural issues. This is a procedural House, but the impact is not
procedural on people on the outside.
I want to thank the gentleman from Pennsylvania (Mr. English) and the
gentleman from Connecticut (Mr. Simmons) for what they have done. The
gentleman from Connecticut (Mr. Simmons) has really been the watchdog
here for a lot of people who could get hurt, and they do not know they
could get hurt. The fact that they have been watchful and sensitive to
the human condition is very important.
As Members have said, this is a stopgap measure. But without this, we
cannot go to the next leg. The next leg is to get rid of a tax. It is
an interesting concept because before 1986, people with large amounts
of capital could give that capital away; and, therefore, under
provisions of the tax law, would not have to pay any tax. It was not
fair and it was not democratic, and that is why this thing came into
effect.
But there was no indexing, and that is why this is creeping up and
involving enormous numbers of people. There are over 3 million people
now, and there will be another 8 million involved. It is a very hurtful
tax. I think it is a very good idea. If you want to vote the Democratic
proposition, that is fine. I happen to believe what the gentleman from
Connecticut (Mr. Simmons) has done is right on target. It is essential.
It is straightforward, simple, and will benefit everybody. Therefore, I
request that Members support the bill, H.R. 4227.
Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may
consume.
I would say to my distinguished colleague, the gentleman from New
York
[[Page H2566]]
(Mr. Houghton), we are going to miss the gentleman when he leaves
Congress. It will be a loss for all of us. The gentleman said this is a
tax that nobody wanted. Well, if we take the Democratic alternative and
look at it in the Statement of Congressional Findings and Purposes, and
mostly Members blow through these bills and never read that. I have a
little bit of time, so I would like to say a few things about it.
In 1986, because of tax preferences on oil and gas depletion and a
whole lot of things, there were a number of people in this country who
made a lot of money who then could write it all off because they had
these preferences on oil and gas exploration and so forth. So there was
an agreement in this House to put in an alternative minimum tax,
believing that every American ought to pay something. No matter how
rich or how poor, we believe that each worker should put something in
the pot. Here we had these people at the top who figured out how to get
rid of it all. So we put the alternative minimum tax in.
Then came the 1990s and we had tax reform. We got rid of all of those
preferences. Even when we did that, we still had less than 1 half of 1
percent of taxpayers who paid this alternative minimum tax. It never
became a problem until 1997 when we took away the personal deductions
and the deductions for kids, and we suddenly swept up a quarter of the
people this year. If we look at the projections, we are going to have
three-quarters of the people paying this thing at some point down the
road.
We could have fixed it along the way, but most people did not want it
in the first place, and so they said let us get rid of it. Those people
on the top should not have to pay anything if they can figure out how
to get out of it. So we have not fixed it.
I give you a tale of two taxpayers. There is one standing here, and I
have a wife who works and the two of us make a nice living. We have
good salaries. We do not have any children, and we do not pay the
alternative minimum tax. And the other thing is I live in Washington
State. We do not have a State income tax. A great State to live in. It
wants folks to come and visit, but do not stop there and live. We do
not have any problem with the AMT.
Mr. Speaker, I am not arguing for myself. I am arguing for these
people behind me who live in the District of Columbia. One has two
kids, one has four kids. They have to pay it on staff salaries in the
House of Representatives. Tell me where is the fairness in that tax
structure? How is it my wife and I benefit tremendously from this
system, and we clobber the people in the middle class behind us? That
is why we are here today.
Obviously, Republicans realize that the people out there are going to
find things out when they do their taxes. They start through the form,
and if you have an adjusted gross income of $58,000, you should begin
to figure your taxes in a parallel fashion, the regular income tax
form, the 1040, and then there is the alternative minimum tax. So there
you are at $60,000, $70,000, and you have to figure your taxes twice.
If you ask the IRS, they put out a flyer that says it takes 3 hours
and 56 minutes to figure the alternative minimum tax. Now people are
filling out their tax forms making $70,000, a lot are not using
accountants, that is their time. So we are putting them through the
wringer twice to fill out their taxes because you would not listen.
Now this idea that we will repeal the alternative minimum tax, that
is nice. That is a great idea. You know who that helps, well, it helps
these people behind me a little bit, but it helps the people at the
top. Again, it would be a give-away to the people on the top. I
understand what the Republican Party is all about. I believe that is
what your goal is. That is a major plank in your platform, is no one
who has millions of dollars should pay anything, they know how to use
their money, we should let them have it and they will invest it and we
will have a lot of jobs.
Well, these tax cuts have not worked in the State of Washington. They
have not worked in the State of Washington. We have more people
unemployed today than we have ever had. It is the highest long-term
unemployment we have ever had since the 1950s, and we are still waiting
for the recovery. In February, there were 21,000 jobs created, all
government jobs. So the tax cuts did not work except for people who had
a lot of money. The next month, March, we had 306,000 jobs. Goodie, we
are growing.
The fact is that economists say that it takes 250,000 new jobs every
month to simply keep up with the growth in the labor force in this
country. So 300,000 is just barely replacement, saying nothing about
the 3.5 million that we have lost since President Bush has been in
office.
This economy has been an absolute disaster for the middle class and
the ordinary working people in this country. This tax structure
Republicans have created is awful. We will vote for this today. There
is no Member who is not going to vote to put a 1-year patch on it, but
it is not being fixed. As a Member said, the way things are going, down
the way, you are going to have half the people we are going to have to
deal with, and at some point it is going to cost a lot of money.
The other side of the aisle would not fix it in 1997. We tried to
tell them, but they were too smart and too full of their own ideas and
ideology to look at what they were doing to people, and that is why we
are here today. We certainly will all vote for it.
Mr. Speaker, I reserve the balance of my time.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Michigan (Mrs. Miller).
Mrs. MILLER of Michigan. Mr. Speaker, I rise today in support of H.R.
4227 to extend the alternative minimum tax relief to our Nation's
middle class and working families. This legislation will ensure that
almost 8 million Americans are not going to be subject to unfair higher
taxes. It is interesting because just last week, I listened to my
colleagues on the other side of the aisle. About 100 of them actually
voted against the marriage penalty relief. They said that offering this
Nation's working families relief from a tax on marriage was
inconsequential because these families would be subject to AMT.
H.R. 4227 is a pro-growth, and most importantly, pro-family piece of
legislation that will help us fix this problem.
Mr. Speaker, as has been mentioned already several times today, the
original intent of AMT provisions in our Nation's Tax Code were
designed to prevent high-income taxpayers from using tax deductions,
from using write-offs, as well as loopholes from avoiding paying their
fair share of taxes. But under the leadership of the Democratic Party
prior to 1995 and their obstructive politics since then, the AMT will
continue to force hard working middle class families to pay more than
their fair share unless something is done.
H.R. 4227 at least offers a temporary fix to this problem until
Congress can develop a permanent solution. I commend President Bush and
the majority party in Congress for implementing an economic growth
package that has all of the economic indices on a positive trend line.
Consumer confidence in our economy is on the rise because thanks to the
leadership of President Bush, more Americans are able to keep more of
their hard-earned money. The President and the Republican majority
trust and believe in the American people. By extending relief from the
AMT, we can make sure that taxpayers are not paying more than their
fair share and they can have money in their pocket to help expand our
economy even further.
Mr. Speaker, this House is faced with an important decision today,
one that will affect up to 8 million working families. I support this
legislation because I support those families. I urge my colleagues to
make the right decision and vote to pass this.
Mr. McDERMOTT. Mr. Speaker, I reserve the balance of my time.
Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from
California (Mr. Herger).
Mr. HERGER. Mr. Speaker, I rise in strong opposition to the Rangel
substitute. Under the guise of individual tax relief from the
alternative minimum tax, or AMT, the Rangel substitute would raise
taxes by $15 billion. This new tax increase would fall squarely on the
shoulders of America's small businesses, the same American companies
that create jobs and drive our Nation's economic engine.
The tax relief this Congress has passed over the past 3 years has
contributed mightily to the economic recovery we are now experiencing.
More
[[Page H2567]]
than 750,000 jobs have been created in the past 8 months. We have
strong economic growth of between 4 and 5 percent, low inflation, and
homeownership rates at the highest level ever.
Mr. Speaker, why in the world would we choose to raise taxes on
American small businesses just as our economy has turned the corner?
Why would we smother the engines of job creation with higher taxes? Yet
this is exactly what the Democrat substitute would have us do. Hard-
working Americans need relief from the unfair AMT tax, and the majority
bill offered by the gentleman from Connecticut (Mr. Simmons) will give
it to them.
Without passage of the majority bill, an additional 8 million middle
income taxpayers will see their Federal taxes rise because of the AMT
next year.
{time} 1230
We cannot allow this to happen. Let us reject the Democrat substitute
and pass the underlying bill. Americans deserve relief from the AMT
tax, not new taxes.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Tennessee (Mrs. Blackburn).
Mrs. BLACKBURN. Mr. Speaker, I came to Washington to work on several
issues, one of which is the sales tax deduction. Tennesseans know my
record on tax fairness. I have been working with the gentleman from
Texas (Mr. Brady) to put that sales tax deduction issue on the map. I
am glad to see that we have got some folks on the other side of the
aisle that are coming in here and ready to help us with this debate.
Like my mom always said, better late than never.
Unfortunately, true to form, their proposal, the Democrat proposal is
a classic political bait and switch. They are talking about supporting
a sales tax deduction while they are hiding the fact that their motion
to recommit contains a tax increase. Tennesseans are not going to buy
that kind of gimmickry. Whenever you make that kind of bargain, the end
result is always higher taxes.
Today we are talking about the AMT, the alternative minimum tax. One
of my Democrat colleagues said he never hears from constituents about
the AMT, that they do not know what it is. He might be right. There are
millions of middle-income taxpayers that do not know what is coming,
that 11 million of them will be hit with an average tax increase of
$1,520. So let us come back in a year and tell these people they do not
know what the AMT is. They are going to know. They will know that they
have been walloped with a $1,500 tax hike if we do not take action
right now. They will be angry because people opposed the Republican
plan that is supported today.
My friends across the aisle claim that their motion to recommit
addresses the tax hike. Where were they when President Clinton raised
taxes and failed to adjust the AMT for inflation? They had their chance
to act then, and they failed. People back home need to ask themselves
who do they trust on the tax policy; who has been consistently on the
side of the taxpayer. It is an easy call. Democrats only talk about tax
relief in election years. Republicans talk about tax relief every year.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from New Hampshire (Mr. Bradley).
Mr. BRADLEY of New Hampshire. Mr. Speaker, I would like to salute the
leadership of the gentleman from Pennsylvania (Mr. English) on this
issue.
Mr. Speaker, what we face with the alternative minimum tax is a
sleeping giant, a sleeping giant that is starting to wake up and gobble
the hard-earned funds of millions of American taxpayers. Today it is 3
million taxpayers; but tomorrow if we do not pass this legislation, it
will be 11 million taxpayers. And if we do not have the time necessary
to have a longer-term solution for the alternative minimum tax, by the
end of the decade it will be 30 million taxpayers, one in three
Americans, will fall victim to this tax that was originally designed to
catch about 150 very wealthy Americans that did not pay their fair
share of taxes.
What we have today, though, with the alternative minimum tax is a
situation where middle-income Americans will be paying more than the
wealthier Americans because they lose their personal exemptions, they
lose the exemption for State and local taxes, and they lose the
exemptions for itemized deductions. Most of the benefits of the tax
cuts in 2001 and 2003 will be evaporated for these taxpayers; and for
anybody that has had to go through the alternative minimum tax, the
compliance costs of having to fill out taxes in a dual universe, the
normal way and the alternative minimum way, is much higher.
Mr. Speaker, I urge my colleagues to support H.R. 4227 and allow us
this year of time to have a long-term solution to fix the alternative
minimum tax.
Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time with the
right to close.
Mr. McDERMOTT. Mr. Speaker, I yield myself the balance of my time.
One of the problems here in the House on an issue like this is that
it is hard to have a real debate because we do not set it up as a
debate. We really are having a bunch of 2-minute speeches, and nobody
ever gets to answer anybody back and forth. The gentleman from
Pennsylvania (Mr. English) is an honorable Member and, I think, is just
wrong on this issue. I do not bear him any ill will, but one of the
interesting things about this is one of the more recent Members who
came out here was the gentleman from California (Mr. Herger). He went
on about the fact that the Democratic alternative is going to cost $17
billion. This is a time at which the Republican management of the
economy has developed the biggest deficits in a very long time. We are
going to have to raise the Federal debt limit again. We are going to
have to sell more bonds to the Chinese. We are going to have to sell
more bonds around the world to keep our economy afloat than ever
before.
The gentleman from California's complaint about the gentleman from
New York (Mr. Rangel) is that the gentleman from New York has come in
here and said, you know, I think we ought to pay for this bill. We
ought to pay for it. The gentleman from Pennsylvania (Mr. English) and
his colleagues are not interested in paying for it. They just want to
throw it on the credit card, another $17 billion onto their kids and
their grandchildren. I just had a grandchild born last August, so for
the first time I am really thinking about grandchildren. I used to just
think about my kids. But now I am looking two generations down the
road. It is no problem for the gentleman from California and the
gentleman from Pennsylvania and other Members to say, Hey, throw it to
the kids. Let's not pay for it.
You have done that since 1996. The mess we are in is directly related
to what you have done. When President Bush took over, we had some kind
of surplus, I forget, $200 billion; and we are now going into the hole
at least $400 billion or $500 billion every year. When the gentleman
from New York comes out here and says I would like to pay for it, he
gets criticized. That is called raising taxes. No, it is being fiscally
responsible.
The gentleman from New York is no wild-eyed liberal. You think he is,
but you have never looked at the proposal he made. He reached over
across the hall here into another place and took a provision from the
Finance chairman in the United States Senate. The provisions that he
put in are offsets that are contained in the provisions of a tax
abusive transactions bill from the Senate Finance Committee written by
a Senator from over there. I cannot name him. The offsets are not tax
increases. They are provisions designed to ensure that corporations
cannot use aggressive tax shelter transactions to avoid the taxes they
pay.
So the charge that the gentleman from New York is trying to raise
taxes is simply misleading, to be very generous. I am sure we will see
advertisements going all over, well, you know, the Democrats tried to
raise taxes on you another $17 billion, and we stopped them. They are
not going to tell you about what it is going to cost your kids and your
grandchildren in terms of interest rates and what is going on in this
economy.
The first group of offsets that the other body came up with are
designed to curtail tax shelters by clarifying the economic substance
doctrine. People back home, I am sure their eyes are crossed by now,
but some of you people
[[Page H2568]]
ought to be thinking about it. Increased reporting and penalty
provisions. The economic substance doctrine is a rule of law that
denies artificial losses or other tax benefits from transactions that
have no business purpose or profit motive. It is the usual shenanigans
of tax attorneys. Even a Republican in the other body thinks that ain't
right. But, no, people over here say, oh, no, we can't do that, we
can't tighten up. Oh, no, no, no. All those tax attorneys will have to
go out there and find another way to take it away from the middle class
and give it to the rich. They apply to transactions with no substance
other than tax avoidance.
That is what the gentleman from New York's bill does. He says, let's
get people to pay their fair share. If we did, we could do this
alternative minimum tax. In fact, we could do more. His bill actually
says that if you have a combined adjusted gross income of $250,000, if
you are less than that, you do not even have to look at this. That
would take millions of people off the rolls. But the Republicans want
to leave it so that everybody has to be at $58,000 and start into this
alternative plan.
The IRS says the record-keeping for that is 19 minutes. Then they say
it takes an hour and 14 minutes to read the law and understand it. This
is the IRS telling the taxpayers: it is going to take you an hour and a
quarter to read this law and figure it out. Then it takes an hour and
49 minutes to actually figure it. And then copying and assembling and
sending the form takes another 34 minutes. That is where we get the 4
hours.
You are putting a half a day's work on the American public because
you will not consider an alternative from the Democrats. You will not
have a hearing to find out whether this is a better proposal or not,
because all wisdom resides on that side of the aisle. And it is really
wonderful to stand in the presence of people who know everything; but
the problem, the reason you got into this mess is because you would not
listen to anybody else and you are still in the mess because you will
not listen to anybody else. The fact is that your own people, a guy
from Iowa, my gosh, he is a wild liberal, right? Head of the Senate
Finance Committee. He comes up with this, and you think it is no good.
The fact is that this is a big problem that we need to work on
together. If there were any bipartisanship at all on the Committee on
Ways and Means, we could get something done. But if it is going to be
done all by one side, where the ideology is we have to give it all to
the people at the top and we cannot worry about what happens to the
middle class, then we are going to continue to have these kinds of
deals. If, God forbid, you are still in charge next year, you will be
out here with a bill just like this with a bigger problem and a bigger
cost and more money into the deficit.
The question that really is sitting here today is, when is the
Republican majority going to face up to the hole in the tax structure
that you have dug and into which you have thrown all the people? You
gave pittances, $676 average, for the average family and $112,000 for
the people at the top. Do you think there is a millionaire in this
country who needs $112,000? I mean, seriously. How could anybody come
out here and support that, given the problems we have in this country
right now? Spending $200 billion on a war that never should have
happened in the first place, led into it by a President who stood right
here and misled us, and you are throwing money out the door every way
we can imagine; and you will not face what you are doing economically.
I really pray, I really do pray that the day never comes when Europe
stands up or the Japanese or the Chinese stand up and say, we are not
buying any more of that worthless paper from the United States.
The SPEAKER pro tempore (Mr. Simpson). The time of the gentleman has
expired.
Announcement By the Speaker Pro Tempore
The SPEAKER pro tempore. Members are reminded that remarks in debate
in the House may not cite the views of Senators. Sponsorship may be
identified, but further characterization is not in order.
Mr. ENGLISH. I presume, Mr. Speaker, that also means that we cannot
mischaracterize them.
Mr. Speaker, I yield myself the balance of my time.
This has been a useful debate because I think in an odd way it has
highlighted a couple of things. First of all there is a consensus in
this Chamber behind the bill that the gentleman from Connecticut (Mr.
Simmons) has put forward. There will be a substitute offered. I will
have ample opportunity and grounds to criticize that substitute when it
is offered, but for now I think what needs to be emphasized here is
that in the end both parties are committed to at least moving forward
on this very limited bill. I wish we were doing more today, but the
fact is, this is probably the best we could agree on in the gridlock
that exists in the institution right now.
I would like to use some of my time to respond to some of the points
that were made by the other side. First of all, let us be clear. This
bill is not about the war. It is not really about the deficit in the
sense that I think it is fairly clear and I would hope people on both
sides could agree that we do not need revenue from this source. We can
come up with spending cuts, and we can come up with alternative revenue
sources to deal with this.
{time} 1245
We do not need the revenue applied from applying an AMT that was
intended to be applied originally only to a very narrow band of very
wealthy taxpayers, applying it to the middle class.
Some strange things have been said here and I would like to respond
to them. First of all, this problem was not created by the Republicans.
This was created back in 1986 when a tax reform passed when the other
body controlled the Chamber, and in all the time that they controlled
the Chamber afterward, they did nothing to deal with this problem. In
fact, in 1993, they voted to actually increase the burden of the AMT.
And we have heard from a number of speakers today who purport to be
against the AMT, but actually who voted for that increase.
It has been said by the distinguished gentleman from Washington, my
friend, that Republicans do not know what they are doing. I would
submit to the Members when this AMT was put in place without any
provision for how inflation would move and more taxpayers into AMT
status, they knew what they were doing. They wanted the revenue. They
wanted to apply a progressively higher tax burden to the American
people and use that future revenue in order to justify a higher level
of spending and an expansion of the welfare state.
We in this Chamber today are committed to moving forward to making
sure that a new heavier tax burden is not applied to taxpayers next
year and that next year taxpayers do not face a bait and switch on some
of the key provisions that we have passed. That I would submit is
really what the Republican Party is all about.
And as for Republican management of the economy, I am proud to
associate myself with Republican management of the economy at a time
when clearly responsible economists agree the tax policies enacted in
this Congress supported by this administration are having the effect of
lifting the economy, not as much as I would like right now in my
district, but clearly turning around the slowdown that we had
experienced that we inherited from the last administration and
providing a significant prospect of new jobs and new economic growth
and new dynamics that are going to provide opportunities for working
families in the coming months. We recognize that we need to do more,
and this Congress is clearly committed to doing that. And yet we need
to agree at very least today to pass this provision.
I am very proud to support this bill as introduced by the gentleman
from Connecticut (Mr. Simmons) that provides some relief to middle
class taxpayers, to make sure that they have access to the relief that
we promised them so that we can continue to grow the economy, that we
can continue to create opportunities, that we can continue to provide
some relief to families that have children and that are eligible and
should be eligible for the tax credit that we have passed in this
Chamber.
This is to me a critical issue of tax equity. We need to be prepared
to guarantee to middle class families that they do not face a higher
burden because of a stab in the back called the AMT, that they are not
hit on tax day
[[Page H2569]]
with an unexpected tax burden, that they are not required to
recalculate their taxes accordingly. We have an opportunity today to
strike a real blow for tax equity for the middle class.
With that, I hope we pass this bill.
Mr. HOLT. Mr. Speaker, the Alternative Minimum Tax (AMT) is a
terrible burden on middle class taxpayers and the middle class should
be excluded from the AMT.
Once again, however, the Republican leadership is using budget
gimmicks to hide the real cost of their tax cut and doing nothing to
offset it. While the proposed AMT relief bill carries an official cost
of $17 billion, its actual long-term costs are much higher: $549
billion over ten years, or $658 billion if the added interest costs on
the national debt are taken into account. Indeed, by proposing a one-
year ``fix'' to a perpetual problem, H.R. 4227 purposefully obscures
not just the long-term cost of AMT reform. Ignoring these long-term
costs irresponsibly undermines our ability to adequately plan for the
future. It costs the future generation, as well as the present economy.
More unpaid-for tax cuts will not only jeopardize critical public
services now, but they will also hurt Americans well into the future.
Massive deficits now create large debt and high interest payments that
will crowd out spending on public investments for future generations.
Moreover, these deep deficits threaten to increase interest rates in
the future--making it harder for Americans to buy homes and afford
higher education, and making it harder for business to raise capital.
This is why I support the Democratic alternative to relieve the
burden of the AMT on middle class taxpayers. The substitute would
provide temporary relief from the AMT that is more broad and simpler
than the relief contained in H.R. 4227. The substitute would simply
eliminate AMT liability for all taxpayers whose adjusted gross income
is less than $250,000 ($125,000 for single taxpayers). Above those
income levels, AMT liabilities would be phased in over a $40,000 range
($20,000 for single individuals).
The substitute would provide a framework for total reform of the AMT.
It would require the Secretary of the Treasury to promptly submit
legislative recommendations to the Congress, and it would require the
Committee on Ways and Means to act on those recommendations this
summer. It is time for the Congress to be honest with the American
taxpayers and proceed with real AMT reform.
Moreover, the substitute would be revenue neutral. Its cost would be
offset by restricting certain tax shelters, which has already passed
the Senate on a bipartisan basis. The AMT was designed to ensure that
all taxpayers pay a minimum amount of tax and, in effect, limited the
ability to use tax loopholes. The substitute would directly address
those tax avoidance transactions, thereby minimizing the need for the
minimum tax and provide relief for the middle class families of my
district.
We cannot continue to pretend that the AMT problem will go away on
its own and to make major policy decisions based on the reckless
unrealistic assumption that it will. We must work toward a long-term,
fully paid-for solution that protects our ability to fund critical
national priorities and allows us to make realistic plans for the
future.
Mr. KIND. Mr. Speaker, I strongly support providing relief to middle-
income Americans from an encroaching Alternative Minimum Tax (AMT).
Without action this year to extend the current AMT exemption levels
passed in 2003, millions of Americans will feel the AMT crunch in 2005.
While the AMT was enacted in 1969 to prevent high-income earners from
using loopholes in the tax code to avoid paying their fair share, the
AMT is increasingly becoming an unfair tax burden on millions of
middle-income Americans. Because of factors including inflation and
income tax reductions, the complex calculations used by individuals and
couples to determine if they must pay any AMT have adjusted and now
unfairly punish middle-income families, particularly those with
children in high-tax states.
For the third year in a row, the Internal Revenue Service's Taxpayer
Advocate Service's Report to Congress lists AMT encroachment as the
most serious problem encountered by taxpayers. The AMT now impacts more
than 2.4 million Americans. Unless reformed, the AMT will impact 12.4
million in 2005 and more than 30 million Americans in 2010. On top of
that, even more taxpayers will be forced to perform intense
computations to determine if AMT applies to them.
While the majority of the 2003 tax proposal that passed the House was
fiscally irresponsible and designed to benefit only the wealthiest of
Americans, its provision providing increased AMT exemptions in 2003 and
2004 had bipartisan agreement. However, while everyone seems to agree
that the AMT needs to be reformed, the President's budget for fiscal
year 2005 again covered up the full cost of fixing the AMT--estimated
by the CBO at over $500 billion--by proposing another one-year
extension. A comprehensive, bipartisan proposal is long overdue to
address the problems of the AMT, and it is important that Congress
account for this necessary reform in its budget resolutions.
As we reform the AMT to provide relief to middle-income Americans, we
need to act in a fiscally responsible manner. It is unfair to Americans
today, and especially the next generation, to delude ourselves by
thinking the record budget deficits facing our nation, estimated by the
White House at over $500 billion this year alone, will simply go away.
As a member of the House Budget Committee, I supported a budget
resolution that allows for extending AMT relief while still reducing
the deficit. This approach requires tough choices, prioritization, and
a bipartisan commitment to helping working families. With the House-
Senate conference committee still negotiating the budget resolution for
fiscal year 2005, I remain hopeful that we will be able to provide
Americans continued tax relief today without raising the debt burden on
our children's generation.
The substitute offered today by Representative Neal is a more
responsible bill that will provide relief to more than 10 million
families while not increasing the budget deficit. By closing corporate
tax shelters, the Neal substitute provides a responsible offset to
benefit more American families without burdening our children with
added debt that they will have to pay off. Further the Neal substitute
unambiguously and completely exempts married couples with incomes under
$250,000 from the AMT. This is a superior approach, helps more
Americans, and ensures most middle income taxpayers will not have to
worry about the AMT.
Mr. Chairman, it is important that we act today to ensure average
income Americans will not unfairly face the alternative minimum tax in
2005. However, I believe we can and must provide this relief in a
fiscally responsible manner that will not burden future generations of
Americans. Just as it was true last week when we passed legislation
permanently repealing the marriage penalty tax, our work is far from
over in helping working families face the challenges of today's
economy. We must come together in a bipartisan manner to craft a
fiscally responsible budget resolution.
Ms. KILPATRICK. Mr. Speaker, today we are considering H.R. 4227, the
Middle-Class Alternative Minimum Tax (AMT) Relief Act. I have
considered the merits of the legislation and concluded that the base
bill offered by the Republican majority needed to be amended. I voted
aye to the Neal-Bishop-Israel substitute, that would have exempted
married couples making $250,000, and singles making $125,000, from
paying the alternative minimum tax. The substitute would have been
offset by cracking down on corporate tax shelters and tax avoidance
schemes used by corporations like Enron. The current budget deficit has
been fueled by unprecedented tax cuts that have erased a surplus in
excess of $200 billion when the Bush administration took office. Given
the loss of 2.6 million private-sector jobs over the last three years,
I and my fellow Democrats believe tax cuts should not add to the record
budget deficits, because ballooning deficits threaten economic growth,
raise interest rates, and cost jobs. That is why the Democratic
alternative targeted tax cuts--providing more tax relief to the
millions of families with children in high-tax states with incomes
under $250,000.
I was also concerned by facts provided by Ways and Means staff that
indicated the base bill is expected to reduce federal revenue by
approximately $17 billion to $18 billion over 10 years, and none of the
provisions in the bill were accompanied by any offsets.
The substitute provided the framework for total reform of the AMT. It
would have been paid for, and would have provided AMT relief that is
broader and simpler than the relief contained in H.R. 4227. The
substitute eliminated AMT liability for all taxpayers whose income is
less than $125,000 for single taxpayers and $250,000 for married
couples. Above those income levels, AMT liabilities would be phased in
over a $20,000 range for single taxpayers and a $40,000 range for
married couples. The cost of the substitute was roughly $19 billion and
would have been offset by restrictions on tax shelters that have been
supported by House Democrats as offsets in other substitutes that have
been approved in the Senate on a bipartisan basis.
I opposed H.R. 4227 because it did not provide a sufficient level of
tax relief to my constituents.
Mr. STARK. Mr. Speaker, I rise today to oppose H.R. 4227, the
``Middle-Class Alternative Minimum Tax Relief Act of 2004,'' and in
support of the Democratic substitute that provides real relief for
middle-class families.
The alternative minimum tax, AMT, was designed to ensure high-income
taxpayers did not thwart the system and avoid their share of the tax
burden. But once again, the Republicans are on the floor with a tax
proposal favoring the wealthy over the middle class, penalizing hard
working Americans raising families. We should not mortgage our future
with
[[Page H2570]]
tax policies that will merely pass on the ever-increasing debt to our
children.
Despite its title, the Republicans are offering a bill that does not
provide effective AMT relief for lower-income households and those
families claiming the dependent care credit. In addition, the
irresponsible AMT relief proposed by the Republicans is not paid for
with any offsetting revenue increases or spending cuts.
In contrast, the Democratic substitute provides AMT relief to more
households than the Republican bill and gives increased relief to low-
income households--especially those claiming the dependent care credit.
This tax relief for real middle-class families is paid for with new
restrictions on corporate tax shelters. The Republicans call this a tax
hike, but it is actually the most responsible way to provide effective
middle-class tax relief without adding to the national debt.
The Democratic substitute provides AMT relief to 10.2 million
households, a full 1 million more than the GOP proposal. Married
households below $250,000 adjusted gross income will be completely
excluded from the AMT under the Democratic substitute, while the
Republican bill gives big breaks to those over $250,000 who obviously
need tax relief the least--and have already most benefited from the
Bush tax cuts.
I urge my colleagues to vote against the inadequate Republican
proposal and support the Democratic substitute, which provides AMT
relief for American families who need it most.
Ms. DeLAURO. Mr. Speaker, the alternative minimum tax, AMT, is a huge
and growing burden on a middle class that is already burdened by a
tough economy and the loss of 2.6 million private sector jobs.
Originally designed to make sure everyone paid their fair share by
limiting excessive tax shelters for wealthy families, the AMT has
become a tax penalty for families with children who live in high-tax
States. By 2010, 30 million Americans will be faced with minimum tax
liability, as compared to about 3 million today and 1 million in 1999.
Everyone in this chamber agrees that something must be done to ease
this burden on the middle class. And let me make clear--Democrats have
a long track record of supporting real tax relief for the middle class.
Unfortunately, this bill represents a band-aid approach to what has
been deemed by the IRS's National Taxpayer Advocate as the Nation's top
tax problem.
Under the Republican bill, 1 million families would still be paying
the AMT. A two-income family with four children in a high-tax State
would be hit by the alternative minimum tax even if their income is
only $95,000. And their bill would extend AMT relief for just 1 year--
meaning taxes on millions of middle class families will go right back
up in 2006.
The Congressional Budget Office estimates that a true fix of the AMT
would cost $376 billion over 10 years. But Republicans have refused to
step back on their tax cuts for the wealthy, which have created a $3
trillion deficit, in order to pay for this essential middle class tax
relief.
Today Democrats bring to the House floor a true solution to the AMT
problem. The Democratic substitute completely exempts married couple
families with incomes under $250,000 from the alternative minimum tax,
providing tax relief to more than 10 million families, particularly
those with children in high-tax States. Compared to the Republican
bill, it provides more relief to 1 million additional families.
And, the Democratic plan is fully paid for by cracking down on
corporate tax shelters. As nearly two-thirds of corporations paid no
tax at all in 2000, this is an important step to ensuring that
corporations pay their fair share while relieving middle class families
from the unfair burden of the alternative minimum tax. The middle class
does not benefit by adding to our already ballooning budget deficit and
further threatening economic growth.
I urge my colleagues to support true AMT tax relief for middle class
families, without adding to the budget deficit, by supporting the
Democratic plan.
Mr. FRELINGHUYSEN. Mr. Speaker, today I rise in support of H.R. 4227,
which extends through 2005 the higher alternative minimum tax exemption
amounts enacted in the Jobs and Growth Tax Relief Reconciliation Act of
2003. This important piece of legislation will prevent a tax increase
on middle class families next year.
The fact of the matter is if Congress does not act this year,
taxpayers will feel the burden of a significant tax increase.
The alternative minimum tax hits the residents of northern New Jersey
the hardest, especially those who are considered middle-class, because
it doesn't allow for a deduction of our State's outrageously high
property taxes. In 2001 and 2003, Congress took steps to present
middle-class families from falling deeper into the AMT trap. The
legislation the House has before it today continues in that tradition,
ensuring that working families throughout northern New Jersey and the
country are not hit with a tax increase in 2005.
Created more than 30 years ago, this out of date tax was meant to
prevent high-income taxpayers from using multiple-tax deductions and
write-offs to avoid paying income taxes. In 1993, President Clinton
increased the AMT and did not index it for inflation. As a result, more
and more middle-income taxpayers are now forced to pay the AMT.
As you know, H.R. 4227 extends through 2005 the higher AMT exemption
amounts enacted last year ($58,950 for joint filers and $40,900 for
single taxpayers) and adjusts these amounts for inflation to protect
their value.
Without enactment of this legislation, the current exemption amounts
will automatically fall in 2005 to $45,000 for married couples and to
$33,750 for single taxpayers. As a result, the Joint Committee on
Taxation reports 11 million taxpayers would be hit with an average tax
increase of $1,520.
I would hardly say by today's standards, a family making $45,000 is
considered ``rich.''
Mr. Speaker, I recognize that H.R. 4227 is a short term fix to a long
term problem which must be addressed. I understand the Committee on
Ways and Means is exploring ways to correct this inequity in a more
permanent way and I look forward to voting on that legislation.
But for now, I urge my colleagues to build on our ongoing efforts to
provide tax relief for all hard working Americans. Let's pass H.R. 4227
today.
Mr. BALLENGER. Mr. Speaker, I am happy to come to the floor today in
support of lowering taxes on American families--all American families.
The Democrat substitute basically says that it's O.K. to cut taxes on
some American families, but that other American families should have to
pay for those tax cuts. Mr. Speaker, that's not tax cut at all.
As everyone in this body knows, the Alternative Minimum Tax was
enacted to prevent the wealthiest taxpayers from using loopholes to
avoid paying any federal taxes. Today, the AMT doesn't just affect the
rich, but hits a substantial portion of middle-income Americans. The
2001 and 2003 tax relief bills increased the AMT exemption to help deal
with this problem. However, this needed relief is scheduled to expire
at the end of this year. If we do not act today, 11 million middle
class taxpayers will experience an average tax increase of $1,520 next
year.
Mr. Speaker, we can't allow the AMT to take away everything Congress
and President Bush have done to lower the tax burden on American
families. We also shouldn't force some Americans to pay for other
American's tax cuts. I urge my colleagues to defeat the Democrat
substitute and extend the AMT exemption by voting for the underlying
bill, authored by my Republican colleague and friend, Representative
Rob Simmons.
Mr. ENGLISH. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Simpson). All time for debate on the
bill has expired.
Amendment in the Nature of a Substitute Offered by Mr. Neal of
Massachusetts
Mr. NEAL of Massachusetts. Mr. Speaker, I offer an amendment in the
nature of a substitute.
The SPEAKER pro tempore. Is the gentleman a designee of the gentleman
from New York (Mr. Rangel)?
Mr. NEAL of Massachusetts. Yes, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr. Neal
of Massachusetts:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``AMT Reform
Act of 2004''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Statement of Congressional findings and purposes.
TITLE I--TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX; FRAMEWORK
FOR REFORM
Sec. 101. Temporary relief from the alternative minimum tax.
Sec. 102. Framework for reform.
TITLE II--RESTRICTIONS ON TAX SHELTERS
Subtitle A--Provisions Designed To Curtail Tax Shelters
Sec. 201. Clarification of economic substance doctrine.
Sec. 202. Penalty for failing to disclose reportable transaction.
[[Page H2571]]
Sec. 203. Accuracy-related penalty for listed transactions and other
reportable transactions having a significant tax
avoidance purpose.
Sec. 204. Penalty for understatements attributable to transactions
lacking economic substance, etc.
Sec. 205. Modifications of substantial understatement penalty for
nonreportable transactions.
Sec. 206. Tax shelter exception to confidentiality privileges relating
to taxpayer communications.
Sec. 207. Disclosure of reportable transactions.
Sec. 208. Modifications to penalty for failure to register tax
shelters.
Sec. 209. Modification of penalty for failure to maintain lists of
investors.
Sec. 210. Penalty on promoters of tax shelters.
Sec. 211. Increases in penalties for aiding and abetting
understatements.
Subtitle B--Enron-Related Tax Shelter Provisions
Sec. 221. Limitation on transfer or importation of built-in losses.
Sec. 222. No reduction of basis under section 734 in stock held by
partnership in corporate partner.
Sec. 223. Expanded disallowance of deduction for interest on
convertible debt.
Sec. 224. Expanded authority to disallow tax benefits under section
269.
Sec. 225. Modification of interaction between subpart F and passive
foreign investment company rules.
SEC. 2. STATEMENT OF CONGRESSIONAL FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds the following:
(1) The current alternative minimum tax (hereinafter
referred to as the ``AMT'') was enacted in 1986 with the
stated purpose of ensuring that individuals with relatively
large incomes would pay some minimum amount of Federal income
tax, notwithstanding the fact that the individuals could have
used otherwise allowable tax preferences to reduce their
regular tax to zero.
(2) The AMT, when enacted, affected a very small percentage
of individuals. Approximately 0.1 percent of all individuals
were subject to the AMT in 1987.
(3) During the 1990's virtually all items that have been
traditionally considered to be tax preferences were removed
from the AMT.
(4) As a result, virtually all AMT liability now is
attributable to 3 items that few people would consider to be
tax preferences: the deduction for personal exemptions, the
deduction for State and local taxes, and miscellaneous
itemized deductions.
(5) In 1993, adjustments to minimum tax rates were made to
correspond to adjustments made in regular income tax rates.
The 1993 legislation also increased the amount of the AMT
exemption.
(6) The percentage of individuals subject to the AMT did
not increase as a result of the 1993 changes. The percentage
in 1992 was 0.3 percent. It was 0.3 percent in 1994.
(7) The first significant increase in the percentage of
individuals paying the AMT occurred by reason of the Taxpayer
Relief Act of 1997. Some of the benefits of the capital gains
tax reduction provided in the 1997 Act were taken back by the
AMT. As a result of the 1997 Act, the percentage of
individuals paying the AMT doubled in less than 2 years.
(8) Even after the impact of the 1997 Act, the number of
individuals subject to the AMT was extremely small until the
enactment of the tax reductions by the Economic Growth and
Tax Relief Reconciliation Act of 2001. Less than 1 percent of
individuals were subject to the AMT before 2001.
(9) The Economic Growth and Tax Relief Reconciliation Act
of 2001 contained reductions in the regular income tax rates
but not in the minimum tax rates. As a result, the number of
individuals subject to the AMT is projected to skyrocket. In
the future--
(A) 92 percent of all households with income between
$100,000 and $500,000 will be subject to the minimum tax;
(B) 73 percent of households with income between $75,000
and $100,000 will be subject to the minimum tax; and
(C) 37 percent of households with income between $50,000
and $75,000 will be subject to the minimum tax.-------
(10) The AMT has a substantial marriage penalty that has
never been addressed by recent ``marriage penalty repeal''
legislation. Married couples are 20 times more likely to be
on the minimum tax than single individuals.
(11) More than one-half of the promised tax reductions in
the recent marriage penalty bill passed by the House of
Representatives will be taken back by the AMT.
(12) The AMT disproportionately applies to families with
children. Ninety-seven percent of families with children and
with incomes between $75,000 and $100,000 will be subject to
the AMT.
(13) The current AMT means that many of the tax reductions
enacted in 2001 and 2003 are essentially temporary regardless
of whether Congress makes them permanent by repealing the
sunset contained in the 2001 Act. On average, the AMT will
take back--
(A) 15.3 percent of the benefits of the recent tax cuts
from families with incomes between $50,000 and $70,000;
(B) 37.2 percent of the benefits from families with incomes
between $75,000 and $100,000;
(C) 65 percent of the benefits from families with incomes
between $100,000 and $200,000; and
(D) 71.8 percent of the benefits from families with incomes
between $200,000 and $500,000.
(14) Only extremely wealthy taxpayers will retain most of
the benefits of the recent tax cuts. Taxpayers making more
than $1,000,000 will find only 8 percent of their tax
reductions taken back by the AMT.
(15) The Bush Administration's Fiscal Year 2005 Budget
recommends that the recent tax reductions be made permanent.
Accomplishing that goal requires a total reform of the AMT.
(b) Purpose.--It is the purpose of this Act to--
(1) provide significant temporary relief from the
alternative minimum tax; and
(2) to provide a framework for a total reform of the
alternative minimum tax.
TITLE I--TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX; FRAMEWORK
FOR REFORM
SEC. 101. TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX.
(a) In General.--Section 55 (relating to alternative
minimum tax imposed) is amended by adding at the end the
following new subsection:
``(f) Exemption for Individuals for Taxable Years Beginning
in 2005.--For any taxable year beginning in 2005, in the case
of an individual--
``(1) In general.--The tentative minimum tax of the
taxpayer shall be zero if the adjusted gross income of the
taxpayer (as determined for purposes of the regular tax) is
equal to or less than the threshold amount.
``(2) Phasein of liability above exemption level.--In the
case of a taxpayer whose adjusted gross income exceeds the
threshold amount but does not exceed $145,000 ($290,000 in
the case of a joint return), the tax imposed by subsection
(a) shall be the amount which bears the same ratio to such
tax (determined without regard to this subsection) as--
``(A) the excess of--
``(i) the adjusted gross income of the taxpayer (as
determined for purposes of the regular tax), over
``(ii) the threshold amount, bears to
``(B) $20,000 ($40,000 in the case of a joint return).
``(3) Threshold amount.--For purposes of this paragraph,
the term `threshold amount' means $125,000 ($250,000 in the
case of a joint return).
``(4) Estates and trusts.--This subsection shall not apply
to any estate or trust.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2004.
SEC. 102. FRAMEWORK FOR REFORM.
(a) Recommendations by the Secretary of the Treasury.--Not
later than 30 days after the enactment of this Act, the
Secretary of the Treasury shall submit to the Committee on
Ways and Means of the House of Representatives and to the
Committee on Finance of the Senate detailed legislative
recommendations designed to reform the alternative minimum
tax. Unless the Secretary determines that it is not feasible,
such recommendations shall include changes designed to ensure
that the percentage of individuals paying the minimum tax
would be reduced to the level in effect before the enactment
of the Economic Growth and Tax Relief Reconciliation Act of
2001 (which is less than 1 percent). The Secretary shall
include with such recommendations estimates of their revenue
cost.
(b) Action by Committee on Ways and Means.--Not later than
August 1, 2004, the Committee on Ways and Means of the House
of Representatives shall report legislation providing
permanent reform of the alternative minimum tax. Such
legislation shall be designed so that the percentage of
individuals subject to the minimum tax will be restored to
the level in effect before the enactment of the Economic
Growth and Tax Relief Reconciliation Act of 2001 (which is
less than 1 percent).
TITLE II--RESTRICTIONS ON TAX SHELTERS
Subtitle A--Provisions Designed To Curtail Tax Shelters
SEC. 201. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General.--Section 7701 is amended by redesignating
subsection (n) as subsection (o) and by inserting after
subsection (m) the following new subsection:
``(n) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In any case in which a court determines
that the economic substance doctrine is relevant for purposes
of this title to a transaction (or series of transactions),
such transaction (or series of transactions) shall have
economic substance only if the requirements of this paragraph
are met.
``(B) Definition of economic substance.--For purposes of
subparagraph (A)--
``(i) In general.--A transaction has economic substance
only if--
``(I) the transaction changes in a meaningful way (apart
from Federal tax effects) the taxpayer's economic position,
and
``(II) the taxpayer has a substantial nontax purpose for
entering into such transaction and the transaction is a
reasonable means of accomplishing such purpose.
In applying subclause (II), a purpose of achieving a
financial accounting benefit
[[Page H2572]]
shall not be taken into account in determining whether a
transaction has a substantial nontax purpose if the origin of
such financial accounting benefit is a reduction of income
tax.
``(ii) Special rule where taxpayer relies on profit
potential.--A transaction shall not be treated as having
economic substance by reason of having a potential for profit
unless--
``(I) the present value of the reasonably expected pre-tax
profit from the transaction is substantial in relation to the
present value of the expected net tax benefits that would be
allowed if the transaction were respected, and
``(II) the reasonably expected pre-tax profit from the
transaction exceeds a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees and other
transaction expenses and foreign taxes shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--The form
of a transaction which is in substance the borrowing of money
or the acquisition of financial capital directly or
indirectly from a tax-indifferent party shall not be
respected if the present value of the deductions to be
claimed with respect to the transaction is substantially in
excess of the present value of the anticipated economic
returns of the person lending the money or providing the
financial capital. A public offering shall be treated as a
borrowing, or an acquisition of financial capital, from a
tax-indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with tax-
indifferent parties.
``(B) Artificial income shifting and basis adjustments.--
The form of a transaction with a tax-indifferent party shall
not be respected if--
``(i) it results in an allocation of income or gain to the
tax-indifferent party in excess of such party's economic
income or gain, or
``(ii) it results in a basis adjustment or shifting of
basis on account of overstating the income or gain of the
tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term `economic
substance doctrine' means the common law doctrine under which
tax benefits under subtitle A with respect to a transaction
are not allowable if the transaction does not have economic
substance or lacks a business purpose.
``(B) Tax-indifferent party.--The term `tax-indifferent
party' means any person or entity not subject to tax imposed
by subtitle A. A person shall be treated as a tax-indifferent
party with respect to a transaction if the items taken into
account with respect to the transaction have no substantial
impact on such person's liability under subtitle A.
``(C) Exception for personal transactions of individuals.--
In the case of an individual, this subsection shall apply
only to transactions entered into in connection with a trade
or business or an activity engaged in for the production of
income.
``(D) Treatment of lessors.--In applying paragraph
(1)(B)(ii) to the lessor of tangible property subject to a
lease--
``(i) the expected net tax benefits with respect to the
leased property shall not include the benefits of--
``(I) depreciation,
``(II) any tax credit, or
``(III) any other deduction as provided in guidance by the
Secretary, and
``(ii) subclause (II) of paragraph (1)(B)(ii) shall be
disregarded in determining whether any of such benefits are
allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of
this subsection shall be construed as being in addition to
any such other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''.
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after the date of
the enactment of this Act.
SEC. 202. PENALTY FOR FAILING TO DISCLOSE REPORTABLE
TRANSACTION.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6707 the following new section:
``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE
TRANSACTION INFORMATION WITH RETURN OR
STATEMENT.
``(a) Imposition of Penalty.--Any person who fails to
include on any return or statement any information with
respect to a reportable transaction which is required under
section 6011 to be included with such return or statement
shall pay a penalty in the amount determined under subsection
(b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the amount of the penalty under subsection (a) shall be
$50,000.
``(2) Listed transaction.--The amount of the penalty under
subsection (a) with respect to a listed transaction shall be
$100,000.
``(3) Increase in penalty for large entities and high net
worth individuals.--
``(A) In general.--In the case of a failure under
subsection (a) by--
``(i) a large entity, or
``(ii) a high net worth individual,
the penalty under paragraph (1) or (2) shall be twice the
amount determined without regard to this paragraph.
``(B) Large entity.--For purposes of subparagraph (A), the
term `large entity' means, with respect to any taxable year,
a person (other than a natural person) with gross receipts in
excess of $10,000,000 for the taxable year in which the
reportable transaction occurs or the preceding taxable year.
Rules similar to the rules of paragraph (2) and subparagraphs
(B), (C), and (D) of paragraph (3) of section 448(c) shall
apply for purposes of this subparagraph.
``(C) High net worth individual.--For purposes of
subparagraph (A), the term `high net worth individual' means,
with respect to a reportable transaction, a natural person
whose net worth exceeds $2,000,000 immediately before the
transaction.
``(c) Definitions.--For purposes of this section--
``(1) Reportable transaction.--The term `reportable
transaction' means any transaction with respect to which
information is required to be included with a return or
statement because, as determined under regulations prescribed
under section 6011, such transaction is of a type which the
Secretary determines as having a potential for tax avoidance
or evasion.
``(2) Listed transaction.--Except as provided in
regulations, the term `listed transaction' means a reportable
transaction which is the same as, or substantially similar
to, a transaction specifically identified by the Secretary as
a tax avoidance transaction for purposes of section 6011.
``(d) Authority To Rescind Penalty.--
``(1) In general.--The Commissioner of Internal Revenue may
rescind all or any portion of any penalty imposed by this
section with respect to any violation if--
``(A) the violation is with respect to a reportable
transaction other than a listed transaction,
``(B) the person on whom the penalty is imposed has a
history of complying with the requirements of this title,
``(C) it is shown that the violation is due to an
unintentional mistake of fact;
``(D) imposing the penalty would be against equity and good
conscience, and
``(E) rescinding the penalty would promote compliance with
the requirements of this title and effective tax
administration.
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may be delegated only to the head of the
Office of Tax Shelter Analysis. The Commissioner, in the
Commissioner's sole discretion, may establish a procedure to
determine if a penalty should be referred to the Commissioner
or the head of such Office for a determination under
paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination under this subsection may not be
reviewed in any administrative or judicial proceeding.
``(4) Records.--If a penalty is rescinded under paragraph
(1), the Commissioner shall place in the file in the Office
of the Commissioner the opinion of the Commissioner or the
head of the Office of Tax Shelter Analysis with respect to
the determination, including--
``(A) the facts and circumstances of the transaction,
``(B) the reasons for the rescission, and
``(C) the amount of the penalty rescinded.
``(5) Report.--The Commissioner shall each year report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate--
``(A) a summary of the total number and aggregate amount of
penalties imposed, and rescinded, under this section, and
``(B) a description of each penalty rescinded under this
subsection and the reasons therefor.
``(e) Penalty Reported to SEC.--In the case of a person--
``(1) which is required to file periodic reports under
section 13 or 15(d) of the Securities Exchange Act of 1934 or
is required to be consolidated with another person for
purposes of such reports, and
``(2) which--
``(A) is required to pay a penalty under this section with
respect to a listed transaction,
``(B) is required to pay a penalty under section 6662A with
respect to any reportable transaction at a rate prescribed
under section 6662A(c), or
``(C) is required to pay a penalty under section 6662B with
respect to any noneconomic substance transaction,
the requirement to pay such penalty shall be disclosed in
such reports filed by such person for such periods as the
Secretary shall specify. Failure to make a disclosure in
accordance with the preceding sentence shall be treated as a
failure to which the penalty under subsection (b)(2) applies.
``(f) Coordination With Other Penalties.--The penalty
imposed by this section is in addition to any penalty imposed
under this title.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6707 the following:
[[Page H2573]]
``Sec. 6707A. Penalty for failure to include reportable transaction
information with return or statement.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns and statements the due date for which
is after the date of the enactment of this Act.
SEC. 203. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS
AND OTHER REPORTABLE TRANSACTIONS HAVING A
SIGNIFICANT TAX AVOIDANCE PURPOSE.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662 the following new section:
``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERSTATEMENTS WITH RESPECT TO REPORTABLE
TRANSACTIONS.
``(a) Imposition of Penalty.--If a taxpayer has a
reportable transaction understatement for any taxable year,
there shall be added to the tax an amount equal to 20 percent
of the amount of such understatement.
``(b) Reportable Transaction Understatement.--For purposes
of this section--
``(1) In general.--The term `reportable transaction
understatement' means the sum of--
``(A) the product of--
``(i) the amount of the increase (if any) in taxable income
which results from a difference between the proper tax
treatment of an item to which this section applies and the
taxpayer's treatment of such item (as shown on the taxpayer's
return of tax), and
``(ii) the highest rate of tax imposed by section 1
(section 11 in the case of a taxpayer which is a
corporation), and
``(B) the amount of the decrease (if any) in the aggregate
amount of credits determined under subtitle A which results
from a difference between the taxpayer's treatment of an item
to which this section applies (as shown on the taxpayer's
return of tax) and the proper tax treatment of such item.
For purposes of subparagraph (A), any reduction of the excess
of deductions allowed for the taxable year over gross income
for such year, and any reduction in the amount of capital
losses which would (without regard to section 1211) be
allowed for such year, shall be treated as an increase in
taxable income.
``(2) Items to which section applies.--This section shall
apply to any item which is attributable to--
``(A) any listed transaction, and
``(B) any reportable transaction (other than a listed
transaction) if a significant purpose of such transaction is
the avoidance or evasion of Federal income tax.
``(c) Higher Penalty for Nondisclosed Listed and Other
Avoidance Transactions.--
``(1) In general.--Subsection (a) shall be applied by
substituting `30 percent' for `20 percent' with respect to
the portion of any reportable transaction understatement with
respect to which the requirement of section 6664(d)(2)(A) is
not met.
``(2) Rules applicable to assertion and compromise of
penalty.--
``(A) In general.--Only upon the approval by the Chief
Counsel for the Internal Revenue Service or the Chief
Counsel's delegate at the national office of the Internal
Revenue Service may a penalty to which paragraph (1) applies
be included in a 1st letter of proposed deficiency which
allows the taxpayer an opportunity for administrative review
in the Internal Revenue Service Office of Appeals. If such a
letter is provided to the taxpayer, only the Commissioner of
Internal Revenue may compromise all or any portion of such
penalty.
``(B) Applicable rules.--The rules of paragraphs (2), (3),
(4), and (5) of section 6707A(d) shall apply for purposes of
subparagraph (A).
``(d) Definitions of Reportable and Listed Transactions.--
For purposes of this section, the terms `reportable
transaction' and `listed transaction' have the respective
meanings given to such terms by section 6707A(c).
``(e) Special Rules.--
``(1) Coordination with penalties, etc., on other
understatements.--In the case of an understatement (as
defined in section 6662(d)(2))--
``(A) the amount of such understatement (determined without
regard to this paragraph) shall be increased by the aggregate
amount of reportable transaction understatements and
noneconomic substance transaction understatements for
purposes of determining whether such understatement is a
substantial understatement under section 6662(d)(1), and
``(B) the addition to tax under section 6662(a) shall apply
only to the excess of the amount of the substantial
understatement (if any) after the application of subparagraph
(A) over the aggregate amount of reportable transaction
understatements and noneconomic substance transaction
understatements.
``(2) Coordination with other penalties.--
``(A) Application of fraud penalty.--References to an
underpayment in section 6663 shall be treated as including
references to a reportable transaction understatement and a
noneconomic substance transaction understatement.
``(B) No double penalty.--This section shall not apply to
any portion of an understatement on which a penalty is
imposed under section 6662B or 6663.
``(3) Special rule for amended returns.--Except as provided
in regulations, in no event shall any tax treatment included
with an amendment or supplement to a return of tax be taken
into account in determining the amount of any reportable
transaction understatement or noneconomic substance
transaction understatement if the amendment or supplement is
filed after the earlier of the date the taxpayer is first
contacted by the Secretary regarding the examination of the
return or such other date as is specified by the Secretary.
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).
``(5) Cross reference.--
``For reporting of section 6662A(c) penalty to the Securities and
Exchange Commission, see section 6707A(e).''.
(b) Determination of Other Understatements.--Subparagraph
(A) of section 6662(d)(2) is amended by adding at the end the
following flush sentence:
``The excess under the preceding sentence shall be determined
without regard to items to which section 6662A applies and
without regard to items with respect to which a penalty is
imposed by section 6662B.''.
(c) Reasonable Cause Exception.--
(1) In general.--Section 6664 is amended by adding at the
end the following new subsection:
``(d) Reasonable Cause Exception for Reportable Transaction
Understatements.--
``(1) In general.--No penalty shall be imposed under
section 6662A with respect to any portion of a reportable
transaction understatement if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
``(2) Special rules.--Paragraph (1) shall not apply to any
reportable transaction understatement unless--
``(A) the relevant facts affecting the tax treatment of the
item are adequately disclosed in accordance with the
regulations prescribed under section 6011,
``(B) there is or was substantial authority for such
treatment, and
``(C) the taxpayer reasonably believed that such treatment
was more likely than not the proper treatment.
A taxpayer failing to adequately disclose in accordance with
section 6011 shall be treated as meeting the requirements of
subparagraph (A) if the penalty for such failure was
rescinded under section 6707A(d).
``(3) Rules relating to reasonable belief.--For purposes of
paragraph (2)(C)--
``(A) In general.--A taxpayer shall be treated as having a
reasonable belief with respect to the tax treatment of an
item only if such belief--
``(i) is based on the facts and law that exist at the time
the return of tax which includes such tax treatment is filed,
and
``(ii) relates solely to the taxpayer's chances of success
on the merits of such treatment and does not take into
account the possibility that a return will not be audited,
such treatment will not be raised on audit, or such treatment
will be resolved through settlement if it is raised.
``(B) Certain opinions may not be relied upon.--
``(i) In general.--An opinion of a tax advisor may not be
relied upon to establish the reasonable belief of a taxpayer
if--
``(I) the tax advisor is described in clause (ii), or
``(II) the opinion is described in clause (iii).
``(ii) Disqualified tax advisors.--A tax advisor is
described in this clause if the tax advisor--
``(I) is a material advisor (within the meaning of section
6111(b)(1)) who participates in the organization, management,
promotion, or sale of the transaction or who is related
(within the meaning of section 267(b) or 707(b)(1)) to any
person who so participates,
``(II) is compensated directly or indirectly by a material
advisor with respect to the transaction,
``(III) has a fee arrangement with respect to the
transaction which is contingent on all or part of the
intended tax benefits from the transaction being sustained,
``(IV) has an arrangement with respect to the transaction
which provides that contractual disputes between the taxpayer
and the advisor are to be settled by arbitration or which
limits damages by reference to fees paid to the advisor for
such transaction, or
``(V) as determined under regulations prescribed by the
Secretary, has a disqualifying financial interest with
respect to the transaction.
``(iii) Disqualified opinions.--For purposes of clause (i),
an opinion is disqualified if the opinion--
``(I) is based on unreasonable factual or legal assumptions
(including assumptions as to future events),
``(II) unreasonably relies on representations, statements,
findings, or agreements of the taxpayer or any other person,
``(III) does not identify and consider all relevant facts,
``(IV) is not signed by all individuals who are principal
authors of the opinion, or
``(V) fails to meet any other requirement as the Secretary
may prescribe.''.
(2) Conforming amendment.--The heading for subsection (c)
of section 6664 is amended by inserting ``for Underpayments''
after ``Exception''.
(d) Conforming Amendments.--
[[Page H2574]]
(1) Subparagraph (C) of section 461(i)(3) is amended by
striking ``section 6662(d)(2)(C)(iii)'' and inserting
``section 1274(b)(3)(C)''.
(2) Paragraph (3) of section 1274(b) is amended--
(A) by striking ``(as defined in section
6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
(B) by adding at the end the following new subparagraph:
``(C) Tax shelter.--For purposes of subparagraph (B), the
term `tax shelter' means--
``(i) a partnership or other entity,
``(ii) any investment plan or arrangement, or
``(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity, plan,
or arrangement is the avoidance or evasion of Federal income
tax.''.
(3) Section 6662(d)(2) is amended by striking subparagraphs
(C) and (D).
(4) Section 6664(c)(1) is amended by striking ``this part''
and inserting ``section 6662 or 6663''.
(5) Subsection (b) of section 7525 is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(6)(A) The heading for section 6662 is amended to read as
follows:
``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERPAYMENTS.''.
(B) The table of sections for part II of subchapter A of
chapter 68 is amended by striking the item relating to
section 6662 and inserting the following new items:
``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements
with respect to reportable transactions.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 204. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662A the following new section:
``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
``(a) Imposition of Penalty.--If a taxpayer has an
noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal
to 40 percent of the amount of such understatement.
``(b) Reduction of Penalty for Disclosed Transactions.--
Subsection (a) shall be applied by substituting `20 percent'
for `40 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect
to which the relevant facts affecting the tax treatment of
the item are adequately disclosed in the return or a
statement attached to the return.
``(c) Noneconomic Substance Transaction Understatement.--
For purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be
an understatement under section 6662A(b)(1) if section 6662A
were applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction
if--
``(A) there is a lack of economic substance (within the
meaning of section 7701(n)(1)) for the transaction giving
rise to the claimed benefit or the transaction was not
respected under section 7701(n)(2), or
``(B) the transaction fails to meet the requirements of any
similar rule of law.
``(d) Rules Applicable To Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (2), (3),
(4), and (5) of section 6707A(d) shall apply for purposes of
paragraph (1).
``(e) Coordination With Other Penalties.--Except as
otherwise provided in this part, the penalty imposed by this
section shall be in addition to any other penalty imposed by
this title.
``(f) Cross References.--
``(1) For coordination of penalty with understatements under section
6662 and other special rules, see section 6662A(e).
``(2) For reporting of penalty imposed under this section to the
Securities and Exchange Commission, see section 6707A(e).''.
(b) Clerical Amendment.--The table of sections for part II
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6662A the following new item:
``Sec. 6662B. Penalty for understatements attributable to transactions
lacking economic substance, etc.''.
(c) Effective Date.--The amendments made by this section
shall apply to transactions entered into after the date of
the enactment of this Act.
SEC. 205. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY
FOR NONREPORTABLE TRANSACTIONS.
(a) Substantial Understatement of Corporations.--Section
6662(d)(1)(B) (relating to special rule for corporations) is
amended to read as follows:
``(B) Special rule for corporations.--In the case of a
corporation other than an S corporation or a personal holding
company (as defined in section 542), there is a substantial
understatement of income tax for any taxable year if the
amount of the understatement for the taxable year exceeds the
lesser of--
``(i) 10 percent of the tax required to be shown on the
return for the taxable year (or, if greater, $10,000), or
``(ii) $10,000,000.''.
(b) Reduction for Understatement of Taxpayer Due to
Position of Taxpayer or Disclosed Item.--
(1) In general.--Section 6662(d)(2)(B)(i) (relating to
substantial authority) is amended to read as follows:
``(i) the tax treatment of any item by the taxpayer if the
taxpayer had reasonable belief that the tax treatment was
more likely than not the proper treatment, or''.
(2) Conforming amendment.--Section 6662(d) is amended by
adding at the end the following new paragraph:
``(3) Secretarial list.--For purposes of this subsection,
section 6664(d)(2), and section 6694(a)(1), the Secretary may
prescribe a list of positions for which the Secretary
believes there is not substantial authority or there is no
reasonable belief that the tax treatment is more likely than
not the proper tax treatment. Such list (and any revisions
thereof) shall be published in the Federal Register or the
Internal Revenue Bulletin.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 206. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES
RELATING TO TAXPAYER COMMUNICATIONS.
(a) In General.--Section 7525(b) (relating to section not
to apply to communications regarding corporate tax shelters)
is amended to read as follows:
``(b) Section Not To Apply to Communications Regarding Tax
Shelters.--The privilege under subsection (a) shall not apply
to any written communication which is--
``(1) between a federally authorized tax practitioner and--
``(A) any person,
``(B) any director, officer, employee, agent, or
representative of the person, or
``(C) any other person holding a capital or profits
interest in the person, and
``(2) in connection with the promotion of the direct or
indirect participation of the person in any tax shelter (as
defined in section 1274(b)(3)(C)).''.
(b) Effective Date.--The amendment made by this section
shall apply to communications made on or after the date of
the enactment of this Act.
SEC. 207. DISCLOSURE OF REPORTABLE TRANSACTIONS.
(a) In General.--Section 6111 (relating to registration of
tax shelters) is amended to read as follows:
``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.
``(a) In General.--Each material advisor with respect to
any reportable transaction shall make a return (in such form
as the Secretary may prescribe) setting forth--
``(1) information identifying and describing the
transaction,
``(2) information describing any potential tax benefits
expected to result from the transaction, and
``(3) such other information as the Secretary may
prescribe.
Such return shall be filed not later than the date specified
by the Secretary.
``(b) Definitions.--For purposes of this section--
``(1) Material advisor.--
``(A) In general.--The term `material advisor' means any
person--
``(i) who provides any material aid, assistance, or advice
with respect to organizing, managing, promoting, selling,
implementing, or carrying out any reportable transaction, and
``(ii) who directly or indirectly derives gross income in
excess of the threshold amount for such aid, assistance, or
advice.
``(B) Threshold amount.--For purposes of subparagraph (A),
the threshold amount is--
``(i) $50,000 in the case of a reportable transaction
substantially all of the tax benefits from which are provided
to natural persons, and
``(ii) $250,000 in any other case.
``(2) Reportable transaction.--The term `reportable
transaction' has the meaning given to such term by section
6707A(c).
``(c) Regulations.--The Secretary may prescribe regulations
which provide--
``(1) that only 1 person shall be required to meet the
requirements of subsection (a) in cases in which 2 or more
persons would otherwise be required to meet such
requirements,
``(2) exemptions from the requirements of this section, and
``(3) such rules as may be necessary or appropriate to
carry out the purposes of this section.''.
(b) Conforming Amendments.--
(1) The item relating to section 6111 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6111. Disclosure of reportable transactions.''.
[[Page H2575]]
(2)(A) So much of section 6112 as precedes subsection (c)
thereof is amended to read as follows:
``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS
MUST KEEP LISTS OF ADVISEES.
``(a) In General.--Each material advisor (as defined in
section 6111) with respect to any reportable transaction (as
defined in section 6707A(c)) shall maintain, in such manner
as the Secretary may by regulations prescribe, a list--
``(1) identifying each person with respect to whom such
advisor acted as such a material advisor with respect to such
transaction, and
``(2) containing such other information as the Secretary
may by regulations require.
This section shall apply without regard to whether a material
advisor is required to file a return under section 6111 with
respect to such transaction.''.
(B) Section 6112 is amended by redesignating subsection (c)
as subsection (b).
(C) Section 6112(b), as redesignated by subparagraph (B),
is amended--
(i) by inserting ``written'' before ``request'' in
paragraph (1)(A), and
(ii) by striking ``shall prescribe'' in paragraph (2) and
inserting ``may prescribe''.
(D) The item relating to section 6112 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6112. Material advisors of reportable transactions must keep
lists of advisees.''.
(3)(A) The heading for section 6708 is amended to read as
follows:
``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH
RESPECT TO REPORTABLE TRANSACTIONS.''.
(B) The item relating to section 6708 in the table of
sections for part I of subchapter B of chapter 68 is amended
to read as follows:
``Sec. 6708. Failure to maintain lists of advisees with respect to
reportable transactions.''.
(c) Required Disclosure Not Subject to Claim of
Confidentiality.--Subparagraph (A) of section 6112(b)(1), as
redesignated by subsection (b)(2)(B), is amended by adding at
the end the following new flush sentence:
``For purposes of this section, the identity of any person on
such list shall not be privileged.''.
(d) Effective Date.--The amendments made by this section
shall apply to transactions with respect to which material
aid, assistance, or advice referred to in section
6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as
added by this section) is provided after the date of the
enactment of this Act.
SEC. 208. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER
TAX SHELTERS.
(a) In General.--Section 6707 (relating to failure to
furnish information regarding tax shelters) is amended to
read as follows:
``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING
REPORTABLE TRANSACTIONS.
``(a) In General.--If a person who is required to file a
return under section 6111(a) with respect to any reportable
transaction--
``(1) fails to file such return on or before the date
prescribed therefor, or
``(2) files false or incomplete information with the
Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return
in the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraph (2), the
penalty imposed under subsection (a) with respect to any
failure shall be $50,000.
``(2) Listed transactions.--The penalty imposed under
subsection (a) with respect to any listed transaction shall
be an amount equal to the greater of--
``(A) $200,000, or
``(B) 50 percent of the gross income derived by such person
with respect to aid, assistance, or advice which is provided
with respect to the listed transaction before the date the
return including the transaction is filed under section 6111.
Subparagraph (B) shall be applied by substituting `75
percent' for `50 percent' in the case of an intentional
failure or act described in subsection (a).
``(c) Certain Rules To Apply.--The provisions of section
6707A(d) shall apply to any penalty imposed under this
section.
``(d) Reportable and Listed Transactions.--The terms
`reportable transaction' and `listed transaction' have the
respective meanings given to such terms by section
6707A(c).''.
(b) Clerical Amendment.--The item relating to section 6707
in the table of sections for part I of subchapter B of
chapter 68 is amended by striking ``tax shelters'' and
inserting ``reportable transactions''.
(c) Effective Date.--The amendments made by this section
shall apply to returns the due date for which is after the
date of the enactment of this Act.
SEC. 209. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN
LISTS OF INVESTORS.
(a) In General.--Subsection (a) of section 6708 is amended
to read as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If any person who is required to
maintain a list under section 6112(a) fails to make such list
available upon written request to the Secretary in accordance
with section 6112(b)(1)(A) within 20 business days after the
date of the Secretary's request, such person shall pay a
penalty of $10,000 for each day of such failure after such
20th day.
``(2) Reasonable cause exception.--No penalty shall be
imposed by paragraph (1) with respect to the failure on any
day if such failure is due to reasonable cause.''.
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 210. PENALTY ON PROMOTERS OF TAX SHELTERS.
(a) Penalty on Promoting Abusive Tax Shelters.--Section
6700(a) is amended by adding at the end the following new
sentence: ``Notwithstanding the first sentence, if an
activity with respect to which a penalty imposed under this
subsection involves a statement described in paragraph
(2)(A), the amount of the penalty shall be equal to 50
percent of the gross income derived (or to be derived) from
such activity by the person on which the penalty is
imposed.''.
(b) Effective Date.--The amendment made by this section
shall apply to activities after the date of the enactment of
this Act.
SEC. 211. INCREASES IN PENALTIES FOR AIDING AND ABETTING
UNDERSTATEMENTS.
(a) In General.--Section 6701(b) is amended to read as
follows:
``(b) Amount of Penalty.--
``(1) In general.--The amount of the penalty imposed by
subsection (a) shall be the greater of--
``(A) $2,000, or
``(B) 50 percent of the gross income derived (or to be
derived) from the activity giving rise to the penalty.
``(2) Corporations.--If the return, affidavit, claim, or
other document relates to the tax liability of a corporation,
paragraph (1)(A) shall be applied by substituting `$20,000'
for `$2,000'.''
(b) Effective Date.--The amendment made by this section
shall apply to activities after the date of the enactment of
this Act.
Subtitle B--Enron-Related Tax Shelter Provisions
SEC. 221. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT-IN
LOSSES.
(a) In General.--Section 362 (relating to basis to
corporations) is amended by adding at the end the following
new subsection:
``(e) Limitations on Built-In Losses.--
``(1) Limitation on importation of built-in losses.--
``(A) In general.--If in any transaction described in
subsection (a) or (b) there would (but for this subsection)
be an importation of a net built-in loss, the basis of each
property described in subparagraph (B) which is acquired in
such transaction shall (notwithstanding subsections (a) and
(b)) be its fair market value immediately after such
transaction.
``(B) Property described.--For purposes of subparagraph
(A), property is described in this subparagraph if--
``(i) gain or loss with respect to such property is not
subject to tax under this subtitle in the hands of the
transferor immediately before the transfer, and
``(ii) gain or loss with respect to such property is
subject to such tax in the hands of the transferee
immediately after such transfer.
In any case in which the transferor is a partnership, the
preceding sentence shall be applied by treating each partner
in such partnership as holding such partner's proportionate
share of the property of such partnership.
``(C) Importation of net built-in loss.--For purposes of
subparagraph (A), there is an importation of a net built-in
loss in a transaction if the transferee's aggregate adjusted
bases of property described in subparagraph (B) which is
transferred in such transaction would (but for this
paragraph) exceed the fair market value of such property
immediately after such transaction.
``(2) Limitation on transfer of built-in losses in section
351 transactions.--
``(A) In general.--If--
``(i) property is transferred by a transferor in any
transaction which is described in subsection (a) and which is
not described in paragraph (1) of this subsection, and
``(ii) the transferee's aggregate adjusted bases of such
property so transferred would (but for this paragraph) exceed
the fair market value of such property immediately after such
transaction,
then, notwithstanding subsection (a), the transferee's
aggregate adjusted bases of the property so transferred shall
not exceed the fair market value of such property immediately
after such transaction.
``(B) Allocation of basis reduction.--The aggregate
reduction in basis by reason of subparagraph (A) shall be
allocated among the property so transferred in proportion to
their respective built-in losses immediately before the
transaction.
``(C) Exception for transfers within affiliated group.--
Subparagraph (A) shall not apply to any transaction if the
transferor owns stock in the transferee meeting the
requirements of section 1504(a)(2). In the case of property
to which subparagraph (A) does not apply by reason of the
preceding sentence, the transferor's basis in the stock
received for such property shall not exceed its fair market
value immediately after the transfer.''.
(b) Comparable Treatment Where Liquidation.--Paragraph (1)
of section 334(b) (relating to liquidation of subsidiary) is
amended to read as follows:
``(1) In general.--If property is received by a corporate
distributee in a distribution in a complete liquidation to
which section 332 applies (or in a transfer described in
section
[[Page H2576]]
337(b)(1)), the basis of such property in the hands of such
distributee shall be the same as it would be in the hands of
the transferor; except that the basis of such property in the
hands of such distributee shall be the fair market value of
the property at the time of the distribution--
``(A) in any case in which gain or loss is recognized by
the liquidating corporation with respect to such property, or
``(B) in any case in which the liquidating corporation is a
foreign corporation, the corporate distributee is a domestic
corporation, and the corporate distributee's aggregate
adjusted bases of property described in section 362(e)(1)(B)
which is distributed in such liquidation would (but for this
subparagraph) exceed the fair market value of such property
immediately after such liquidation.''.
(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a) shall
apply to transactions after the date of the enactment of this
Act.
(2) Liquidations.--The amendment made by subsection (b)
shall apply to liquidations after the date of the enactment
of this Act.
SEC. 222. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK
HELD BY PARTNERSHIP IN CORPORATE PARTNER.
(a) In General.--Section 755 is amended by adding at the
end the following new subsection:
``(c) No Allocation of Basis Decrease to Stock of Corporate
Partner.--In making an allocation under subsection (a) of any
decrease in the adjusted basis of partnership property under
section 734(b)--
``(1) no allocation may be made to stock in a corporation
(or any person which is related (within the meaning of
section 267(b) or 707(b)(1)) to such corporation) which is a
partner in the partnership, and
``(2) any amount not allocable to stock by reason of
paragraph (1) shall be allocated under subsection (a) to
other partnership property in such manner as the Secretary
may prescribe.
Gain shall be recognized to the partnership to the extent
that the amount required to be allocated under paragraph (2)
to other partnership property exceeds the aggregate adjusted
basis of such other property immediately before the
allocation required by paragraph (2).''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 223. EXPANDED DISALLOWANCE OF DEDUCTION FOR INTEREST ON
CONVERTIBLE DEBT.
(a) In General.--Paragraph (2) of section 163(l) is amended
by inserting ``or equity held by the issuer (or any related
party) in any other person'' after ``or a related party''.
(b) Capitalization Allowed With Respect to Equity of
Persons Other Than Issuer and Related Parties.--Section
163(l) is amended by redesignating paragraphs (4) and (5) as
paragraphs (5) and (6) and by inserting after paragraph (3)
the following new paragraph:
``(4) Capitalization allowed with respect to equity of
persons other than issuer and related parties.--If the
disqualified debt instrument of a corporation is payable in
equity held by the issuer (or any related party) in any other
person (other than a related party), the basis of such equity
shall be increased by the amount not allowed as a deduction
by reason of paragraph (1) with respect to the instrument.''.
(c) Exception for Certain Instruments Issued by Dealers in
Securities.--Section 163(l), as amended by subsection (b), is
amended by redesignating paragraphs (5) and (6) as paragraphs
(6) and (7) and by inserting after paragraph (4) the
following new paragraph:
``(5) Exception for certain instruments issued by dealers
in securities.--For purposes of this subsection, the term
`disqualified debt instrument' does not include indebtedness
issued by a dealer in securities (or a related party) which
is payable in, or by reference to, equity (other than equity
of the issuer or a related party) held by such dealer in its
capacity as a dealer in securities. For purposes of this
paragraph, the term `dealer in securities' has the meaning
given such term by section 475.''.
(c) Conforming Amendments.--Paragraph (3) of section 163(l)
is amended--
(1) by striking ``or a related party'' in the material
preceding subparagraph (A) and inserting ``or any other
person'', and
(2) by striking ``or interest'' each place it appears.
(d) Effective Date.--The amendments made by this section
shall apply to debt instruments issued after the date of the
enactment of this Act.
SEC. 224. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER
SECTION 269.
(a) In General.--Subsection (a) of section 269 (relating to
acquisitions made to evade or avoid income tax) is amended to
read as follows:
``(a) In General.--If--
``(1)(A) any person or persons acquire, directly or
indirectly, control of a corporation, or
``(B) any corporation acquires, directly or indirectly,
property of another corporation and the basis of such
property, in the hands of the acquiring corporation, is
determined by reference to the basis in the hands of the
transferor corporation, and
``(2) the principal purpose for which such acquisition was
made is evasion or avoidance of Federal income tax,
then the Secretary may disallow such deduction, credit, or
other allowance. For purposes of paragraph (1)(A), control
means the ownership of stock possessing at least 50 percent
of the total combined voting power of all classes of stock
entitled to vote or at least 50 percent of the total value of
all shares of all classes of stock of the corporation.''.
(b) Effective Date.--The amendment made by this section
shall apply to stock and property acquired after the date of
the enactment of this Act.
SEC. 225. MODIFICATION OF INTERACTION BETWEEN SUBPART F AND
PASSIVE FOREIGN INVESTMENT COMPANY RULES.
(a) Limitation on Exception From PFIC Rules for United
States Shareholders of Controlled Foreign Corporations.--
Paragraph (2) of section 1297(e) (relating to passive foreign
investment company) is amended by adding at the end the
following flush sentence:
``Such term shall not include any period if the earning of
subpart F income by such corporation during such period would
result in only a remote likelihood of an inclusion in gross
income under section 951(a)(1)(A)(i).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years of controlled foreign
corporations beginning after the date of the enactment of
this Act, and to taxable years of United States shareholders
with or within which such taxable years of controlled foreign
corporations end.
Amend the title so as to read: ``A bill to provide for
significant temporary relief from the alternative minimum tax
and for a framework for a total reform of the alternative
minimum tax.''.
The SPEAKER pro tempore. Pursuant to House Resolution 619, the
gentleman from Massachusetts (Mr. Neal) and a Member opposed each will
control 30 minutes.
The Chair recognizes the gentleman from Massachusetts (Mr. Neal).
Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, the gentleman from Pennsylvania (Mr. English) is a good
friend of mine. He is a member of the Committee on Ways and Means, and
he really is a very decent guy, but he is really wrong in what he said
earlier. To suggest that these tax cuts and this mania that we have
witnessed now for tax cuts for the last 3 years has not had a
substantial impact on the size of Federal deficit is to really put our
heads in the sand. Let me remind Members of this House we are now
fighting two wars with three tax cuts, and the mathematics are there
for everybody to see.
An announcement this morning by Secretary Rumsfeld that 135,000
troops now are going to stay in Iraq for an extended tour of duty, well
into the year 2005, and let us be honest with the American people, they
are there for 2006 and 2007 and maybe through 2010. That is the reality
that we confront. We are going to a $500 billion deficit this year
after coming out of the Clinton years when we not only balanced the
budget but projected surpluses for years to come.
I want to remind ``all is well'' that this proposal from the
gentleman from Connecticut today has never even been vetted in the
Committee on Ways and Means. Maybe I am mistaken, but I believe after
having served in that committee for 12 years that the Committee on Ways
and Means has a responsibility for tax revenue issues. So this is being
brought to us by an individual who is not on the committee and indeed
it has not been aired in the committee. There has been no public
hearing on the proposal that we are going to vote on in an hour. So we
find ourselves having this debate about alternative minimum tax.
And I want to say something. I think my hands are clean on this
issue. I have heard them say that the Democrats put this in place in
the reform of the Tax Act of 1986. That may well be the case, but let
me tell the Members something. I am in favor of repealing it. I think
there ought to be some intellectual honesty as it relates to AMT. It
has outlived its usefulness. It has outlived its purpose, and now
middle-income taxpayers are now being asked to carry its burden.
We have a game of kind of hocus-pocus here. The Republicans stand up
and say, well, we are going to give AMT relief. They are not giving AMT
to the number of people they could and should be giving AMT relief to,
largely because it does not square with the tax cuts that the
administration has proposed, and once again Republicans in this House
go along with very few questions asked about any issue. The
administration says it is so, they just go along with it, no questions
asked, even if the evidence a few weeks, months,
[[Page H2577]]
years later turns a contrary conclusion.
Let me speak specifically, if I can, to this issue as it relates to
this debate today. The alternative minimum tax was originally designed
to make sure that everyone paid their fair share. Who among us can
argue with that? The second notion of the proposal that we have offered
today is that we want to grant some relief to the burden that the
Republican Party has put on middle-income tax earners. If they, in
fact, take advantage of certain credits in the Tax Code and they have a
lot of children, they are penalized by their proposal. Do the Members
know why? It is very simple, because the philosophy of the majority in
of this body is that the only people in America that ought to have tax
relief are the wealthy.
And to the credit of the wealthy 3 years ago, they were not even
asking for tax relief. They wanted to pay down the debt, and public
opinion polling concludes, once again, they still think that paying
down the deficits are a far better use of taxpayer money than giving
tax relief to even those who might benefit most from it.
They promised that they were going to do something about tax reform
as it relates to AMT. But what they did not tell them was that they are
going to give them tax relief on one hand and then if they sit down to
do their tax forms, they are going to take it away from them if they
have four or five children. If people desire to use the HOPE credit,
they are going to take it away from them. If they try to take advantage
of the child credit, they are going to take it away from them. So they
give it to them on one hand and they take it back on the other. So in
the end, there really is no tax relief as it relates to alternative
minimum tax.
I want the Members to listen to this. Half, half of the promised
benefits that we voted on last week under the marriage penalty bill, we
were told we were going to provide relief to those folks as well, they
are taken back to the Treasury by alternative minimum tax.
I have offered time and again, Mr. Speaker, a couple of very easy
proposals in this body. Let us get rid of AMT. Let us scale back the
size of the tax cuts the administration offered. Let us pay down the
deficit. Let us pay for these two wars. Let us fix Social Security. Let
us fix Medicare, as American people clearly desire. And let us give tax
relief to middle-income Americans, particularly from alternative
minimum tax.
I hope in the next few minutes as we engage this debate, we will have
a chance to put the magnifying glass on the proposal that is before us
today. And I have got to tell the Members, as a member of the oldest
committee in this House, a committee that I believe is so desirable to
sit on, a committee whose history is so profound as it relates to this
Republic, they did not even have enough regard for the Committee on
Ways and Means to hold a hearing on this proposal in the committee.
This is the introduction to their proposal today on the House floor.
Nobody has seen it until about an hour and a half ago.
So let us engage this debate. Let us have an opportunity to draw some
attention to what it is that they are saying but, most importantly, to
what it is that they are doing.
Mr. Speaker, I reserve the balance of my time.
Mr. ENGLISH. Mr. Speaker, I rise to claim the time in opposition to
the amendment in the nature of a substitute.
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr.
English) is recognized for 30 minutes.
Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume.
This has been a fascinating debate today, and I particularly want to
congratulate the gentleman for his contribution. The gentleman from
Massachusetts, as with his customary eloquence, has laid out his
position, and in the process perhaps subconsciously has drawn a
striking contrast between the two parties and perhaps one that he had
not intended. He characterizes, first of all, Republican tax relief as
maniacal. I think that is an interesting choice of words, but as I look
at it, it perhaps I think accurately captures the view on the other
side of tax relief and a tax program that is already lifting the
economy, that is creating jobs, that is creating opportunities
throughout America, including for a lot of people who were not directly
the beneficiary of as much tax relief as we would have liked.
Let me say in addition to that, there has been the procedural
argument made here that this proposal before us today has not been
adequately vetted. Mr. Speaker, to be very clear, this language is
similar to what has been included in the tax bill that passed. This
kind of language has been many times before the body. We have
thoroughly debated within the Committee on Ways and Means the issue of
the alternative minimum tax, and it is not clear that additional
hearings would have provided a substantive additional agenda.
I am delighted to hear the gentleman come out in favor of full repeal
because, as I said to the gentleman from New York earlier in our
discussion, I invite the gentleman to join with me and other members of
the zero AMT caucus to come together and to work through a proposal to
get rid of this AMT.
The substitute that we have now risen to debate, though, was not I
think adequately discussed in the gentleman's remarks, and perhaps
there is where the contrast is clearest. Because in an effort to, as
they put it, pay for the AMT relief that is included in the bill, what
they have proposed doing is permanently putting in place an increase of
corporate taxes in order to pay for 1-year relief to the individual
AMT. That sounds like good politics, but at a time when our economy is
struggling, at a time when even people on the other side of the aisle
have conceded that corporate tax rates in our country and on our
companies and workers are higher than those globally and are a clear
competitive disadvantage to our companies who are seeking to keep jobs
here in the United States, that the idea of permanently raising
corporate taxes is one that I think is striking and I think uniquely
ill conceived.
{time} 1300
What they have proposed doing is generating revenue through the
permanent implementation of something called the economic substance
doctrine. Economic substance is a doctrine that our courts apply on a
discretionary basis to situations which erode our rules-based tax
system.
The substitute attempts to codify this judicial doctrine and expand
its definition so the IRS can pick apart any ordinary business
transaction and subjectively look for reasonable business purposes. The
result is a new requirement for taxpayers to have yet another layer of
IRS intervention and be burdened with restrictions in ways that the
courts have not even considered. I realize that there are some who have
embraced this on the Senate side, but no one on our side of the aisle
here in the House of Representatives so far has done so. The result
would be a new requirement for taxpayers and another layer of IRS
intervention.
The proposal would then propose strict liability penalties on
understatements of tax, which would not be limited to abusive
transactions. The proposal, in our view, is far too broad and
significantly expands common-law doctrines.
There is also no indication that the doctrine would be limited to
abusive transactions. While we are currently debating a 1-year
extension of tax relief for working families, let me make this clear
again: this substitute levies a permanent tax increase on employers and
ultimately on the labor of the workers that they employ.
The gentleman from New York (Mr. Rangel) has himself indicated
support for lower corporate tax rates for our manufacturers in his own
bill to replace the FSC/ETI regime. Here his proxy is insisting on
raising their taxes by $15 billion.
In addition to a $15 billion tax increase, companies would now have
to spend valuable time and resources managing the implications of the
law, when they could be using these resources to expand their
operations, invest in production lines, and create jobs. Instead, what
this proposal effectively does is create jobs only in the legal
profession.
Mr. Speaker, the House has voted repeatedly against this tax increase
because it is bad tax policy, bad economic policy, and it further
hinders
[[Page H2578]]
American competitiveness and does so permanently. I think it is fairly
clear that what is being attempted here in this substitute is to take
something that we really need to do, addressing the problem of the AMT,
and attach to it something off of a wish-list from the left, which,
frankly, has no place here at a time when we are trying to buoy the
economy.
I think it is worth noting that the last time someone really
aggressively proposed to raise taxes during a slowdown was Mr. Hoover,
so there may even be some Republican genealogy in the proposal we are
seeing offered on the other side. But the Republicans of today do not
recognize this as a positive thing.
Let me summarize the bill of particulars against the Rangel
substitute and specifically the economic substance doctrine.
First of all, it is a permanent tax increase. Although the AMT relief
in the Democratic substitute is temporary, the tax increases are
permanent.
In addition, the administration strongly opposes codification of the
economic substance doctrine. They have looked at it, and they have
found it wanting. Acting Treasury Assistant Secretary for Tax Policy,
Gregory Jenner, has stated that codifying the economic substance
doctrine could be counterproductive, as it would drive tax shelters
even further underground. Assistant Secretary Jenner has stated that
the most effective way to stop tax shelter transactions is to require
increased disclosure. The administration's tax shelter proposal
increases disclosure by levying substantial penalties on those who fail
to disclose their transactions.
As I have noted, this proposal has been repeatedly rejected in the
House, and it would also hurt jobs and investment. Codifying the
economic substance doctrine would result in businesses foregoing job-
creating investments because of concerns that the IRS would improperly
apply the economic substance doctrine to legitimate transactions.
Finally, this proposal goes beyond accepted case law. The Democratic
proposal requires that some transactions have at least a risk-free rate
of return. This type of provision goes beyond what is required by
either the Tax Code or common-law court doctrines. Furthermore, their
proposal does not define a risk-free rate of return.
All things being equal, this is a very poor substitute; and we urge
its rejection.
Mr. Speaker, I reserve the balance of my time.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, anytime that we can ask those companies that have moved
to Bermuda to avoid paying American taxes with 134,000 troops in Iraq
to pay their share, I am happy to have my fingerprints on that issue.
Mr. Speaker, I yield 4 minutes to the distinguished gentleman from
Maryland (Mr. Hoyer), the Democratic whip.
Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, this debate on the alternative minimum tax epitomizes,
unfortunately, precisely what is wrong in this House today: the
Republican leadership's refusal to seize bipartisan opportunities where
they exist, and its desire to turn every tax bill into a decisive
political bludgeon.
Let us be honest: every Member of this House, without exception,
recognizes that we must fix the alternative minimum tax. That is not
what this debate is about. When the AMT was enacted in 1969, it was
supposed to ensure that wealthy taxpayers paid a fair share, that is to
say, that you did not have your accountants figure out 17 ways to
Sunday that you would not pay any taxes to support this democracy, this
Republic, this great Nation.
We said in a bipartisan way, you ought to pay something. But because
it was not indexed for inflation, the AMT today ensnares more and more
middle-income taxpayers. That was not the intent of any Member of this
House. It forces them to pay more than they would under the regular tax
schedule. But rather than trying to find a bipartisan solution to this
growing and vexing problem, the majority has offered the legislative
equivalent of a Band-Aid that would only drive us further into debt.
Make no mistake: the Democratic substitute drafted by the gentleman
from New York (Mr. Rangel) is vastly superior. Where the Republican
bill would extend current AMT exemptions for taxpayers whose adjusted
gross income is less than $40,250, or $58,000 for married couples, the
Democratic substitute would say to individuals making $125,000 or
couples making $250,000, the Alternative Minimum Tax was not meant for
you. You will pay your regular taxes. It was meant for the very wealthy
who exempted themselves from taxes.
I want you to know that I paid 10 percent more of my income, which is
about one-eighth of Dick Cheney's income, the Vice President's. Why?
Because he has an extraordinary preference item, $625,000 in income
from municipal bonds. Zero taxes. But the soldiers who are defending
the assets of those municipal bonds, CDC is protecting the health of
those in those municipalities, as well as Mr. Cheney's and mine.
Not one nickel of cost in the Republican bill is paid for. Not one
nickel. My friends on the Republican side, you are raising taxes, but
you are slick; you are doing it by the back door. You are increasing
the debt. As a result of increasing the debt, my kids are going to have
to pay higher taxes.
That is pretty slick. Why do I say it is slick? My kids happen to be
voting; but my grandchildren, who are going to have to pay more taxes,
are not voting, so they are not focused on what you are doing, this
shell game you are playing of pretending you are cutting taxes.
You are delaying taxes, is what you are doing; and you are increasing
them at the same time. The fact is, the Democratic substitute provides
a simpler and broader relief. It is fiscally responsible. That used to
be the mantra of your party. Many of your folks talk about it today.
They do not vote that way, however.
It is ironic, Mr. Speaker, that this Republican majority, which talks
about tax fairness and simplification, in the last 3\1/2\ years has
only made our Tax Code much more complicated.
Let us not perpetuate tax confusion and complexity. Let us help those
who need help. Let us pay for what we do. That is the responsible
policy. That would make this Congress responsible. We can do so in a
bipartisan way. Vote for this substitute.
Mr. ENGLISH. Mr. Speaker, I yield myself 10 seconds to thank the
gentleman for his salute to the simplicity of the economic substance
doctrine, and we look forward to the vote on the substitute.
Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut
(Mrs. Johnson), a member of the Committee on Ways and Means.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank my colleague for
yielding me time to speak on what I consider to be a very important
bill.
I rise in support of H.R. 4227 and commend my colleague, the
gentleman from Connecticut (Mr. Simmons), for introducing this
legislation.
This bill is simply about keeping promises, about keeping the promise
made to the middle-class taxpayers that we would provide child credits
to reduce the taxes on our young families, that we would eliminate the
marriage penalty, and that we would expand the 10 percent bracket so
that those low earners in America would not be burdened with tax
liabilities.
Unfortunately, unless we pass this legislation, we will renege on
that promise of lower taxes and effectively increase the taxes of 11
million taxpayers by on average $1,520. I can tell you, that is a lot
of money to families in our country. We cut their taxes; and we need to
remain loyal to that policy that supports families, recognizes the
circumstances of low-income individuals and families in the 10 percent
bracket, and eliminates the gross unfairness of the current marriage
penalty in our code.
So I rise in strong support of the legislation. It is temporary. I
look forward to working with my colleagues in the administration on a
permanent solution, but passage of this legislation is imperative.
I also strongly oppose the substitute. First of all, it is wrong to
fund a 1-year provision with a permanent increase in taxes. It is also
wrong to ``clarify current law'' by muddying it. Current law
[[Page H2579]]
has a body of case law behind it which has helped to define the complex
issues and eliminate uncertainty.
Now, the current law could be improved upon. Our Acting Assistant
Secretary of the Treasury, Gregory Jenner, has recommended, and the
Treasury has strongly recommended, that we increase disclosure, that we
require more disclosure, and that by doing so, we could stop tax
shelter transactions that were abusive. So we need to move to increase
disclosure.
But to add instead a new, complicated doctrine of economic substance
will cause the kind of confusion that retards investment. People will
be uncertain. This is a very complicated issue. They will not know what
the government is going to do. They will slow down investment, killing
jobs.
When our recovery is soft, it is dumb to do something that will cost
jobs now and cost considerable jobs over the next few years. The
Heritage Foundation has just come forward with an analysis that says
this would kill 3,000 jobs the first year and 15,000 jobs over 5 years.
Remember, many of our manufacturers pay taxes and would be affected by
this, just at the time when they are getting back on their feet.
So what you do not need in the Tax Code is uncertainty. We have a
problem in the Tax Code. We need to deal with it. A 1-year extension is
the right way to go at this time.
Mr. Speaker, I thank the gentleman and oppose the substitute.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I remind the Republican Members a year ago in the
Committee on Ways and Means they had a chance to vote for my AMT bill,
which would have done exactly some of the things we are proposing to do
today.
Mr. Speaker, I yield 3 minutes to the gentleman from Oregon (Mr.
Blumenauer).
Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy in
permitting me to speak on this.
Mr. Speaker, I find my friend from Pennsylvania's commentary somewhat
ironic because all independent observers agree that after three rounds
of massive tax cuts, we are getting very little benefit for the
magnitude of the costs involved.
{time} 1315
On our side of the aisle, we have had a variety of areas that would
have put far more people to work producing far more economic benefit
for this country at far less cost.
It is also ironic that somehow, the blame; after 10 years of
Republicans in control, that somehow, this inequity is the problem of
the Democrats. In fact, under the watch of my Republican colleagues, we
have seen the ``millionaires' tax'' that was enacted in 1969 to stop
sheltering all income, now punishes people who pay their taxes, claim a
child care credit, and save for their future.
In the midst of the largest tax-cutting frenzy in our country's
history, the Republican majority has used the $600 billion that is
going to be extracted from people who do not deserve to pay this over
the next 10 years, to disguise the impact of their misguided policies.
Now, I would suggest that it is inappropriate to continue limping
along as my Republican colleagues would do today with the enactment of
their proposal. It just puts off the day of reckoning, gets past
another election and, they hope, can implement more of their true
agenda: to provide more permanent tax relief for people who need it the
least.
Now, I would suggest that the Democratic substitute, which is
providing more help and not making deficits worse, is a step in the
right direction. I join with my friend, the gentleman from Pennsylvania
(Mr. English) and the gentleman from Massachusetts (Mr. Neal) to come
forward to either repeal or fix the alternative minimum tax. But we
could do that in a minute if the Committee on Ways and Means would
return to its historic way of doing business, being bipartisan, maybe
even considering legislation like this in committee before bringing it
to the floor, allowing debate back and forth, allowing amendments. I
think we would have a bipartisan majority that would put 400 votes on
the floor to get rid of the single greatest inequity in the Tax Code.
Instead, the drum-beat from my friends on the other side of the aisle
is to make permanent the most egregious part of their program for the
people who need it least, and holding hostage some 35 million to 43
million American families with this sword of Damocles holding over
their heads. It is just what they have done with the estate tax.
Instead of coming forward with a bipartisan reform that we are ready to
do and would get 300 or 400 votes, they have this bizarre thing where
one has to be careful about what year they die, to know how many wills
they have to have in order to play the game with this year after year.
I think it is inappropriate and it is shameful. It is time for us to
take a step in the right direction, with the approval of the Democratic
substitute.
Mr. ENGLISH. Mr. Speaker, I am delighted to yield 3 minutes to the
gentleman from Florida (Mr. Foley), my distinguished colleague on the
Committee on Ways and Means.
Mr. FOLEY. Mr. Speaker, let me thank the gentleman from Pennsylvania
for leading the debate today. I certainly want to salute my colleague,
the gentleman from Massachusetts (Mr. Neal). He has raised this AMT
issue at every one of our hearings on the Committee on Ways and Means.
He has kept this issue alive. It is important for the people who are
middle wage-earners in our country to get some relief.
I disagree with the past speaker on suggesting we are limping along,
suggesting that the tax cuts that we put in place have not helped this
economy. If we tune in to any show or read any publication, whether it
is CNBC or CNN or to read Forbes Fortune or the Wall Street Journal,
virtually every person who studies the economy is giving credit for
this resurgence, if you will, of opportunity due to the tax cuts we
have enacted.
The AMT is a burden for middle income taxpayers. We in our bill solve
that burden, and we do so without raising corporate taxes. That is a
good debate for a day, maybe today, maybe another day on corporate
taxation, because we do understand a lot of companies take their plants
and facilities overseas.
I asked the H.J. Heinz Company why they found so many countries
comfortable for them to move plants to and they said we want to be
close to those who are buying our goods and services. So I do not look
at the Heinz Company as unpatriotic for opening Heinz of Canada, Heinz
of Ireland, Heinz of France, or Heinz of whatever countries they settle
in. But I do recognize that at times, companies do make decisions based
on their locations, based on the Tax Code of this country.
All agree that our corporate taxes today are too high, and in the
Rangel substitute, they raise them further. So we start off with a
problem of substance in their bill that actually further punishes
corporations who are trying to provide jobs here in America for the
citizens of our country. So the administration and this committee, the
Committee on Ways and Means on the Republican side, do oppose what
would be a $15 billion tax increase.
We also recognize that this needs to be dealt with, and we have dealt
with it. If we look back at our history, Public Law 107-16, the
Economic Growth and Tax Relief Reconciliation Act, we allowed the child
credit, the adoption credit, the small savers credit to be counted
against the AMT in 2010. We increased the exemption from 45 for 49 for
married couple, and 33 to 35 for single individuals. In public law 107-
47, the Job Creation and Worker Assistance Act of 2002, we extended
through 2003 the ability to claim nonrefundable tax credits against the
AMT. Public law 108-27, the Jobs and Growth Tax Reconciliation Act of
2003 again expanded the amounts and extended the amounts. The Tax
Relief Act, H.R. 3521.
So there is a consistent history of our committee in a Republican-led
Congress moving forward on trying to minimize the grab, if you will, of
the AMT.
Now, I believe as we try to determine on this bill how to give people
an understanding of how to file their taxes, how to do their taxes,
simplicity is the best possible option, and I do look forward to the
chance we have on our committee to talk about simplifying this very
complicated Tax Code.
[[Page H2580]]
But today we are here to oppose the Rangel substitute and genuinely
support H.R. 4227 to provide relief for American families.
Mr. NEAL of Massachusetts. Mr. Speaker, I am just curious, and I
would ask the gentleman from Pennsylvania (Mr. English) or perhaps the
gentleman from Florida (Mr. Foley), since this was never aired in the
committee, this proposal has not been brought up in front of the
committee, will the author of this proposal, will he be taking his
picture with the Committee on Ways and Means later on at 2 o'clock?
Will we have him there for the photograph for history and posterity? I
was just wondering, since we now have nonmembers of the committee
bringing these proposals forward.
Mr. Speaker, I yield 3 minutes to the distinguished gentleman from
Michigan (Mr. Levin).
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, the country should know there is a tax train
wreck coming along the tracks here, and what is the Republican answer?
Speed up the train, making tax cuts permanent, mainly, heavily, for the
very wealthy, and they essentially try to hide the track.
First of all, much of what is being given is going to be taken back
by the AMT. Secondly, while some is being taken back now, much more
will be in future years. So what is the answer of the Republican
majority? The answer is, oh, blame the Democrats because of actions
taken what, 10 years ago, 12 years ago, 15 years ago. The Republicans
have run this place for 10 years, and their answer on the AMT is always
wait until next year. The gentleman from Massachusetts (Mr. Neal) has
heard that year after year.
When the Republicans took over this place, a third of 1 percent of
taxpayers were subject to the AMT. In 2004, that will be 7 times as
many. So what do they do? They extend it for 1 year, even though in
2011, the percentage will go up to 11.2, many, many, many times more
than the number who paid the AMT when the Republicans took over.
So why do they not act? Because it is going to cost so much money.
The estimate is that if this bill is extended and essentially made
permanent, during the next 10 years, it would cost $550 billion, way
beyond 17, and if you add interest, $650 billion it would cost. So the
Republicans say, wait until next year because they know they cannot act
this year and be honest with the American people.
This Republican majority simply cannot tell it straight to the
American people. They set up a caucus, the Zero Tax Caucus. Why do they
not just act this year instead of setting up a caucus that is nothing
more than a smoke screen?
The substitute is an honest attempt to do better and to pay for it.
The Republican majority does not want to pay for any of their tax cuts,
even those that help middle income taxpayers, but most go to high-
income taxpayers.
Vote for the substitute. Let us begin to be honest with the American
public.
Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from
Missouri (Mr. Akin).
Mr. AKIN. Mr. Speaker, I rise today in strong opposition to the
substitute offered by the gentleman from New York. I have heard the
term ``bipartisan'' and ``bipartisan solution'' now for about half an
hour, and it seems to be a synonym for tax increases. That is exactly
what we are talking about here.
Last week, Democrats claimed that the AMT needed to be fixed so that
married couples could fully benefit from the repeal of this marriage
penalty. Well, given the substitute, apparently what they really meant
was that only certain married people and only for a period of 1 year.
Adding insult to injury, the Democrat substitute would also
permanently raise taxes on manufacturers and other job-creating parts
of our economy. I cannot speak for other States, but I can assure my
colleagues that the last thing that manufacturers in the State of
Missouri want is to have their already slim profits taxed even further.
I really do not understand the logic of wanting to go for a big tax
increase on the very sector that is creating jobs in our economy. It
seems to me that in the last couple of years, we have finally pulled
out of a recession because of the tax cuts, and now, we want to tax
companies and they are the ones that make the jobs. It does not make
any sense at all.
Mr. Speaker, the American people deserve better than another Democrat
tax increase. We are here today because in 1993, when President Clinton
and the Democrats passed the largest, one of the largest tax increases
in history, they did so without indexing those taxes for inflation. As
a result, more and more middle income Americans are now hit with a tax
that was originally enacted to try to ensure that only the wealthiest
among us should pay taxes.
Now, this so-called the wealthiest 1 percent is actually paying 37
percent of the total personal income taxes. One percent is paying 37
percent of the total personal income taxes in this country. I am just
not seeing the logic of the fact that we have to have another tax
increase.
Today, 3 million hard-working American families are hit with the AMT,
a tax that the Congress never intended them to pay. If we do not act
today, by 2005, 11 million American families will be burdened with the
AMT.
Mr. Speaker, I encourage my colleagues to reject another Democrat tax
increase, support House Resolution 4227, which ensures that American
families will receive the relief that they deserve.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield for the purpose of
making a unanimous consent request to the gentlewoman from Texas (Ms.
Jackson-Lee).
(Ms. JACKSON-LEE asked and was given permission to revise and extend
her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, because H.R. 4227 does nothing
but increase taxes on the middle class, I rise enthusiastically to
support the Democratic substitute of the alternative minimum tax relief
of the gentleman from New York (Mr. Rangel), and I ask my colleagues to
support it.
Mr. Speaker, I rise today in support of the Democratic substitute
presented here today by my distinguished colleague, Congressman Rangel.
The democratic substitute answers the shortfalls found throughout the
H.R. 4227. While H.R. 4227 purports to provide tax relief for our
nation's struggling middle class, the reality is far from that. This
bill is a mirage, a gimmick. It provides little to no relief for the
majority of middle class Americans. This is another Republican ploy to
try and fool the middle class that the Majority party is attempting to
grant them tax relief. It is an attempt to cover up the vast amount of
tax relief given to wealthy individuals and big businesses.
Unfortunately this bill does more than just nothing, in reality it
hurts our middle class. This bill will roll back a large portion of the
Administration's tax relief while at the same time taking back over
half of the benefits provide4d by last weeks marriage penalty relief
bill. This just does not make sense. How can you claim to provide tax
relief for the middle class by proposing a bill that cuts back tax
relief for the middle class?
The Democratic substitute answers these shortfalls. It provides the
needed tax relief for our middle classes without any hidden tricks or
misrepresentations. It provides more tax relief to more people without
rolling back past promises of tax relief to more people without rolling
back past promises of tax relief. In fact, it provides tax relief to 1
million more families then the GOP version and is substantially more
effective in providing relief for middle class families making less
than $250,000 a year. Under the GOP plan a family of four earning a
combined income of 95,000, residing in a high tax state, will be forced
to pay the minimum tax. The Democratic Substitute is an easier more
effective way to grant tax relief to the middle class and does away
with the burdensome paperwork required under the Republican plan.
While the IRS's National Taxpayer Advocate labeled the AMT as our
nation's most pressing tax concern, the Democratic Substitute is a
serious long range plan to fix the problem, while the Republican plan
is at best a stop-gap measure. Our current tax system towards the
middle class is a sinking ship filled with holes. The current
Republican proposal is a bucket. We don't need a bucket we need a new
ship. The Democratic Substitute is a step towards this goal. Please
join me and vote in favor of the Democratic Substitute.
Mr. NEAL of Massachusetts. Mr. Speaker, a quick reminder to the
previous speaker. More than half of the promised benefits last week of
the marriage tax penalty are taken back under alternative minimum tax.
[[Page H2581]]
Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr.
Hinchey).
{time} 1330
Mr. HINCHEY. Mr. Speaker, under the Bush administration, 2.6 million
jobs have been lost, long term unemployment is at a record high. We
have gone from $5.6 trillion surplus in the Federal budget to nearly $3
trillion in deficit; and this year, the huge budget deficit is expected
to reach $500 billion primarily due to the economic plans of the
President and congressional Republicans. Four million people lost their
health insurance; 1.3 million more people have gone into poverty.
Median income of middle class families is down $1,400. Thousands of
schools are being forced to meet Federal education standards without
additional Federal assistance.
Federal transportation and infrastructure programs are on life
support while Republicans squabble over the transportation bill. These
are serious problems that we will not be addressing today.
Reforming the alternative preliminary tax is another serious matter
and it is something that Congress should take seriously. The Republican
bill before us today, however, simply pushes the problem down the road.
By the end of this decade, 33 million or 75 percent of families making
between 75 and $100,000 will be swept up into the AMT. It is obvious
that this needs to be fixed.
Republicans are to be blamed for this dilemma. Their irresponsible
tax reductions fail to include any form of the AMT despite the fact
that they forced, and will continue to force millions of middle income
families who live in high tax States to pay the costly alternative
minimum tax. What the Republican bill would do today is borrow $20
billion to provide a 1-year extension of the increased exemptions that
middle income families currently rely on to avoid paying the AMT. This
is not real reform. It is procrastination and it is dangerous. It adds
to our deficit and effectively raises the Republican debt tax that has
ballooned under President Bush.
The Democratic substitute provides more tax relief to middle income
families without adding a penny to our debts. It would eliminate AMT
liability for taxpayers whose adjusted gross income is less than
$250,000; and it would provide the framework for Congress who begin
reforming AMT.
We Democrats support tax relief for lower and middle income families.
Our bill does that. Democrats also are not afraid to begin addressing
the serious problems facing our country. We are willing to take them
head on as evidenced by this substitute.
It is time the House got serious about the issues facing our country
today. Simply procrastinating, pushing off problems on to the shoulders
of our children and grandchildren, that is the Republican plan. It is
also unacceptable; it is immoral, and it must stop.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from New Hampshire (Mr. Bradley).
Mr. BRADLEY of New Hampshire. Mr. Speaker, once again, I salute the
hard work of my colleague from Pennsylvania in bringing this issue to
the attention of the full House.
Mr. Speaker, I oppose the substitute amendment. Why? This corporate
tax increase that is proposed would be a job killer. That is why. Right
now at 35 percent for a corporate tax rate, we have the second highest
corporate tax rate in the world. We have a 5.7 percent unemployment
rate. And though we have seen progress over the last several months due
to tax reduction, the time is not appropriate right now to raise
corporate taxes.
The second reason is the WTO. The WTO tariffs have increased just
recently to 7 percent. We need to be addressing this with the FSC/ETI
reform package, and the way that we are going to address this is
reducing corporate taxes, not raising corporate taxes. So the message
of the substitute motion to raise corporate taxes is a job kill and it
will not enable us to deal with the looming crisis of the WTO issue.
So let us pass the underlying bill, H.R. 4227, which gives a 1-year
fix, an inflation adjustment to the alternative minimum tax. It ensures
that couples who today are earning $58,000 will be exempt from the AMT
or for single individuals who are earning $40,000 will be exempt, and
not moving those brackets down to $45,000 for a couple or $33,750 for a
single individual.
This bill, the underlying bill, will allow us to address the long-
term issues that are a sleeping giant of the alternative minimum tax.
The fact that today 3 million people pay it, tomorrow, if we do not
pass the underlying bill, 11 million people pay it, and by the end of
the decade, it will be one in every three taxpayers who will fall
victim to the AMT.
We need the underlying bill today. We do not need the substitute
motion.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the
gentleman from New York (Mr. Israel).
Mr. ISRAEL. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I rise in support of this substitute. Last week when we
debated the marriage penalty relief, I said this: That the bill that we
were debating was not an act of Congress. It was an act of Harry
Houdini. Here today, gone tomorrow. Give with one hand, snatch away
with the other. And one week later here we are again, another act of
Houdini.
The majority's AMT bill says to middle class taxpayers, we are going
to do a little bit today and nothing tomorrow. Their bills says to
middle class taxpayers who are bleeding from the largest tax increase
in the history of the middle class, take two aspirins, call us next
year. Millions of middle class taxpayers are hurtling to a cliff, our
cops, our teachers, our nurses, our firefighters, they will fall off
that AMT cliff, and what you want to do is simply build them a bigger
ramp. That is the Republican plan.
Here is our substitute. If your adjusted earnings are $250,000 or
less, no AMT. No filings, no calculations, no confusion, no AMT tax.
You do not have to worry about it. We say, tax relief for the middle
class now. You say, keep taxing them. We say we are going to get to it
now and fix it. You say we are just going to talk about it. We say,
protect the middle class. You say, protect the big offshore corporate
tax shelters and havens. We say reform. You say status quo. We say,
solve the problem now and in the future. You say, let us keep pointing
the partisan fingers of blame at the past and not solve this problem
for the middle class.
They deserve better, the middle class. They deserve a real choice.
They deserve real tax relief and meaningful reform which is why this
substitute makes sense, and why the act that we are being given today
is nothing more than more Harry Houdini trickery on the middle class
taxpayers.
Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentleman from the
State of Pennsylvania (Mr. Shuster).
Mr. SHUSTER. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I rise today in strong opposition to the Rangel
substitute and in support of H.R. 4227. I want to thank my colleague
from Pennsylvania (Mr. English) and the gentleman from Connecticut (Mr.
Simmons) for their leadership on this important issue.
The AMT, created over 30 years ago to ensure the super wealthy were
not escaping paying taxes, has grown out of control and is now trapping
millions of middle class families in a complicated and costly tax
system.
Under the leadership of President Bush, the 2001 and 2003 tax relief
bills passed by this Congress included increases in exemption amounts
which ensured many middle income families would not be hit with this
tax. If this Congress does not act, that relief will disappear in 2005.
If these exemption are allowed to expire, approximately 11 million
taxpayers will be hit with an average tax increase of over $1,500. This
substitute is a misguided attempted to provide for AMT relief. While
this provides temporary relief for some families, it does so by
permanently raising taxes on the country's manufacturers and other
corporations.
While the economy is recovering and job creation is steadily
increasing, now is not the time to permanently increase taxes on our
country's job creators.
I strongly support permanent reform of the AMT. And, in fact, I have
introduced a bill that would index the AMT to inflation and end in a
full repeal of this terrible system in 2010. While I believe a long-
term solution such as this is needed to address the tax system,
[[Page H2582]]
doing nothing or voting to increase taxes on corporations are
irresponsible options, in my view.
By extending the 2003 relief through 2005, we can continue to protect
our middle class families from this tax while Congress works on a long-
term solution of reform.
I encourage my colleagues to vote no on increasing taxes with this
substitute and instead vote in support of the underlying bill. H.R.
4227 is a reasonable short term solution to the growing problem of AMT.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I remind the gentleman you cannot fix this on a long-
term basis without doing something about the tax cuts that the
gentleman was heralding a couple of minutes ago.
Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota
(Mr. Pomeroy).
Mr. POMEROY. Mr. Speaker, here we are, another week, another tax
debate. Another occasion in the House of Representatives where the GOP
majority has offered nothing, nothing substantive about the looming
deficit crisis that is racking up historic levels of debt in this
country.
I do not suppose it is a mystery they do not want to talk about it
because when they bring their budget, whenever they can get it out of
conference, it will include, we are told, an increase in the borrowing
limit for our country. It will take the borrowing limit to the highest
levels in the history of the United States. Some are saying it will
take the borrowing limit over $10 trillion. That is $10 trillion of
debt to be incurred under their fiscal plan for this Nation. Debt we
will leave to our children and debt we can not responsibly pass on.
So as we take a look at something imperative like doing something to
respond to the AMT, let us, for goodness sake, put in place a provision
to pay for it so we do not even drive this monstrous debt they have
given us even deeper. That is what the substitute is about.
It talks about clamping down on high-flying tax cheats, some of the
worst avoidance schemes, some of the most shallow, unjustifiable
schemes created simply to cheat the Federal Government by the high
flyers that can afford the hundreds of thousands of dollars of legal
and accounting bills to dream up these schemes.
The Republican majority in this debate has become ``amen corner'' for
tax cheats in this country. You might think the next thing we will see
from this outfit is a resolution commending the Enron executives for
their creative financing.
The fact is there is a whole lot of tax avoidance illegally done in
this country. I am very pleased with the announcement made by IRS
Commissioner Mark Everson today about an initiative launched by the IRS
that they believe is going to target just in 1,500 to potentially 5,000
multi-millionaires and corporations, a crackdown on an illegal tax
scheme that they think will generate for this Treasury 5 to $10
billion.
So do not stand over here and tell us that cracking down on tax
cheats is raising taxes. Taxes are what hard working Americans pay
because they owe it. But the tax avoidance and tax cheats that you
salute so highly in this debate is something else again. We believe we
ought to capture that revenue so we do not drive this debt deeper for
our kids. That is what the substitute is about. I urge Members'
support.
Mr. ENGLISH. Mr. Speaker, I yield 4 minutes to the gentleman from
Arizona (Mr. Hayworth), a member of the Committee on Ways and Means
(Mr. Hayworth).
Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Pennsylvania for
yielding me time.
Mr. Speaker, I rise in opposition to the Rangel substitute and in
support of the base legislation that we are discussing here today. I
think it is important to have a full perspective of what is being
talked about. Part of it, of course, is the tenor of the times, where
we are on the calendar, the fact that notwithstanding, the first
Tuesday following the first Monday in November the people of the United
States will make some decisions. Perhaps it is in order, Mr. Speaker,
to remind the Nation, and certainly my colleagues in this Chamber, how
we arrived at this point.
A decade ago, the largest tax increase in American history increased
the alternative minimum tax rate and did not adjust the AMT exemption
amounts for inflation. As a result, more and more middle income
families are forced to pay the AMT each year. Now with a change in
majority status, when I was pleased to come here to the Congress and
become a part of this majority, the fact is we have delivered time and
again on relief from the alternative minimum tax.
Public Law 107-16, the Economic Growth and Tax Relief Reconciliation
Act of 2001; Public Law 107-47, the Job Creation and Worker Assistant
Act of 2002; PL 108-27, Jobs and Growth Tax Relief Reconciliation Act
of 2003; H.R. 3521, the Tax Relief Extension Act of 2003; H.R. 4227,
the Middle Class Alternative Minimum Tax Relief Act of 2004, again
providing alternative minimum tax relief by extending the relief
enacted in 2003, adjusting it for inflation through 2005.
Now, my friends on the other side of the aisle reminiscent of a
country song, that is their story and they are sticking to it, perhaps
need to be reminded of this fact.
{time} 1345
Do my colleagues know who really ends up paying corporate taxes? Mr.
Speaker, the fact is every American consumer ends up paying corporate
taxes. How? Prices increase, business accommodates, oh, and just to
help people understand because I listened with interest to my friend
from North Dakota say that somehow we are in the amen corner, I will
tell my colleagues what I do say amen to, Mr. Speaker. I say amen to
more quality jobs for Americans, and the Rangel substitute will result
in lost jobs by imposing a permanent tax hike on manufacturers and
other job creators at a time when our economy is recovering.
I know, Mr. Speaker, for many, given the political season, any good
news is bad news for partisan political fortunes; but the fact is, we
have seen an increase in orders for manufacturing. Manufacturing is on
the upswing. Now that we are seeing real growth, quarterly economic
growth, now that we are getting there, my friends on the left, who
sadly have never met a tax hike they did not like, witnessed their
inaction in the wake of the largest increase in American history a
decade ago now let us put the kibosh on the recovery.
How best to do that? Well, let us cost jobs to the manufacturing
sector, let us demonize anyone who creates jobs, and let us go back to
the time-tested bugaboo and shopworn phrase that we are only going to
increase taxes on the rich because the rich are somehow inherently
evil.
No, Mr. Speaker, I reject that notion wholeheartedly because what we
are talking about is opening doors of opportunity through job creation.
That is why we should reject the Rangel substitute, stick with my good
friend from Pennsylvania, and pass, yet again, relief from the
alternative minimum tax.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2\1/2\ minutes to the
gentleman from New York (Mr. Bishop).
Mr. BISHOP of New York. Mr. Speaker, I rise today in support of the
Democratic substitute. I join my colleagues in offering this amendment
in order to bring relief to so many families, particularly Long Island
families who have been disproportionately hit by the alternative
minimum tax. Our substitute would not only extend the current
exemption, but it would exempt married couples with incomes under
$250,000 from this punitive tax. In addition, and this is very
important, we completely pay for this tax relief to middle-income
families by closing corporate loopholes.
Long Island taxpayers are paying the price for this Congress'
abdication of duty when it comes to sound tax policy. Our refusal to
reform the AMT has had the effect of severely curtailing the promised
Bush tax cuts from middle-income Long Island families. While the
wealthiest families completely benefit from the tax cuts targeted
towards the upper brackets, middle-income families were hit with the
unwelcome surprise of higher taxes on tax day.
I have been hearing from constituents all across Long Island who feel
double-crossed and double-taxed by
[[Page H2583]]
this undue tax burden. In fact, just yesterday I was speaking with an
accountant from my hometown who told me that AMT filings for middle-
income Long Islanders had shot through the roof this year, while the
wealthiest were reaping tremendous tax benefits, some in excess of $1
million of tax savings. For example, married couples in my district
with two children and an income consisting of $15,000 in wages were
forced to pay the AMT due to State income taxes and real estate taxes
totaling over $21,000. This, in turn, triggered the AMT.
More Long Islanders pay the AMT than taxpayers in any other region of
the country, and I will do everything in my power to put an end to this
unfair treatment. Middle-income Long Islanders bear the brunt of this
tax because State and local income taxes, property taxes, and other
personal deductions are added back in for the purpose of calculating
the AMT, and anyone who lives on Long Island will tell my colleagues
that our property taxes, in particular, are very, very high. The net
effect of this is that we pay inordinately high property taxes, and
then we turn around and are robbed by the AMT of our full Federal tax
relief.
We need a long-term solution for the AMT and not simply a short-term
fix. The so-called fix under consideration would do nothing, and I
repeat nothing, for the Long Islanders who found themselves paying the
AMT this year. Our substitute sends us down the path towards a long-
term solution and makes sure that middle-income families are truly
relieved from this tax next year. Under our substitute, two-parent
families on Long Island making $250,000 or less would be able to rest
assured that they would not be forced to pay the AMT. This is the right
kind of relief for working families.
In my opinion, we owe it to the American taxpayers to put our heads
together and reconsider the consequences of this failed tax policy and
reform the AMT so that it no longer hurts middle-income families.
Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time.
Mr. NEAL of Massachusetts. Mr. Speaker, might I inquire as to how
much time is left.
The SPEAKER pro tempore (Mr. Bass). The gentleman from Massachusetts
(Mr. Neal) has 1\1/2\ minutes remaining, and the gentleman from
Pennsylvania (Mr. English) has 4\1/4\ minutes remaining.
Mr. NEAL of Massachusetts. Is the gentleman prepared to close?
Mr. ENGLISH. Yes.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself the time that
is left.
Mr. Speaker, we have had this debate now in this House for a long
period of time. For Members on the majority side to say, well, this was
a Democratic proposal in 1986 and then to conveniently forget or
suggest that during their 10 years that they have not had sufficient
opportunity, working, by the way, with a willing minority to fix the
issue, really does not make a great deal of sense. This issue is
hanging out there. It is waiting for a solution. There ought to be an
opportunity in a bipartisan manner to fix it.
I have said flatly I am in favor of repealing the alternative minimum
tax. Let us get rid of it. There is a revenue gap to make up, $600
billion, that has to be found somewhere; but when we offer the
suggestion, it goes nowhere, because it does not square, Mr. Speaker,
with the tax cuts that the administration has offered and that the
compliant Members of the majority have gone along with without ever,
ever, ever asking a question.
Forbes magazine has suggested that the tax cuts that the Republican
majority and the administration have offered only make the alternative
minimum tax issue worse for middle-income Americans. We have heard
today a suggestion that issues of war in the Middle East and in
Afghanistan are irrelevant to these discussions. How are we going to
pay for the troops, 134,000 that are in Iraq and 12,000 that are in
Afghanistan, and support this war effort? How are we going to pay for,
first, the Defense budget that goes to $421 billion at the conclusion
of this session, $41 billion for homeland security? They are off by
$140 billion in their prescription drug bill proposal; and the answer
is, to all of this, tax cuts.
Mr. Speaker, we can fix the alternative minimum tax issue in a
bipartisan manner. I am more than happy to offer my support to try to
get that under way. Support the Democratic alternative today. It, in
the end, is responsible tax policy, and show those people at Enron and
show those people in Bermuda that they ought to pay like the rest of
the American people.
Mr. ENGLISH. Mr. Speaker, I yield myself the balance of my time, and
first of all, thank the gentleman for his contribution and take him up
on his offer because we in the Zero AMT Caucus would like to work for
permanent resolution of this problem. We would like to see a permanent
repeal of the AMT; but unfortunately, in the current political climate,
in the current climate of gridlock and recrimination that we have in
Washington, nothing more elaborate than the current fix appears to be
possible.
Let me say there are a couple of things that I need to correct at the
outset.
It was suggested by the gentlewoman from Texas that our bill is a tax
increase. It is very hard to understand how she would make that point;
but to be clear, this provides critical tax relief for a significant
portion of the middle class.
The gentleman from Long Island intimated that there was nothing in
this bill to help these people. Well, as a practical matter, a place
like Long Island would be one of the biggest beneficiaries of the
underlying Republican bill because of the high taxes.
Let me say that the gentleman from Michigan talked about a tax train
wreck. I come from a part of the world where we make locomotives, and
we recognize their dynamics; and let me say that we recognize that the
locomotive that was started, that is threatening, the train wreck was
started back when the other party controlled the Chamber and did not
deal with an underlying problem by making the AMT responsive to
increases in the cost of living.
We have heard procedural arguments from the other side, that the
committee has not looked closely enough at this issue; and I reject
those because the committee clearly has been tracking this issue from
the get-go.
What we have instead is the core issue, which is the substitute being
offered today and which, on the other side, they are proposing to
dramatically increase the complexity of the Tax Code and also
significantly raise corporate taxes on a permanent basis in order to
provide temporary tax relief. They congratulate themselves for doing
that, but I do not think that they are entitled to a new chapter in
``Profiles in Courage.''
My feeling is that the substitute is inherently a bait-and-switch and
increasing taxes at a time when we are experiencing, we are trying to
come out of a slow-down. We are, in a sense, embracing Herbert Hoover
economics.
I think that the substitute is very ill conceived. It, among other
things, imposes a burden on the corporate community at a time when we
worry about competitiveness; but that burden is far greater than the
one simply indicated by the expected revenue. This is a burden which
will permanently change behavior and affect legitimate business
transactions. So the rhetoric of the gentleman from North Dakota that
this only affects tax cheats is unfortunately not accurate. This is
going to be an enormous burden for the corporate sector coming at a
most unfortunate time.
Ultimately, I sense that the reason why the folks on the other side
have not been as aggressive and certainly in many cases not as
aggressive as the gentleman from Massachusetts to deal with this
problem is that they want to spend the money. May I suggest, in the
end, we get to the solution on reforming the corporate AMT, not by
undercutting the tax bill, not by undercutting the tax program which is
revitalizing America's economy today, but ultimately by controlling our
spending. That is how we will in the context of a growing economy get
back to a balanced budget and I think in the long run also have room to
deal with this AMT.
Again, I invite our friends on the other side of the aisle to work
with us on this issue. We have an opportunity to do this on a
bipartisan basis. This is a part of the Tax Code that we agree on, but
I think the solution starts today with a rejection of the ill conceived
substitute that is being offered
[[Page H2584]]
by the other side and passage of the underlying legislation.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. All time has expired.
Pursuant to House Resolution 619, the previous question is ordered on
the bill and on the amendment offered by the gentleman from
Massachusetts (Mr. Neal).
The question is on the amendment in the nature of a substitute
offered by the gentleman from Massachusetts (Mr. Neal).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. NEAL of Massachusetts. Mr. Speaker, I object to the vote on the
ground that a quorum is not present and make the point of order that a
quorum is not present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 197,
nays 228, not voting 8, as follows:
[Roll No. 143]
YEAS--197
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Case
Chandler
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Ford
Frank (MA)
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Marshall
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Moore
Moran (VA)
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NAYS--228
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carson (OK)
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Kanjorski
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
Matheson
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Mollohan
Moran (KS)
Murphy
Murtha
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--8
Bono
Boyd
DeMint
Filner
Greenwood
Matsui
Solis
Tauzin
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Bass) (during the vote). Members are
reminded that 2 minutes remain in this vote.
{time} 1425
Mr. TAYLOR of North Carolina, Mr. KNOLLENBERG, Mrs. JOHNSON of
Connecticut, Mrs. MUSGRAVE and Mr. FEENEY changed their vote from
``yea'' to ``nay.''
Mr. ORTIZ changed his vote from ``nay'' to ``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
Stated for:
Mr. FILNER. Mr. Speaker, on rollcall No. 143, I was unavoidably
detained, and I missed the vote. Had I been present, I would have voted
``yes.''
Ms. SOLIS. Mr. Speaker, during rollcall vote No. 143 on the Neal
Substitute Amendment, I was unavoidably detained. Had I been present, I
would have voted ``yes.''
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. ENGLISH. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 333,
nays 89, not voting 11, as follows:
[Roll No. 144]
YEAS--333
Ackerman
Aderholt
Akin
Alexander
Allen
Baca
Bachus
Baker
Baldwin
Ballance
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bell
Bereuter
Berkley
Biggert
Bilirakis
Bishop (GA)
Bishop (NY)
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Boozman
Boswell
Boucher
Bradley (NH)
Brady (TX)
Brown (OH)
Brown (SC)
Brown, Corrine
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Cardin
Cardoza
Carson (OK)
Carter
Castle
Chabot
Chandler
Chocola
Clay
Coble
Cole
Collins
Costello
Cox
Cramer
Crane
Crenshaw
Crowley
Cubin
Culberson
Cunningham
Davis (AL)
Davis (CA)
Davis (TN)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeFazio
DeGette
Delahunt
DeLay
Deutsch
Diaz-Balart, L.
Diaz-Balart, M.
Doggett
Dooley (CA)
Doolittle
Dreier
Duncan
Dunn
Edwards
Ehlers
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Farr
Feeney
Ferguson
Flake
Foley
Forbes
Ford
Fossella
Franks (AZ)
Frelinghuysen
Frost
Gallegly
Garrett (NJ)
Gephardt
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gonzalez
Goode
Goodlatte
Gordon
Goss
Granger
Graves
Green (WI)
Gutknecht
Hall
Harman
[[Page H2585]]
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Hooley (OR)
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Israel
Issa
Istook
Jefferson
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kaptur
Keller
Kelly
Kennedy (MN)
Kennedy (RI)
Kildee
Kind
King (IA)
King (NY)
Kingston
Kirk
Kleczka
Kline
Knollenberg
Kolbe
LaHood
Lampson
Langevin
Lantos
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
Lipinski
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Lynch
Majette
Maloney
Manzullo
Marshall
Matheson
McCarthy (NY)
McCotter
McCrery
McHugh
McInnis
McIntyre
McKeon
Meehan
Meek (FL)
Meeks (NY)
Mica
Michaud
Millender-McDonald
Miller (FL)
Miller (MI)
Miller (NC)
Miller, Gary
Miller, George
Moore
Moran (KS)
Moran (VA)
Murphy
Musgrave
Myrick
Nadler
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Owens
Oxley
Pascrell
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Putnam
Quinn
Radanovich
Rahall
Ramstad
Regula
Rehberg
Renzi
Reyes
Reynolds
Rodriguez
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Royce
Ruppersberger
Ryan (OH)
Ryan (WI)
Ryun (KS)
Sanchez, Loretta
Sanders
Sandlin
Saxton
Schiff
Schrock
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Stearns
Strickland
Stupak
Sullivan
Sweeney
Tancredo
Tanner
Tauscher
Taylor (NC)
Terry
Thomas
Thompson (MS)
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Udall (CO)
Upton
Van Hollen
Vitter
Walden (OR)
Walsh
Wamp
Weiner
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Wynn
Young (AK)
Young (FL)
NAYS--89
Abercrombie
Andrews
Baird
Becerra
Berman
Berry
Blumenauer
Brady (PA)
Capps
Capuano
Carson (IN)
Case
Clyburn
Conyers
Cooper
Davis (FL)
Davis (IL)
DeLauro
Dicks
Dingell
Doyle
Emanuel
Fattah
Frank (MA)
Green (TX)
Grijalva
Gutierrez
Hastings (FL)
Hill
Hinchey
Holt
Hoyer
Inslee
Jackson (IL)
Kanjorski
Kilpatrick
Kucinich
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Markey
Matsui
McCarthy (MO)
McCollum
McDermott
McGovern
McNulty
Menendez
Mollohan
Murtha
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pastor
Payne
Pelosi
Rangel
Rothman
Roybal-Allard
Rush
Sabo
Sanchez, Linda T.
Schakowsky
Scott (VA)
Serrano
Sherman
Smith (WA)
Spratt
Stark
Stenholm
Taylor (MS)
Thompson (CA)
Tierney
Towns
Turner (TX)
Udall (NM)
Velazquez
Visclosky
Watson
Watt
Waxman
Wexler
Woolsey
NOT VOTING--11
Bono
Boyd
Cummings
DeMint
Filner
Greenwood
Honda
Jackson-Lee (TX)
Solis
Tauzin
Waters
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Bass) (during the vote). Members are
advised there are 2 minutes remaining in this vote.
{time} 1442
Mr. GEORGE MILLER of California changed his vote from ``nay'' to
``yea.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
Stated for:
Mr. FILNER. Mr. Speaker, on rollcall No. 144, I was unavoidably
detained, and I missed the vote. Had I been present, I would have voted
``yea.''
Mr. HONDA. Mr. Speaker, on rollcall No. 144, had I been present, I
would have voted ``yea.''
Ms. SOLIS. Mr. Speaker, during rollcall vote No. 144 on final passage
on H.R. 4227, I was unavoidably detained. Had I been present, I would
have voted ``No.''
____________________