[Congressional Record Volume 150, Number 137 (Monday, December 6, 2004)]
[House]
[Pages H10915-H10917]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDING INTERNAL REVENUE CODE TO MODIFY TAXATION OF ARROW COMPONENTS
Mr. RYAN of Wisconsin. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 5394) to amend the Internal Revenue Code of 1986 to
modify the taxation of arrow components.
The Clerk read as follows:
[[Page H10916]]
H.R. 5394
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. EXCISE TAX ON ARROWS.
(a) Repeal.--Subsection (b) of section 332 of the American
Jobs Creation Act of 2004, and the amendments made by such
subsection, are hereby repealed; and the Internal Revenue
Code of 1986 shall be applied as if such subsection and
amendments had never been enacted.
(b) Tax on Arrow Shafts.--Paragraph (2) of section 4161(b)
of the Internal Revenue Code of 1986 (relating to arrows) is
amended to read as follows:
``(2) Arrows.--
``(A) In general.--There is hereby imposed on the first
sale by the manufacturer, producer, or importer of any shaft
(whether sold separately or incorporated as part of a
finished or unfinished product) of a type used in the
manufacture of any arrow which after its assembly--
``(i) measures 18 inches overall or more in length, or
``(ii) measures less than 18 inches overall in length but
is suitable for use with a bow described in paragraph (1)(A),
a tax equal to 39 cents per shaft.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any calendar year
beginning after 2005, the 39-cent amount specified in
subparagraph (A) shall be increased by an amount equal to the
product of--
``(I) such amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `2004' for `1992' in subparagraph (B) thereof.
``(ii) Rounding.--If any increase determined under clause
(i) is not a multiple of 1 cent, such increase shall be
rounded to the nearest multiple of 1 cent.''.
(c) Arrow Points.--Clause (ii) of section 4161(b)(1)(B)
(relating to archery equipment) of such Code is amended by
striking ``quiver or broadhead'' and inserting ``quiver,
broadhead, or point''.
(d) Effective Date.--The amendments made by subsections (b)
and (c) shall apply to articles sold by the manufacturer,
producer, or importer after March 31, 2005.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Ryan) and the gentleman from North Dakota (Mr. Pomeroy)
each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr. Ryan).
General Leave
Mr. RYAN of Wisconsin. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on the subject of H.R.
5394, the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself such time as I may
consume.
(Mr. RYAN of Wisconsin asked and was given permission to revise and
extend his remarks.)
Mr. RYAN of Wisconsin. Mr. Speaker, I briefly just want to describe
what this bill does.
I, along with the gentleman from Utah (Mr. Matheson), introduced H.R.
5394, which will correct an unintended new tax on arrows. The American
Jobs Creation Act closed the loophole that allowed imported arrows to
avoid the excise tax paid on domestically produced arrows.
Unfortunately, the IRS identified an unintended consequence that will
require 8,000 retailers to collect and remit a small part of this
excise tax.
The provision of this bill designed to protect the double taxation of
arrows inadvertently moves the incidence of a very small part of the
tax on arrows from manufacturers to retailers. This language will
require every retailer to determine the difference between the tax paid
on the components that they buy and the tax due on arrows that they
assemble and sell. Therefore, 8,000 retailers will be required to file
and remit the excise tax quarterly for an amount of about $100,000.
Clearly, Congress did not intend to impose a new tax on thousands of
small businesses and retailers. This legislation fixes that. It amends
the archery excise provision to impose a flat fee on the first sale of
all arrow shafts. This legislation protects thousands of retailers by
keeping the incidence of the tax on manufacturers, not on retailers;
treats domestic and foreign manufacturers equally; and protects the
Federal Aid in Wildlife Fund.
Mr. Speaker, I reserve the balance of my time.
Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to commend my colleague the gentleman from
Wisconsin (Mr. Ryan). He has worked very diligently on this issue. I
know he personally is an avid sportsman and takes, therefore, more than
passing interest in these matters. He also does very well representing
the constituents involved in the domestic manufacture of arrows.
This has been a hard one to get right. We first passed it in 1997,
trying to address this issue. The language in the FST bill that passed
just a few weeks ago we thought took care of it. We had the joint tax
and Treasury Department involved in getting that language correct, and
only now we are finding that it is going to be a new tax to be
collected by about 10,000 sports retailers.
Mr. Speaker, we want to fix this, and we want to fix this one right,
quick. So I am going to ask for support on this motion today.
I would like to, in the course of my remarks, however, address an
issue raised by the gentleman from New York (Mr. Rangel), the ranking
member of the Committee on Ways and Means, and his statement will be
made a part of the Record.
He had offered for the chairman a deal to bundle in a unanimous
consent package the bow and arrow fix, plus a provision to address the
circumstances of the Virgin Islands and other territories under the
corporate tax reform bill, the FST bill mentioned earlier, as well as
something to address the devastation in Haiti, and so I would just read
a couple of paragraphs from his statement because I think it is
appropriately before the body.
The ``Ways and Means Committee Chairman Thomas knows that the bows
and arrows correction could have been handled by unanimous consent.''
There had been a request that a correcting provision from the FST/ETI
bill also be included to assist the Virgin Islands and some attention
provided to the devastation affecting the people of Haiti.
``The recently enacted FST/ETI legislation contains a provision that
will adversely affect the economic development programs of the Virgin
Islands and other possessions.
``The provision denies the Virgin Islands the ability to provide
economic incentives to companies doing business in the Virgin Islands
if they have some U.S. source income.''
It is also clear that House leadership is unwilling to provide
assistance to poverty-stricken Haiti. ``Obviously, our neighbor in this
hemisphere is not viewed as so urgent that it cannot wait. I am talking
about a country that is so poor they bake clay and pretend it is bread.
``It is unclear to me why'' the Haiti trade preferences bill could
not have been brought up by year end.
I agree that, to summarize the ranking member's feelings, it is fine
to address this bow and arrows provision, absolutely fine. We have some
issues we also wanted addressed, circumstances about possession under
FST/ETI and something to be done to address the pathetic circumstance
of Haiti, and that would have been our preference also at year end.
Having now stated what our preferences would have been, let me again
summarize the minority position on this bill. It needs to be corrected.
We want it corrected. We do not think it should have taken three times
to get right, but here we are. We are willing to get it right this
time.
I again salute the gentleman from Wisconsin's (Mr. Ryan), my
colleague, efforts who have been untiring and in the end will today
prevail in getting this right.
Mr. Speaker, I yield back my time.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield myself such time as I may
consume.
I first want to just thank my colleague from North Dakota, a
wonderful State I have enjoyed hunting in, and his archers, I think,
will be pleased with his support today.
We are finally getting this thing fixed. We thought the tax experts
figured it out the last time. That was not necessarily the case. We
have got this fix in place. So, again, we are not going to be pushing
jobs overseas. We are not going to be draining precious resources from
the Pittman-Robertson Fund. We are fixing that loophole.
Mrs. CHRISTENSEN. Mr. Speaker, today the House is considering H.R.
5394, a bill
[[Page H10917]]
sponsored by my colleague Paul Ryan of Wisconsin to amend a section of
the recently passed American Jobs Creation Act of 2004 as it relates to
the Federal excise tax on the sale by a manufacturer, producer or
importer of any bows or arrows of a certain weight.
While I do not expressly support or oppose H.R. 5394, I rise to
express my disappointment that the people of my district, the U.S.
Virgin Islands, are not afforded a similar opportunity to address
certain changes to the provisions of the Jobs Act as they relate to the
residence and source rules applicable in U.S. possessions.
It is the longstanding policy of the United States, as reaffirmed in
the Tax Reform Act of 1986, to promote the economic development of the
U.S. Virgin Islands through tax policies that grant the Virgin Islands
exclusive taxing jurisdiction over its residents and the right to tax
the income of non-residents that is either sourced in the Virgin
Islands or attributable to Virgin Islands businesses.
The American Jobs Creation Act of 2004, which was signed into law on
October 22, 2004, significantly changed the Federal tax rules that form
the foundation of Virgin Islands economic incentive program, the
Economic Development Commission (EDC). Unless the changes made to this
program by the Jobs Act is amended or appropriately modified by
regulation, they have the potential to cause substantial damage to the
Virgin Islands EDC program and cause significant losses to the
Government of the Virgin Islands beyond those attributable to the EDC
program.
While the statement of the managers accompanying the conference
report for the Jobs Act indicates that Congress was concerned about
U.S. citizens inappropriately claiming benefits as residents of a
possession while continuing to live and work in the United States, the
provisions of the new IRS Code section 937 would have much broader
impact, affecting individuals who never resided in the United States
and also place restrictions on the different economic development
programs that go far beyond identified abuses.
It is for these reasons Mr. Speaker, that the government of the
Virgin Islands sought to have these changes narrowed and clarified
through legislation similar to H.R. 5394, but we were unsuccessful in
our efforts to date. Accordingly, I beseech my colleagues, the chairman
of the Ways and Means Committee and you, Mr. Speaker, to work with me
when we return next Congress to address these concerns and avert a
potential economic catastrophe for the Government and people of the
Virgin Islands.
Mr. RANGEL. Mr. Speaker, H.R. 5394 is the Republican's third attempt
to provide correct statutory language for the purpose of providing
domestic and foreign manufacturers and retailers of bows and arrows
with a level playing field.
The original provision was enacted into law in 1997. A correction to
that language was included in this year's Foreign Sales Corporation/
Extraterritorial Income Replacement, FSC/ETI, which resulted in another
needed correction--as provided in H.R. 5394. Apparently, the most
recent drafting error would cause about 10,000 new retailers to begin
collecting excise taxes on a quarterly basis due to an unintended new
point of tax collection created for arrow components costing less than
a dollar. I hope that this time the Republicans got it right.
Priorities
What really concerns me today is not bows and arrows. Rather, I
question the priorities of the Republicans in the House.
The Republicans enjoy talking about their values--but their actions
simply do not meet their words. According to Republican values, tax
breaks for makers of bows and arrows are an urgent matter that must be
addressed today.
Of course, Ways and Means Committee Chairman Thomas knows that the
bows and arrows correction could have been handled by unanimous consent
last month. At that time, I asked that a correcting provision from the
FSC/ETI bill also be included to assist the Virgin Islands--as it is
for the arrow component manufacturers--and that some attention be
provided to the devastation facing the people of Haiti.
Virgin Islands
It is obvious that the House Republican Leadership and Chairman
Thomas are unwilling to provide a little helping hand to the Virgin
Islands and the other U.S. possessions. The recently enacted FSC/ETI
legislation contains a provision that will adversely affect the
economic development programs of the Virgin Islands and other
possessions.
The provision denies the Virgin Islands the ability to provide
economic incentives to companies doing business in the Virgin Islands
if they have some U.S. source income. There are many circumstances
where companies engaged in business activities in the Virgin Islands
can have U.S. source income, even though they engage in no activities
in the United States.
Everyone recognizes that the FSC/ETI legislation overreached. The
provision was adopted without any hearings in either House, and without
a serious examination of what it does. So the simple solution is to fix
the problem. The Republicans' response is to wait for Treasury to
address the situation. There is no guarantee when, or if, Treasury will
do so.
The provision in the bill already took effect, and is currently
creating a problem for the Virgin Islands economic development program.
This is a time-sensitive issue, that could be easily resolved with a
delay in the effective date to permit the Treasury to act.
This House has found time today to correct an error for arrow
component retailers. I had hoped that at the same time we could have
corrected the provision harming the Virgin Islands. It is obviously a
question of the Republicans' priorities.
haiti
It also is obvious that the House and committee Republican leadership
are unwilling to provide a little assistance to a poverty stricken
Haiti. Obviously, our neighbor in this hemisphere is not viewed as so
urgent that it cannot wait. I am talking about a country that is so
poor that they bake clay and pretend it is bread.
It is still unclear to me why--other than pure meanness, stinginess
and a lack of real values--that a Haiti trade preferences bill could
not be brought up before the end of the year. Chairman Thomas and I
reached agreement on a compromise bill--a bill that did not present any
threat to the U.S. industry but that would have meant the world to the
people of Haiti.
House Democrats were prepared to support our bill--and I know we had
ample Republican support for it, thanks to the efforts of my friend
Clay Shaw, and my long-time friend and colleague, Phil Crane. I also
know that Senators Bob Graham and Mike DeWine would have been able to
get passage in the Senate--had we sent them something. They had already
passed a much better, more generous bill.
I want everyone to understand that our failure to act on Haiti today
has real consequences for a country already devastated by natural
disasters, years of domestic political turmoil, and foreign
interference.
At the end of this year global textiles and apparel quotas terminate.
Everyone expects China to dominate, taking market share and jobs not
just from workers in the U.S., but also from workers in poor,
vulnerable developing countries. And there is no country so threatened
or so dependent on access to our market as Haiti.
Apparel is the only thing these people make--it is 90 percent of what
the Haitians send to us. And because we are not acting, those exports
are threatened. And you know what will replace those exports of
sweaters and pants? Exports of people.
I will fight again for Haiti next year, and I pray it will not be too
late.
conclusion
I want to compliment my colleague, Representative Paul Ryan, for his
diligence in correcting the drafting error for the 1997 bows and arrow
tax relief provision and, again today, for correcting the correction in
the FSC/ETI bill. One would have thought that drafting a simple bill,
like bows and arrows, could be handled right the first time. But, I
understand that things happen.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield back the balance of my
time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Ryan) that the House suspend the rules
and pass the bill, H.R. 5394.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
____________________