Congressional Record, Volume 151 Issue 156 (Wednesday, December 7, 2005)

[Congressional Record Volume 151, Number 156 (Wednesday, December 7, 2005)]
[House]
[Pages H11150-H11152]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TAX REVISION ACT OF 2005

Mr. McCRERY. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4388) to amend the Internal Revenue Code of 1986 to extend
certain expiring provisions, and for other purposes, as amended.
The Clerk read as follows:

H.R. 4388

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

SECTION 1. SHORT TITLE, ETC.

(a) Short Title.--This Act may be cited as the ``Tax
Revision Act of 2005''.
(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.--The table of contents for this Act
is as follows:

Sec. 1. Short title, etc.
Sec. 2. Election to include combat pay as earned income for purposes of
earned income credit.
Sec. 3. Cover over of tax on distilled spirits.
Sec. 4. Authority for undercover operations.
Sec. 5. Disclosures of certain tax return information.
Sec. 6. Deduction allowable with respect to income attributable to
domestic production activities in Puerto Rico.
Sec. 7. Technical corrections to regional value-content methods for
rules of origin under Public Law 109-53.

SEC. 2. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR
PURPOSES OF EARNED INCOME CREDIT.

(a) In General.--Subclause (II) of section 32(c)(2)(B)(vi)
is amended by striking ``January 1, 2006'' and inserting
``January 1, 2007''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2005.

SEC. 3. COVER OVER OF TAX ON DISTILLED SPIRITS.

(a) In General.--Paragraph (1) of section 7652(f) (relating
to limitation on cover over of tax on distilled spirits) is
amended by striking ``January 1, 2006'' and inserting
``January 1, 2007''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to articles brought into the United States after
December 31, 2005.

SEC. 4. AUTHORITY FOR UNDERCOVER OPERATIONS.

Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking ``January 1, 2006'' both
places is appears and inserting ``January 1, 2007''.

SEC. 5. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.

(a) Disclosures to Facilitate Combined Employment Tax
Reporting.--
(1) In general.--Subparagraph (B) of section 6103(d)(5)
(relating to termination) is amended by striking ``December
31, 2005'' and inserting ``December 31, 2006''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to disclosures after December 31, 2005.
(b) Disclosures Relating to Terrorist Activities.--
(1) In general.--Clause (iv) of section 6103(i)(3)(C) and
subparagraph (E) of section 6103(i)(7) are each amended by
striking ``December 31, 2005'' and inserting ``December 31,
2006''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to disclosures after December 31, 2005.
(c) Disclosures Relating to Student Loans.--
(1) In general.--Subparagraph (D) of section 6103(l)(13)
(relating to termination) is amended by striking ``December
31, 2005'' and inserting ``December 31, 2006''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to requests made after December 31, 2005.

SEC. 6. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME
ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES
IN PUERTO RICO.

(a) In General.--Subsection (d) of section 199 (relating to
definitions and special rules) is amended by redesignating
paragraph (7) as paragraph (8) and by inserting after
paragraph (6) the following new paragraph:
``(7) Treatment of activities in puerto rico.--
``(A) In general.--In the case of any taxpayer with gross
receipts for any taxable year from sources within the
Commonwealth of Puerto Rico, if all of such receipts are
taxable under section 1 or 11 for such taxable year, then for
purposes of determining the domestic production gross
receipts of such taxpayer for such taxable year under
subsection (c)(4), the term `United States' shall include the
Commonwealth of Puerto Rico.
``(B) Termination.--Subparagraph (A) shall not apply to any
taxable year beginning after December 31, 2006.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to taxable years beginning after December 31,
2005.

SEC. 7. TECHNICAL CORRECTIONS TO REGIONAL VALUE-CONTENT
METHODS FOR RULES OF ORIGIN UNDER PUBLIC LAW
109-53.

Section 203(c) of the Dominican Republic-Central America-
United States Free Trade Agreement Implementation Act (Public
Law 109-53; 19 U.S.C. 4033(c)) is amended as follows:
(1) In paragraph (2)(A), by striking all that follows ``the
following build-down method:'' and inserting the following:

av-vnm

``rvc = -------- 100''.

(2) In paragraph (3)(A), by striking all that follows ``the
following build-up method:'' and inserting the following:

vom

``rvc = -------- 100''.

(3) In paragraph (4)(A), by striking all that follows ``the
following net cost method:'' and inserting the following:

nc-vnm

``rvc = -------- 100''.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Louisiana (Mr. McCrery) and the gentleman from New York (Mr. Rangel)
each will control 20 minutes.
The Chair recognizes the gentleman from Louisiana.
Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
The bill before us at this time is a bill that takes several expiring
provisions of the Tax Code that were not eligible for inclusion in the
tax reconciliation bill because of the rules of reconciliation and
packages them in this legislation that we hope to pass out of the House
today.
Briefly, Mr. Speaker, those provisions include treating combat pay as
earned income under the Earned Income Credit. Currently, combat pay can
be used to figure the earned income credit of our soldiers in combat.
The special rule that allows that would expire this year. This
provision in the bill would extend that special rule by 1 year.
Also, an extension of the transfer of the rum excise taxes to the
Virgin Islands and Puerto Rico is included in this bill.
Also, Mr. Speaker, there is a provision in current law that expires
at the end of this year which gives the IRS the authority to use income
generated by an undercover operation to pay ongoing expenses on that
operation.

{time} 1430

Again, that authority would be extended by 1 year in this bill. Also
there is authority in the bill for the IRS to disclose certain tax
information to other Federal and State authorities.
Finally, Mr. Speaker, a provision in this bill would allow Puerto
Rico and businesses in Puerto Rico to claim the manufacturing deduction
that was part of legislation previously passed by this House. That
summarizes the provisions of this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I fully support this bill. I hope that the gentleman
from Louisiana would understand how those of us on the committee would
have a lot of concern about so many of these tax issues coming up under
the suspension calendar. This is so since the ones that we agree on and
are concerned about are subject to unanimous consent in the Senate.
Therefore, it does not have the same type of protections it would if it
was included in the reconciliation bill. I say that not from a partisan

[[Page H11151]]

viewpoint, but from a respect and appreciation of the work that is done
by Republicans and Democrats on the Committee on Ways and Means.
Mr. Speaker, I yield 3 minutes to the gentleman from South Carolina
(Mr. Spratt), the ranking member of the Budget Committee.
Mr. SPRATT. Mr. Speaker, we have three tax cut bills before us today,
a large one coming up tomorrow, and here is the problem with doing
business that way, especially under suspension.
When you break these tax cuts into so many small places, virtually
fragments, we quickly lose the audit trail and do not appreciate in the
aggregate how much they add up to. So let me try to reconstruct that
audit trail on the back of this envelope right here and show you
exactly what the summation of today and tomorrow will mean for the
bottom line, i.e. the deficit.
If we take the transportation bill which we passed this year, is $1.1
billion over 10 years, about a billion dollars over 5 years.
The Energy Policy Act is about $6.9 billion in revenues lost over 5
years.
The Katrina Tax Relief of 2005 has a $6.1 billion price tag. That is
its revenue impact.
The big bill tomorrow will be the Tax Extension Reconciliation Act,
$56 billion in the House, $80 billion over 10 years.
We have just done the Stealth Tax Relief Act extending for 1 year the
AMT at its existing level of application. The cost of that for 1 year
over 5 years is $31 billion.
Then we have the Tax Revision Act of 2005 with small cuts in it which
have not been scored, but it has a cost.
Finally, we have the Gulf Opportunity Zone Act of 2005. The revenue
effect of it over 5 years is $7 billion.
Add all of those together, and the cost, the revenue impact, comes to
nearly $100 billion which, goes straight to the bottom line and adds to
the deficit.
And the reconciliation spending bill that you passed only offsets
half of that amount.
That is not all. As we demonstrate today, the AMT will have to be
fixed. It will be fixed this year, patched, patched next year, and
patched into the future until we finally do something about its
application to middle income families for whom it was never intended.
If we do basically in future years what we have done today, the cost is
going to be at least $30-40 billion a year.
If you assume in the next 4 years after 2006, we will also have fixes
to the AMT, the cost of these tax bills we are doing today, and it is
going to be close to $200 billion. All of it goes to the bottom line
and adds to the budget deficit, and all of it supports what we have
been saying that until you deal with this aspect of the budget deficit,
the revenue side of the equation as well as the spending side, until
you reinstate the pay-go rule and offset these costly provisions in the
aggregate, you are going to have a huge deficit.
We would have offered, given the chance, on offset. And we will offer
offsets tomorrow, given the chance, in the bill presented. We will
offer a substitute that will offset the revenue impact on the bottom
line. If we had that opportunity on the House floor and in committee,
we would have done it again and we could have avoided the revenue
impact and at least protected the deficit from being made any worse. It
is a shame we will not have that opportunity.
Mr. McCRERY. Mr. Speaker, I yield such time as he may consume to the
gentleman from Florida (Mr. Shaw), the chairman of the Trade
Subcommittee of the Committee on Ways and Means.
Mr. SHAW. Mr. Speaker, I rise in strong support of this particular
provision. As House Members know, moneys received that are paid during
combat is not subject to taxation. That means then it is not used in
the calculation of the earned income tax credit. Clearly our soldiers,
our men and women in the combat zone, deserve that particular treatment
so they can claim the earned income tax credit.
This simply allows it and it extends that provision for an additional
year. This is another provision we should look at and see when we
should look at a permanent fix, that the earned income tax credit would
certainly apply to combat pay.
The question has been as to whether or not this should have been in
reconciliation. Well, it is an outlay; and, therefore, it would be
prohibited as far as the reconciliation bill. The so-called Byrd rule
when this bill gets over into the Senate, would knock it out of
reconciliation, so this is the proper way to bring it to the floor. I
urge all Members to support the bill, as I am sure they will.
Mr. McCRERY. Mr. Speaker, I yield 3 minutes to the gentleman from
Arizona (Mr. Hayworth), a respected member of the Committee on Ways and
Means.
(Mr. HAYWORTH asked and was given permission to revise and extend his
remarks.)
Mr. HAYWORTH. Mr. Speaker, I rise in strong support of this
legislation and welcome the bipartisan support we will see for its
passage. I especially applaud the efforts of the gentlewoman from North
Carolina (Ms. Foxx) for dealing with the key provision of treating
combat pay as earned income under the earned income credit. It has been
stated before on the floor but it deserves amplification again,
especially in the wake of this House voting 403-3 in strong support of
our men and women in uniform in the combat zone in Iraq.
Under current law, combat pay is ignored for the purpose of
calculating the combat credit. Ignoring combat pay can reduce the EIC
in some cases, but a special rule gives military personnel the option
to include combat pay in their earned income calculation. This would
extend the special rule by 1 year.
The criticism to the extent we have heard today is not based totally
on partisan posturing. No, the criticism is inherent at times in
dealing in an institution that is a deliberative body. Sometimes the
clock catches up with us. We would note not in terms of criticism but
in terms of fact that our friends across the Capitol in the other body
do not return this week, indeed do not return until Wednesday of next
week, so the work tends to accumulate. But we do have this venue of
suspension to move legislation upon which we agree.
To the criticisms offered by my friend from South Carolina dealing
with what this costs, I would simply point out that in the broader
context of tax reductions, what we have seen by reducing the overall
tax bite, what we see in so many ways with broader tax policy is that
actually revenues to the Federal Government increase. It is not
something that is especially partisan. President Kennedy offered it in
the 1960s; President Reagan in the 1980s; President Bush and this
majority in Congress now early in the 21st century, so actually to
invigorate our economy, we reduce tax rates, and although some may
quibble about some provisions, in general, a reduction in tax rates
actually fuels the engines of economic prosperity. That is our intent.
People of goodwill may differ on that, but I expect we will see broad
bipartisan agreement with this modest package of what is called in the
trade extenders, and especially dealing with combat pay.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
I would like to say to my friend from Arizona that while we do not
have any problem with the substance of the bill, it is just unfair to
talk about the timetable of the other body. We have a responsibility to
deliberate and to legislate and to do what we think are in the best
interests of the people of the United States of America. We should not
be guided by the lack of time the people on the other side have.
As a matter of fact, by sending this piece of legislation over there,
albeit that it is not paid for, they only need unanimous consent. Any
Member of the Senate can stand up and just object to this and then the
good work is just wiped out. What I am suggesting is that when we do
try to work in a bipartisan way, this should always be included in a
House bill that is protected by the House Members and not left to
arbitrary decisions by people on the other side.
Mr. Speaker, in closing, the gentleman from Louisiana (Mr. McCrery)
is a hardworking member of the Committee on Ways and Means, and while
we may have differences on legislation and policy, that we all have to
protect the integrity of that committee. That

[[Page H11152]]

is the only committee outlined in the Constitution to provide the ways
and means to run this great republic, and I just do not like to see the
Rules Committee making decisions on what has fiscal implications not
only for the Congress and the Members here, but for the entire country.
I do not have any objections to this, and I encourage Members on both
sides of the aisle to support this suspension.
Mrs. CHRISTENSEN. Mr. Speaker, I rise in support of H.R. 4388,
legislation which amends the Internal Revenue code of 1986 to extend
certain expiring provisions.
I want to express my profound gratitude to the Chairman of the Ways
and Means Committee, Bill Thomas, for including in the bill a provision
to extend the cover-over of the additional $1.50 of the taxes on
distilled spirits produced in the Virgin Islands and Puerto Rico for
another year. While the amount of the revenue generated by this tax is
minuscule in relation to the overall federal budget, it is critically
important to my constituents because the government of the Virgin
Islands utilizes this funding as security for the bonds that are used
to provide for improvements to our public infrastructure.
I am eternally grateful, as well, to my good friend, the Ranking
Member of the committee, Charlie Rangel, for his steadfast support.
Mr. Speaker, my constituents and I look forward to the day, which we
hope will not be too long in coming, when we will be able to see the
return of the full tax and that it be made permanent, as was originally
the case, so that we won't have to annually vie for its extension.
I urge my colleagues to support the passage of H.R. 4388 and I yield
back the balance of my time.
Mr. LARSON of Connecticut. Mr. Speaker, I rise today in support of
H.R. 4388, the Tax Revision Act. Among other things, H.R. 4388 includes
an extension of a critical tax provision that our troops and their
families rely on to make ends meet when deployed in Iraq and
Afghanistan.
The Working Families Tax Relief Act (PL-108-311), which we passed
last year, included language which ensured that military families are
not unfairly prevented from receiving the Earned Income Tax Credit
(EITC) because the combat pay they rely on to make ends meet is tax
free.
Ordinarily only those with taxable earned income are eligible for the
EITC. However the only source of income for many military families is
the tax free combat pay of a spouse deployed in Iraq or Afghanistan. As
a result, before we passed last year's legislation, many low-income
military families were unable to claim the EITC based on the tax free
status of their family members' combat pay.
The last thing our troops in Iraq and Afghanistan need to worry about
is their families' taxes. The extension of the EITC combat pay
provision will ensure that the families of our brave men and women in
uniform are not unfairly and inadvertently punished when their loved
ones are deployed abroad.
The tax treatment of combat pay for EITC purposes is not
controversial. However, it was not included in the larger
reconciliation bill on apparently technical grounds that the refund
portion of the EITC is a budget outlay and therefore cannot be included
in the bill. The substitute that Democrats offered in Committee
contained a provision, rejected by majority, that was designed to
continue full EITC benefits to our military families and which did not
run afoul of the budget rules.
I worry that this bill is for show and merely meant to help make some
on the other side of the aisle feel better about the tax cut bill they
will support tomorrow which helps the wealthy and ignores working and
military families. I hope that my concerns are unfounded and that this
important legislation is made into law.
Mr. RANGEL. Mr. Speaker, I yield back the balance of my time.
Mr. McCRERY. Mr. Speaker, I have no additional speakers, and I yield
back the balance of my time.
The SPEAKER pro tempore (Mr. Simpson). The question is on the motion
offered by the gentleman from Louisiana (Mr. McCrery) that the House
suspend the rules and pass the bill, H.R. 4388, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. McCRERY. Mr. Speaker, on that, I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this question will
be postponed.

____________________