[Congressional Record Volume 153, Number 20 (Thursday, February 1, 2007)]
[Senate]
[Pages S1488-S1512]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FAIR MINIMUM WAGE ACT OF 2007--Continued
Mr. HARKIN. Madam President, I rise to discuss an amendment I have
filed to eliminate a provision that was added to the minimum wage bill
regarding employee leasing firms, also known as professional employer
organizations, or PEOs.
I have fought for a clean minimum wage bill, on the grounds that
workers have been waiting 10 long years for this raise. During that
time, businesses have seen record profits and productivity--and that
has been equally the case in States and regions that have raised the
minimum wage. Yet now we are being asked to include this aggressively
anti-worker PEO provision in order to pass a minimum wage increase in
the Senate.
For my colleagues and others who may not know what a PEO is, let me
explain. It is an organization that handles administrative details for
workers who actually do work for another company. For example, I might
technically be employed by Tristate PEO, but I actually show up to work
every day at Main Street Construction Company. Companies use PEOs so
they don't have to handle the tax-and-benefits paperwork for many of
their workers.
The language in the PEO provision, however, seeks to make these PEOs
the ``employer of record'' for tax purposes. PEOs have sought to become
the ``employer of record'' under various laws because they would like
to be able to tell employers that the PEOs can independently take care
of payroll taxes, workers' compensation, unemployment
[[Page S1489]]
insurance, and the like. However, in the past, PEOs have misrepresented
what jobs are covered by workman's compensation--for instance, by
characterizing construction workers as clerical. Under current law,
legal responsibility for employer obligations typically remains partly
or wholly with the worksite employer.
Making a PEO the sole employer makes the evasion of labor and
employment standards much easier. The National Employment Law Project
and other worker-rights advocates have concluded that the language now
in the bill would make it harder for employees to go to an arbiter and
get unpaid overtime, unemployment insurance benefits, or workman's
compensation benefits if the PEO collapses. And this is by no means
hypothetical. Such collapses have happened not just with small, fly-by-
night operations, but with large PEOs like Administaff and Simplified
Employment Services, SES.
For example, when SES allowed health insurance premiums to go unpaid
and then went bankrupt, it left employees like Melanie Martin out in
the cold. She said ``We trusted him to pay our insurance premiums, and
now I'm stuck with a $7,000 surgery bill. Every time I think about
this, I cry.''
In 2004, when MidAtlantic Postal Express in Roanoke, VA, went
bankrupt, the U.S. Treasury wasn't the only one left holding the bag.
Employees were left wondering where to turn for thousands of dollars in
back pay. Victory Compensation Services was the PEO handling the
workers' pay and benefits, and admitted that workers had no workman's
compensation coverage even though MidAtlantic had paid Victory
premiums. But Victory blamed MidAtlantic for the unpaid payroll.
Now, let's say that you are newly unemployed trucker who is owed
$7,000 in back pay. This is a complicated mess for a worker to try to
navigate just to get a paycheck that he or she is owed.
This is part of a larger, systemic problem. Working people in the
United States feel less and less empowered in our you're-on-your-own
society. Seventy percent of families are headed by either dual-income
couples or a single parent. The housing bubble is bursting.
Globalization is sending American jobs overseas. Pensions are being
frozen at an unprecedented pace. The national savings rate has actually
gone into negative figures. Women are working an average of 500 more
hours more per year than in 1979. But productivity has increased 70
percent since then. People are working harder and getting paid less.
In this context of economic anxiety, we shouldn't be making it even
harder for workers to organize, negotiate or enforce contracts, or
fight for their rights under law. But that will be the sure-fire result
if the final bill has this PEO provision in it.
I urge my colleagues to strip this provision from the bill. We must
not sacrifice worker rights in exchange for this modest and long-
overdue increase in the wages for those at the lowest rungs of the
economic ladder.
Mr. LEVIN. Madam President, I have long supported an increase in the
minimum wage. I am pleased that, with the leadership of the new
majority in Congress, this minimum wage increase will be passed by a
bipartisan majority.
In 1996 Congress raised the minimum wage by 90 cents an hour in two
steps to $5.15 an hour. That increase was enacted more than 10 years
ago. Since then, the real value of that wage has eroded by 21 percent
and the nearly 5.5 million workers earning the minimum wage have
already lost all of the gains from the 1996-1997 increase. Since then,
Gallup polls have shown that 86 percent of small business owners do not
think that the minimum wage affects their business, and nearly half of
small business owners think that the minimum wage should be increased.
Since then, 29 States, including Michigan, as well as the District of
Columbia have recognized the importance of keeping our working families
out of poverty by increasing State minimum wages.
Unfortunately, since the 1970s, poverty has increased by 50 percent
among full-time, year-round workers. Currently, 37 million Americans,
including 13 million children, live in poverty. As the most prosperous
nation in the world, our minimum wage should be a living wage, and it
is not. When a father or mother works full time, 40 hours a week, year-
round, they should be able to lift their family out of poverty. A full-
time minimum wage laborer working 40 hours a week for 52 weeks earns
$10,700 per year--more than $6,000 below the Federal poverty guidelines
for a family of three.
I believe that a full-time minimum wage job should provide a minimum
standard of living in addition to giving workers the dignity that comes
with a paycheck. These lower paid workers, many of whom have entered
the workforce due to the welfare reform, should be rewarded for
entering the workforce, not penalized by a poverty wage. A higher
minimum wage has the potential to ensure that lower paid workers will
be protected from falling into poverty and possibly back on the welfare
rolls. The minimum wage increase during the recession in 1991 provided
much needed income to poor people and helped to increase spending in
the economy. 58 percent of the benefit of the 1996 increase went to
families in the bottom 40 percent of income groups. Over one-third of
the benefit went to the poorest families--those in the bottom 20
percent of income groups.
Today the real value of the minimum wage is $4.00 below what it was
in 1968. To have the purchasing power it had in 1968, the minimum wage
would have to be at least $9.37 an hour today, not $5.15. According to
the United States Department of Labor, over 60 percent of minimum wage
earners are women; almost 40 percent are minorities, and nearly 80
percent are adults. These hardworking Americans deserve a fair deal.
In addition to the long overdue minimum wage provision, this bill
contains a package of tax provisions. I am pleased that these include a
number of measures to crack down on abusive tax dodges, including an
improvement to current law to end the tax benefits received by
companies that reincorporate and set up shell headquarters in offshore
tax havens.
I am also pleased that the bill extends the work opportunity tax
credit, which allows employers credit against wages for hiring workers
from targeted groups such as recipients of public assistance, qualified
veterans, and ``high risk'' youth. I have heard from a number of
Michigan companies that the WOTC program is important to them in their
hiring members of these targeted groups, and I am pleased that this
provision will be extended through the end of 2012.
I am also pleased that the tax provisions would put in place a limit
on the amount that corporate executives and other highly paid employees
can place tax-free into deferred compensation plans. Under current law,
public companies cannot deduct more than $1 million per year for
compensation paid to their top officers. However, compensation that is
``deferred,'' meaning the employee doesn't have immediate access to it,
is not subject to this $1 million limit; so deferred compensation
packages have become a main way that company executives can get multi-
million dollar compensation packages while their companies continue to
take a tax write-off.
We have seen these excessive packages time and again in recent
stories about runaway executive compensation totaling tens of millions
of dollars. Tens and even hundreds of millions of dollars have been
salted away in this fashion for corporate executives, and companies
have simply found another way to game the system by excluding this
``deferred compensation'' from those individuals' income for the year.
It is more than time for Congress to put an end to this game which has
fueled excessive executive pay.
This bill would set a limit on the amount of compensation that could
receive tax deferral at the lower of $1 million annually or the average
of the previous 5 years compensation. The ability of corporate
executives to defer tax on up to $1 million in compensation is still a
significant benefit that stands in stark contrast to the minimum wage
we are attempting to raise for those at the lowest end of the pay
scale.
It is only right that those who are at the low end of the pay scale
who work hard should receive a fair wage and be able to support their
families. These people do not always have the leverage to negotiate a
fair salary. This bill to increase the minimum wage will help to move
them to a more livable wage.
Mr. INHOFE. Madam President, I will unavoidably miss the final vote
on
[[Page S1490]]
the minimum wage bill but I come down here now to ask unanimous consent
that the Record reflect, immediately after the vote, my announcement
that I would have voted against this bill.
In so doing, I remain consistent on the issue. Government is best
when it is does not pick winners and losers--when it does not
competitively advantage one group of people over another or one set of
States over another.
Senator DeMint offered an amendment to equally and fairly increase
the minimum wage by $2.10 for each State over what the wage is today.
The fact that the liberals voted against the DeMint amendment is
proof that their bill as now constituted is really about damaging the
competitiveness of middle America--the so-called red States,
disparagingly called `'fly-over country'' by liberals--compared to the
liberal fringe States.
Without this amendment, the underlying legislation would partially
exempt minimum wage workers in higher-cost States that already have
State minimum wage rates greater than the Federal level of $5.15 an
hour, and completely exempt minimum wage workers in highest-cost States
that have State minimum wage rates near $7.25 an hour.
The DeMint amendment would increase the Federal minimum wage equally
for workers in all States at the same rate as H.R. 2 would increase the
minimum wage from the current Federal minimum wage rate.
Senator Kennedy's arguments against this amendment have been both
confusing and contradictory. On the one hand, he said that we need a
one-size-fits-all mandate, and then he said that Massachusetts has a
higher cost of living.
I will not stand for people in Washington, DC, damaging the
competitiveness of Oklahoma against other States. If Oklahomans vote to
change our own laws, that is one thing, but we are not going to buckle
under to DC and the liberal fringe States.
Thus I would vote nay.
I ask unanimous consent that the following chart be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
----------------------------------------------------------------------------------------------------------------
Current Kennedy Proposal DeMint Proposal
MinWage --------------------------- $ Wage --------------------------- $ Wage
State In 2007 2008 2009 Hike 2007 2008 2009 Hike
Effect $5.85 $6.55 $7.25 $0.70 $1.40 $2.10
----------------------------------------------------------------------------------------------------------------
Alabama....................... $5.15 $5.85 $6.55 $7.25 $2.10 $5.85 $6.55 $7.25 $2.10
Alaska........................ 7.15 7.15 7.15 7.25 0.10 7.85 8.55 9.25 2.10
Arizona....................... 6.75 6.75 6.75 7.25 0.50 7.45 8.15 8.85 2.10
Arkansas...................... 6.25 6.25 6.55 7.25 1.00 6.95 7.65 8.35 2.10
California.................... 7.50 7.50 8.00 8.00 0.50 8.20 8.90 9.60 2.10
Colorado...................... 6.85 6.85 6.85 7.25 0.40 7.55 8.25 8.95 2.10
Connecticut................... 7.65 7.65 7.65 7.65 -- 8.39 9.10 9.80 2.15
Delaware...................... 6.65 6.65 7.15 7.25 0.60 7.35 8.05 8.75 2.10
District of Columbia.......... 7.00 7.00 7.55 8.25 1.25 8.70 9.40 10.10 3.10
Florida....................... 6.67 6.67 6.67 7.25 0.58 7.37 8.07 8.77 2.10
Georgia....................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Hawaii........................ 7.25 7.25 7.25 7.25 -- 7.95 8.65 9.35 2.10
Idaho......................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Illinois...................... 6.50 7.50 7.75 8.00 1.50 7.20 7.90 8.60 2.10
Indiana....................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Iowa.......................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Kansas........................ 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Kentucky...................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Louisiana..................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Maine......................... 6.75 7.00 7.00 7.25 0.50 7.45 8.15 8.85 2.10
Maryland...................... 6.15 6.15 6.55 7.25 1.10 6.85 7.55 8.25 2.10
Massachusetts................. 7.50 7.50 8.00 8.00 0.50 8.30 9.00 9.70 2.10
Michigan...................... 6.95 7.15 7.40 7.40 0.45 7.65 8.35 9.05 2.10
Minnesota..................... 6.15 6.15 6.55 7.25 1.10 6.85 7.55 8.25 2.10
Mississippi................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Missouri...................... 6.50 6.50 6.55 7.25 0.75 7.20 7.90 8.60 2.10
Montana....................... 6.15 6.15 6.55 7.25 1.10 6.85 7.55 8.25 2.10
Nebraska...................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Nevada........................ 6.15 6.85 7.65 8.25 2.10 7.85 8.55 9.25 2.10
New Hampshire................. 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
New Jersey.................... 7.15 7.15 7.15 7.25 0.10 7.85 8.55 9.25 2.10
New Mexico.................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
New York...................... 7.15 7.15 7.15 7.25 0.10 7.85 8.55 9.25 2.10
North Carolina................ 6.15 6.15 6.55 7.25 1.10 6.85 7.55 8.25 2.10
North Dakota.................. 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Ohio.......................... 6.85 6.85 6.85 7.25 0.40 7.55 8.25 8.95 2.10
Oklahoma...................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Oregon........................ 7.80 7.80 7.80 7.80 -- 8.50 9.20 9.90 2.10
Pennsylvania.................. 6.25 6.25 6.55 7.25 1.00 6.95 7.65 8.35 2.10
Rhode Island.................. 7.40 7.40 7.40 7.40 -- 8.10 8.80 9.50 2.10
South Carolina................ 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
South Dakota.................. 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Tennessee..................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Texas......................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Utah.......................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Vermont....................... 7.53 7.53 7.53 7.53 -- 8.23 8.93 9.63 2.10
Virginia...................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
Washington.................... 7.93 7.93 7.93 7.93 -- 8.63 9.33 10.03 2.10
West Virginia................. 5.85 5.85 6.55 7.25 1.40 6.55 7.25 7.95 2.10
Wisconsin..................... 6.50 6.50 6.55 7.25 0.75 7.20 7.90 8.60 2.10
Wyoming....................... 5.15 5.85 6.55 7.25 2.10 5.85 6.55 7.25 2.10
----------------------------------------------------------------------------------------------------------------
22 States--Fully Impacted.
18 States--Partially Impacted.
10 States--Not Impacted.
Mr. FEINGOLD. Madam President, I speak today in support of passage of
H.R. 2, the Fair Minimum Wage Act of 2007. The Federal minimum wage has
not been increased in almost 10 years and an increase is long overdue.
I have been a strong supporter of an increase in the Federal minimum
wage for many years and I am delighted the Senate is finally about to
vote for an increase in the Federal minimum wage.
This much-needed increase is projected to benefit close to 13 million
Americans either with a direct increase in their minimum wage or
indirectly by promoting higher wages for other working Americans
earning more than the minimum wage. This increase is sorely needed
because the current minimum wage cannot adequately support workers as
its value has eroded significantly since the last increase in 1997.
Furthermore, the Center on Budget and Policy Priorities notes that
after adjusting for inflation, the value of the minimum wage is at its
lowest level since 1955. As the costs of housing, health care, energy,
and education continue to skyrocket, we must raise the minimum wage to
provide millions of hard-working Americans the respect and dignity
their work demands.
More and more of these working Americans find themselves mired in
poverty or living on the cusp of poverty. Right now, there are 37
million Americans living in poverty, including 13 million children.
Since the 1970s, poverty has increased by 50 percent for full-time,
year-round workers. Minimum wage workers who work full time earn
$10,700 a year, which is almost $6,000 below the Federal poverty
guidelines for a family of three. No American should work full-time,
year-
[[Page S1491]]
round, and still live in poverty. While this modest increase in the
Federal minimum wage will not eliminate poverty, it will provide hard-
working Americans with a well-deserved increase in their wages. This
increase will provide more money for workers to purchase prescription
drugs, to pay utilities and rent, to provide child care for their
children, and to invest in higher education opportunities. This
increase is needed because the majority of the low income people in our
country are working and are holding down low-paying jobs with stagnant
wages that do not allow them to break free from poverty.
Even with this increase in the Federal minimum wage, workers in
Wisconsin and throughout the country will still struggle to afford
housing. The National Low Income Housing Coalition estimates that the
fair market rent for a two-bedroom apartment in Wisconsin is $666 a
month and calculates that a worker in Wisconsin needs to make $12.80 an
hour to avoid paying more than 30 percent of his or her income on
housing. According to NLIHC data, a full-time minimum wage employee
earning the current $5.15 an hour needs to work 79 hours a week, 52
weeks a year to afford a two-bedroom apartment. Madam President, 79
hours a week is almost the equivalent of two full-time minimum wage
workers and the number of hours of work required to cover the costs of
an apartment are even higher in States with higher housing costs. It is
a disgrace that in many cases, minimum wage workers working full time
cannot afford adequate housing or are forced to pay a huge share of
their income to cover housing costs. While this increase will alleviate
some of the housing affordability burdens facing workers, more needs to
be done this year to promote affordable housing, including expanding
rental assistance and affordable housing production.
Unfortunately hunger and food insecurity are also a reality for far
too many minimum wage workers. Even in a State known for its diverse
agricultural production, many Wisconsinites periodically face hunger.
Food Stamps, or FoodShare as it is known in Wisconsin, serves over 25
million nationwide and 329,000 Wisconsinites. Even with this and other
Federal nutrition assistance programs combined with the dedicated work
of food pantries, soup kitchens and even many religious organizations,
9 percent--or 1 out of 11 of households in Wisconsin lack sufficient
food. Many of these food assistance recipients are working at low-wage
jobs, so increasing the minimum age is an important step. But even with
this improvement, it will not fully solve this problem and I will
continue to work to provide improved Federal support in the Farm Bill
and elsewhere to reduce hunger.
Housing costs are not the only necessity of life that minimum wage
workers have to provide for themselves and their families. They also
have to purchase groceries, provide health care, pay for higher
education, pay for increasingly expensive gas and electric costs, and
provide child care for their children. Some Americans may think that
the majority of minimum wage workers are teenagers in the first job;
that perception is incorrect. The Economic Policy Institute notes that
over 70 percent of minimum wage workers are adults and in Wisconsin,
over 80 percent of minimum wage workers are adults. Moreover, of these
adult minimum wage workers, over 30 percent are the sole breadwinners
of their families.
I think it is unconscionable that in the almost 10 years that we have
not raised the minimum wage, Congress has voted to increase its own pay
by $31,600. People in Wisconsin find it hard to understand why Members
of Congress received substantial pay raises at a time when the real
value of the minimum wage has eroded by 20 percent since 1997. As my
colleagues know, I have long fought against automatic congressional pay
increases and will continue to do so. I have introduced legislation
that would put an end to automatic cost-of-living adjustments for
congressional pay. Mr. President, we have Americans who are working
full time, 52 weeks a year and they cannot afford health care, housing,
and child care. They don't have the power to automatically raise their
pay--they are dependent on Congress to raise the Federal minimum wage.
But instead of working to raise the minimum wage during the past 10
years, we in Congress worked to protect our automatic pay raises.
Opponents of increasing the minimum wage argue that it hurts the
economy and job growth, but past increases in the minimum wage do not
support that argument. In the 4 years after the previous minimum wage
increase, nearly 12 million new jobs were created. A 1998 Economic
Policy Institute study did not find significant job loss associated
with the 1997 minimum wage increase. Additionally, the Center on
Wisconsin Strategy examined job growth after the June 2005 increase in
Wisconsin's minimum wage and found that Wisconsin had an average growth
of 30,000 more jobs, not a job loss.
This increase is a great start, but more needs to be done for the
American worker. I am pleased an amendment I offered was accepted into
the underlying package that seeks to support American manufacturers. I
thank my colleague, Senator Kennedy, for his leadership in moving this
bill through the Senate and both he and his staff for their assistance
in getting my Buy American reporting requirement amendment accepted
into the Senate package. This amendment is based on past Buy American
reporting requirements that I have been successful in getting enacted
in various appropriations bills from fiscal year 2004 through fiscal
year 2006.
This Buy American reporting requirement requires Federal agencies to
submit annual reports that include the following information: (a) the
dollar value of any articles, materials, or supplies purchased that
were manufactured outside of the United States; (b) an itemized list of
all waivers of the Buy American Act granted with respect to such
articles, materials, or supplies, and a citation to the treaty,
international agreement, or other law under which each waiver was
granted; (c) if any articles, materials, or supplies were acquired from
entities that manufacture articles, materials, or supplies outside the
United States, the specific exemption under the Buy American Act that
was used to purchase such articles, materials, or supplies; and (d) a
summary of total procurement funds spent on goods manufactured in the
United States versus funds spent on goods manufactured outside of the
United States.
The amendment also requires that these reports should be made
publicly available to the maximum extent possible and contains a common
sense exception for members of the intelligence community.
I have long believed that an important way Congress can support
American manufacturers and workers is to ensure that the Federal
Government buys American-made goods whenever reasonably possible.
Congress enacted such a policy when it passed the Buy American Act of
1933. That act requires government agencies to purchase American-made
goods but allows these requirements to be waived in certain specified
cases. I am concerned that those waivers may be being used excessively.
Unfortunately, right now, only the Department of Defense is required to
permanently report on its use of waivers of domestic procurement laws.
I hope that this Buy American reporting language can help ensure that
the entire government buys American-made goods in every possible
circumstance, and is able to explain its reasons when it does not do
so. This is a straightforward way to help ensure that the Federal
Government--and American taxpayer dollars--support American workers.
My State has suffered a huge loss of manufacturing jobs over the past
6 fyears. According to statistics from the Department of Labor,
Wisconsin lost over 90,000 manufacturing jobs between January 2000 and
November 2006. Unfortunately, many other manufacturing states around
the country are facing similarly tough times. The Economic Policy
Institute reported that the August 2006 level of manufacturing
employment is ``at near lows not seen since the 1950s.'' The continued
loss of high-paying manufacturing jobs underscores the need for the
Federal Government to support American workers and businesses by buying
American-made goods.
American workers need our support on a range of issues, whether it is
by
[[Page S1492]]
increasing the minimum wage, fighting against bad trade policies, or
encouraging the purchase of American-made goods. The Senate took a good
first step with the passage of this legislation. I was proud to vote
for the 1996-1997 increase bringing the minimum wage to its current
level of $5.15 an hour and I am pleased to now support the increase in
the Federal minimum wage from $5.15 to $7.25.
When the minimum wage was established in 1938, its purpose was to
ensure that American workers were fairly compensated for a day's work.
Despite the passage of this increase, far more work needs to be done to
support hard-working American families. I look forward to working with
my colleagues in this new Congress to promote housing, education, and
health care policies that support the working men and women of this
country. This is a great victory for families in Wisconsin and
throughout the Nation and it is my hope that this first step paves the
way for additional legislative victories for working Americans this
year.
Mr. DOMENICI. Madam President, I rise today in support of the Fair
Minimum Wage Act of 2007, H.R. 2.
It has been 10 years since Congress last voted to raise the minimum
wage. In the meantime, our cost of living has increased annually and
working families have struggled to meet their most basic needs. The
current Federal minimum wage just isn't sufficient. Now is the time to
raise the minimum wage. It is time to give America's hard-working, low-
wage workers a raise.
This bill will increase the Federal minimum wage by $2.10 an hour to
$7.25 an hour. This increase will be done in three phases over a 26
month period. The minimum wage has proven to be an important tool in
fighting poverty in our country and I believe that this modest increase
will help to improve the situation of low-wage workers and their
families.
The Fair Minimum Wage Act also contains several key tax credits.
These tax credits will encourage small businesses to continue to
explore new investments and make improvements to their business
property. This bill will extend the tax credit provided to employers
who hire workers who have experienced barriers to entering the
workforce, such as low-income workers welfare and food stamp
recipients, and high-risk youth. The work opportunity tax credit will
also apply to the hiring of veterans disabled after the September 11,
2001, attacks. I believe that these tax credits will be of benefit to
our small businesses owners and I hope that my colleagues will support
this package.
Mr. SMITH. Madam President, I rise today to support the Fair Minimum
Wage Act of 2007 to increase the Federal minimum wage.
The Fair Minimum Wage Act of 2007 will increase the Federal minimum
wage by $2.10 to $7.25. Oregon's minimum wage, which is $7.80 and
adjusted annually for inflation, will not be impacted by this boost.
Nevertheless, I support the increase of the Federal minimum wage for
our Nation's employees. I also support the inclusion of the small
business tax relief in the legislation. I believe this is a valuable
legislative package, helping both our Nation's employees and small
businesses and strengthening America's workforce and economy.
The bill before us today will have a positive impact on our low-
income workers. An estimated 14 million workers will receive a pay
increase if the minimum wage were raised from $5.15 to $7.25. There are
roughly 3.9 million families with children under 18 that will benefit
from this minimum wage increase, including 1.4 million single parents.
I am proud that we had this debate on the Senate floor. By engaging
in this bipartisan discussion, we were able to reach a compromise that
benefits low-income American workers. After 10 years, hard-working
Americans, many of whom are working full-time jobs, will be in a better
position to pay their bills, take care of their families, and reinvest
in the economy.
I also support the tax relief included in this bill for our Nation's
small businesses. As a small business owner, I know first hand what it
takes to meet a payroll and to sign the front of a paycheck. Small
businesses are the backbone of the American economy, employing more
than half of all private sector employees and generating 60 to 80
percent of net new jobs annually. Targeted tax and regulatory relief is
vital to helping these businesses continue to create new jobs, stay
competitive, and keep our economy growing.
I applaud the Senate leadership for bringing forth the minimum wage
bill to help our Nation's workers. I am honored to support the Fair
Minimum Wage Act of 2007.
Mr. GRASSLEY. Madam President, I wish to speak briefly on a revenue
provision contained in the minimum wage bill. Senator Baucus and I
worked closely on the tax bill, both on the provisions providing relief
to small businesses affected by the minimum wage but also the offsets
that made sure the package was in balance.
One of the offsets, that dealing with limiting the amounts of annual
deferrals under nonqualified deferred compensation plans, has attracted
some concern and raised some questions.
I thought it would be useful to my colleagues for me to provide a
brief sketch of where we have been on this issue. The issue of
nonqualified deferred compensation came to the attention of the Finance
Committee in response to the Joint Committee on Taxation's
investigation into Enron--done at the request of the Finance Committee.
The Enron report highlighted a number of abuses by top executives
involving nonqualified deferred compensation.
In the American Jobs Creation Act that Congress passed in 2004, there
were included provisions that limited deferred nonqualified
compensation plans. In brief, the legislation limited when and under
what circumstances distributions could be made.
More recently, in the Pension bill passed last year, Congress
restricted funding of nonqualified deferred compensation plans if the
employer had underfunded certain other retirement plans.
In addition, the Finance Committee last September had a hearing that
looked closely at executive compensation that covered a wide range of
pay issues involving top employees.
As my colleagues can see, the issue of executive compensation and
particularly nonqualified deferred compensation has been of long-
standing interest for the Finance Committee. I expect that these
matters will continue to command the attention of the committee this
Congress.
The majority of concerns that have been raised about this most recent
provision contained in the minimum wage bill is its possible impact on
middle management. I appreciate those calling for caution. The Finance
Committee's Republican staff is reviewing the legislation and seeking
to get more and better numbers about who is affected by this
legislation. In addition, there have been bipartisan discussions at the
staff level.
In discussions with Joint Committee on Taxation I have asked them
what would be the impact of eliminating the 5-year average compensation
limitation so that the aggregate amounts deferred under a nonqualified
deferred compensation plan would be limited to $1 million annually.
JCT informs me that this would reduce the current $806 million score
by less than $100 million--so it would only be a small shave off the
score. This suggests to me, that the vast majority of individuals--90
percent--who would be affected by this reform are among the
wealthiest--i.e., those individuals receiving more than $1 million
annually in nonqualified deferrals. I hope this information will help
inform members as we discuss this matter in the near future.
Finally, I think it is important for members to bear in mind that
ERISA does not apply to so-called ``top hat'' plans, these top hat
plans being those for top management. There is a concern that if a
nonqualified plan is widely applicable, as widely applicable as some of
the opponents of this provision contend, it raises other red flags.
The issue raised is the fact that a widely applicable plan should be
treated as an ERISA plan. If these widely applicable nonqualified
deferred compensation plans are actually ERISA plans, they then should
come under the protections that Congress has put in place under ERISA
to provide workers retirement security.
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I will continue to look at this provision and bear in mind the issues
raised by my colleagues.
Madam President, we are finishing up debate on the Senate minimum
wage/small business tax relief bill.
The Senate invoked cloture on the Baucus substitute amendment. It
contained two basic components. The first one is the proposed increase
in the Federal minimum wage. The second component is tax incentives to
assist workers and businesses burdened by the increased Federal minimum
wage. That part of the package was approved, on a bipartisan basis, by
the Finance Committee late last month.
Now, by approving the Baucus substitute on an overwhelmingly
bipartisan vote, the Senate has made its will clear: a minimum wage
increase must be linked to small business tax relief package.
In the normal course of events, after Senate passage, the amended
House bill would either go into conference or go back to the House as
amended. We call the latter procedure ``pingpong.''
Since tax matters were linked and the House bill doesn't have tax
provisions, the House Democratic leadership and tax writers have
threatened to send the Senate bill back to the Senate. They will claim
that they are protecting prerogatives of the House.
We find ourselves stuck on minimum wage because the House Democrats
have threatened to use the ``blue slip'' procedure.
So, no one should be mistaken. It is House Democrats, not Senate
Republicans, who are delaying passage of the minimum wage.
If House Democrats send us a suitable revenue bill, Senate
Republicans will be ready to move expeditiously to the next step. Right
now, we can not move.
Now, if the House Democrats send us a minimum wage-related revenue
bill, what happens next?
That is up to our Democratic and Republican leaders.
There are two basic avenues to take. One is a conference. The other
is to amend the House revenue bill back with the Senate-passed bill and
send it to the House.
On tax bills, we have used both approaches over the last few years.
For instance, the Hurricane Katrina tax relief measures never went to
conference. On the other hand, we had conferences on the tax relief
reconciliation bill and the pension bill.
Still another approach would be for the House to combine its minimum
wage bill with the Senate tax relief package and send it over here.
That route, though unusual, has also worked.
In this case, I have indicated to my Republican leadership that I am
wary about the conference option.
The Senate Democratic leadership only came to linking minimum wage
with small business tax relief after Chairman Baucus relayed the
Republican position to them. It took a cloture vote to prove Chairman
Baucus right.
So, if we go to conference, the Senate Democratic leadership and
House Democratic leadership might be perfectly willing to scrap the
Senate's position.
Apparently, at a pen and pad session with reporters today, the
majority leader indicated as much. He told reporters he wanted a
``clean'' minimum wage bill to come out of conference. Now, I am told
the majority leader's press operation has attempted to change the
impression those remarks left.
Let's just say I am reasonably suspicious of those kinds of
``clarifications.'' Apparently, the majority leader also said he would
be prepared to dare Republicans to filibuster a clean minimum wage
conference report. By ``clean,'' he appears to be referring to the term
used by House and Senate Democratic leadership to mean no linked small
business tax relief.
Make no mistake--the easiest and quickest way to send a minimum wage
bill to the President would be for the House to send the Senate a bill
identical to the Senate-passed bill.
An alternative quick option would be for the House to send us a
revenue bill and the Senate would amend the bill and send it to the
House. The House could then send the bill to the President's desk.
The conference option could be troublesome. It could be drawn out.
Or, it could be a way for the House and Senate Democratic leadership to
subvert the Senate position. That would not be a good way to start out
the new session. In a conference setting, it would mean the Senate
Democratic leadership acting in a manner that is at odds with how it
said it was going to conduct business.
I counsel my leadership and the Democratic leadership to consider my
concerns about the next step.
Mr. BAUCUS. Madam President, I am grateful to the people of Montana
for sending me to Washington as their Senator. I never forget whom I am
here to represent.
That is why my staff and I continually meet and talk with small
business owners and CPAs from across the State. In anticipation of
legislation to increase the minimum wage, I wanted to know how
Montana's small businesses would be affected, I wanted to know what tax
benefits would help small businesses, and I wanted to make sure that
the Senate substitute to H.R. 2 would benefit Montanans.
In particular, I thank James McHugh of Hammer Jack's in Missoula;
Robert Walter of Walter's IGA and ACE in Sheridan; James Whaley of
Whaley & Associates in Missoula; Ken Walsh of Ruby Valley National Bank
in Twin Bridges; Micki Frederikson of Bingham, Campbell, Amrine, and
Nolan in Missoula; Dan Vuckovich of Hamilton Misfeldt & Company in
Great Falls; Ronald Yates, Jr. of Eide Bailly in Billings; David
Johnson of Anderson Zurmuehlen & Co. in Helena; and Leslee Tschida of
M.A.R.S. Stout in Missoula.
I thank the men and women of Montana for their hard work, for their
input into the formulation of this legislation, for their dedication to
grow their companies, and for their confidence in me to deliver for
Montana.
Madam President, today the Senate will increase the minimum wage and
provide tax relief to the Nation's small businesses. This important
legislation will help millions of working Americans and those who
employ them. It has been a decade since the last minimum wage increase.
It is long overdue.
I am very pleased we added a package of tax incentives for small
businesses because many worry that a minimum wage increase will place a
burden on small businesses. I want to take a moment to thank the
individuals who worked so hard on the tax package.
First, I want to thank my good friend Senator Grassley, the chairman
of the Finance Committee, for his leadership on this bill. I also
appreciate the hard work and cooperation of his staff, especially Kolan
Davis, Mark Prater, Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy
Barre, Anne Freeman, Grant Menke, Stanford Swinton and Nick Wyatt.
Second, I thank the staff of the Joint Committee on Taxation and
Senate Legislative Counsel for their service. I also want to recognize
two staff members of the Joint Committee on Taxation who are leaving
Congress, Patricia McDermott and Gray Fontenot.
Patricia McDermott will be retiring from her position as legislation
counsel with the Joint Committee of Taxation and moving to the private
sector. Tricia was qualified plans branch chief in the Office of
Associate Chief Counsel at IRS before she came to Joint Tax as a
detailee in July of 2000. She joined the JCT staff when the detail
ended in 2001. Tricia has advised us on many projects, but I especially
want to thank her for the expertise and tireless effort she brought to
our work on the Pension Protection Act of 2006. Tricia's knowledge--and
her patience--were invaluable and will not be easily replaced.
And we bid farewell to Gray Fontenot, an accountant with the Joint
Tax Committee, who will be leaving this week to head to the private
sector. Gray has been an essential adviser, particularly on the Katrina
tax relief bills. As a native of New Orleans, whose extended family was
personally affected by the hurricane, he truly understood the needs of
the Gulf Zone, and his expertise was greatly appreciated by the members
and staff of the Finance Committee.
Finally, I thank my staff for their tireless effort and dedication,
including Russ Sullivan, Bill Dauster, Pat Heck, Rebecca Baxter,
Melissa Mueller, Judy Miller, Pat Bousliman, Ryan Abraham, Carol
Guthrie, and Erin Shields.
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I also thank our dedicated fellows, Mary Baker, Thomas Louthan, and
Sara Shepherd, and our talented interns, David Ashner, Larry Boyd,
Sarah Butler, Gretchen Hector, Molly Keenan, and Ryan Majerus.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Madam President, as I have said during the course of the
last 9 days, on this side of the aisle we are prepared to go ahead and
vote. We have been prepared to vote since the first day we were on this
legislation. It only took 4 hours for the House of Representatives to
debate this issue and then to proceed to a vote. We have been on this
for 9 days. We have debated an increase to the minimum wage 16 other
days since the last increase. Twenty-five days of debate about the
increase in the minimum wage. Imagine that, 25 days taking up the time
of the United States Senate.
With all the challenges we face in education, in energy, in health,
and jobs, all the challenges we are facing in terms of environmental
issues and foreign policy issues, we have spent 25 days on whether we
are going to increase the minimum wage. Twenty-five days during this
period of time. On this side, we are prepared to move ahead. We are
prepared to move ahead.
The President of the United States made this talk yesterday on Wall
Street, and it was well received and cheered on Wall Street, as he
talked about how well the economy has been proceeding. Well, I took a
few moments earlier in the day to talk about the increase in the number
of families who are living in poverty. We have close to 2 million more
children living in poverty today than we had 5 years ago. Two million
more families living in poverty than we had 5 years ago. That is
according to the census. That is not some speech writer's concept,
those are hard facts.
President John Adams, one of our great Founders, said facts are
stubborn things. Those numbers are stubborn things. Facts speak.
Increased numbers of Americans have gone into poverty over the last 5
years, with an increase in the number of children who have gone into
poverty.
Other countries have addressed the problems of poverty and have
lifted children out of poverty, lifted families out of poverty, and
most of them have used an increase in the minimum wage to do it. You
have to understand the problem in order to address it, and this
President, evidently, doesn't understand the kinds of pressures that
are on working families and middle-income families.
Members of some of our great churches in this country have strongly
supported the increase in the minimum wage. We have over 1,000
different organizations that have supported the increase in the minimum
wage. I have included most of their letters of support in the Record.
Here is one from the Urban League:
Passing this wage hike represents a small but necessary
step to help lift America's working poor out of the ditches
of poverty and onto the road toward economic prosperity and
will narrow the financial gap between Americans of color and
whites.
That is the National Urban League president, President Morial.
Here we have an extraordinary group of business owners and executives
for a higher minimum wage. They are some of the large companies in the
country and some of the small companies. It is six pages long in terms
of the companies themselves, ranging from Mr. Alex Von Bidder,
president of the Four Seasons Restaurant in New York, a very high-cost
restaurant, to some of the small mom-and-pop stores, but all of them
expressing the view that:
We expect an increased minimum wage to provide a boost to
local economies. Businesses and communities will benefit as
low-wage workers spend their much-needed pay raises at
businesses in the neighborhoods where they live and work.
Higher wages benefit business by increasing consumer
purchasing power, reducing costly employee turnover, raising
productivity, improving product quality, customer
satisfaction, and company reputation.
In a recent National Consumers' League survey, 76 percent of American
consumers said how well a company treats and pays its employees
influences what they buy.
I also have a letter from the president of Catholic Charities, Father
Larry Snyder, and included in his letter are these words:
Over the last several years, our agencies have been coping
with steady increases of 20 percent each year in requests for
emergency assistance because low-wage workers simply cannot
earn enough to cover rent, child care, food, utilities, and
clothing for their families. Many people served by Catholic
Charities agencies are poor despite full-time employment at
the bottom of the labor market: cleaning houses and office
buildings, harvesting and preparing food, watching over
children of working parents. They contribute to our Nation's
economic prosperity. Yet the current minimum wage leaves them
nearly $6,000 below the poverty line. People who work full
time should not live in poverty.
Then he continues:
Our Catholic tradition teaches that society, acting through
government, has a special obligation to consider first the
needs of the poor. Catholic social teaching tells us that a
just wage is not just an economic issue--it is a moral issue.
The United States Conference of Catholic Bishops stated in
its pastoral letter, Economic Justice for All, ``all economic
institutions must support the bonds of community and
solidarity that are essential to the dignity of persons.''
The dignity of persons, that is what the increase in the minimum wage
is about. It will help those 6 million children get a chance to maybe
buy a book and read a little more, maybe even participate in a birthday
party, maybe have a chance to spend a little more time with their
parent because their parent will not have to have two or three jobs.
Here they are talking about the importance of dignity, ``essential to
the dignity of persons.'' That is what this debate is about, the
dignity of persons.
And the list goes on. Virtually all of the churches of faith have all
recognized the importance of this issue, and interestingly, they have
all pointed out what this letter says from Catholic Charities; that
over the past several years their agencies have been coping with steady
increases of 20 percent each year in requests for emergency assistance
because low-income workers simply cannot afford the necessities.
That is true about my food bank in Boston. I was there just a few
weeks ago talking to those who run it. It is an extraordinary
institution. They have the same kinds of demands. We hear it all over
the country. Yet we have the President talking on Wall Street about
everything is fine.
So what are some of the facts? We are finding out what is happening.
First of all, the Bush economy fails American families' wallets. This
is the median household income: $47,599 in 2000 and $46,326 in 2005.
These numbers are from the Bureau of the Census. Imagine people opening
up their newspapers and seeing the pictures of the President being
cheered on Wall Street talking about how well the economy is going.
No one is doubting that the economy is working well for Wall Street.
We are not talking about that. If you are asking the Census Bureau, not
a speech writer but the Census Bureau, these are their figures, and
this is what has been happening to the median household income. It has
declined $1,273. That is from the Bureau of the Census. That is what
has happened to the median household income across this country.
We have those members of our various faiths talking about the
increase in demand, the 20-percent increase in demand. Yet we are
seeing these kinds of figures. We see this kind of drop in real income.
Yet let's look at the cost of the things these individuals have to buy.
We have the decline in the family income, but look at what has
happened. Gas has gone up 36 percent; health insurance, 33 percent,
which is a very modest estimate; nationwide college tuition, 35
percent; housing, 38 percent. And I would say, for the most part, these
are rather modest. They come from the Kaiser Family Foundation and the
College Board's Annual Survey of Colleges.
In my district, certainly in New England, those numbers are a great
deal higher. But, nonetheless, it makes the point that real income has
gone down and the cost of everything that a family has to buy, in terms
of gasoline, health insurance for their family, college tuition, and
housing has gone up. Look at the end of this chart. Wages stagnant
across the way; up 1 percent. These are the figures. We haven't put the
food in there, but these are strong indicators, and certainly food has
gone up, although perhaps not as high as these indicators.
Let's look at the other side and see what has been happening down
there on Wall Street. My goodness, look at
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this chart. Look what has happened to corporate profits during this
same time. While real family income has been going down, these
corporate profits have grown by 80 percent, 80 percent they have gone
up. Eighty percent. Real income for the family has gone down over the
last 5 years, but corporate profits have gone up 80 percent.
No wonder the President was cheered on Wall Street. No wonder. And
look on the bottom line. That is the minimum wage. It slows, the
extraordinary explosion in corporate profits. Yet the minimum wage has
not gone up because our Republican friends refuse to let it go up. This
is not any mystery. The Democrats are ready to vote. We are ready to
vote this afternoon. We were ready to vote when it first came up, or at
any time, but we can't get an agreement to vote. We are going to have
to get it because the time is going to run out sometime tonight.
So these are the corporate profits that have gone up. Here is the
minimum wage worker that has to work more than a day just to fill up
his tank with gasoline. These are the kinds of things that they are
faced with. And as we have pointed out earlier, more than a thousand
Christian, Jewish, and Muslim faith leaders say that minimum wage
workers deserve a prompt, clean, minimum wage increase, with no strings
attached. This is Let Justice Roll, January of this year.
I have given the statistics, the flow lines, the charts, and so,
Madam President, let me wind up this part of my presentation by
mentioning what it means in real people's terms.
An increase in the minimum wage helps Constance Martin of Pittsburgh,
PA. Constance used to have a good job that paid a decent wage. Then her
son got cancer. She was forced to choose between that job and taking
care of her child. So now she works for $5.50 an hour at Kentucky Fried
Chicken. Her job has no health care or other health benefits. She can
barely afford to pay the rent and utilities, much less to give her son
the care he needs. When Pennsylvania raised its minimum wage at the
State level last year, it was a help but still not enough to keep pace
with the cost of living. A Federal raise would allow her to pay off her
bills and provide for her son's future instead of living day to day and
hand to mouth just to get by.
A raise in the minimum wage would help Tonya Schmidt. Tonya is a
single mother with two children, ages 8 and 11. She works at Little
Caesar's pizza. It is hard work, but she likes her job and is good at
it. Tonya talked about how hard it is for her to get by each month. Her
family lives in a converted motel room, but she has trouble making
rent. She doesn't have a car but relies on friends and family to take
her to the grocery store to buy food for her children.
Tonya can't afford the basic necessities for her children. She often
cannot afford to buy her children the clothes they need to go to
school. Tonya says a higher minimum wage would help her provide her
kids with these basic necessities, and it might help her get a few
steps ahead to buy a used car or pay for car insurance so that she
could go to the grocery store on her own.
A raise in the minimum wage would help Gina Walter from Ohio. Gina, a
44-year-old single mother, works in a retail job at a thrift store.
Gina earns $6.25 an hour, just over $12,000 per year. She has no car or
health insurance and hasn't taken a vacation in 6 years. It takes Gina
2 full days of work just to pay her gas bill every month. She cuts her
own hair because she can't afford to get a haircut. But Gina goes to
work every day. She works hard and tries to build a better life for her
family.
That is the typical statement: working hard, trying to provide for
their family.
This bill will help Gina provide better opportunities for her 18-
year-old daughter. It will help pay her gas bill and be able to go get
a haircut. It might even help her finally take that vacation she so
richly deserves.
Madam President, this is what we are talking about on the floor of
the Senate. I will speak later about what I really think about this
increase in the minimum wage in terms of it being the defining aspect
of our country's humanity and a reflection of our sense of decency and
our sense of fairness. But it is a scandal that we have not increased
our minimum wage over a 10-year period. Hopefully we will have an
opportunity to do it before the day is out.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
The PRESIDING OFFICER. The Chair recognizes the Senator from Wyoming.
Mr. ENZI. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ENZI. Madam President, I rise today to speak in support of final
passage of H.R. 2, as amended. I think it is a very exciting time. I
appreciate the wise direction this body has decided upon with regard to
the minimum wage. Yesterday, 88 Members of the Senate correctly
concluded that raising the minimum wage, without providing relief for
small business that must pay for that increase, is simply not an
option. Rather the option we did strongly decide on included tax
benefits to help offset the impact on small business.
I wish to reiterate my hope that our colleagues in the House will not
derail this bipartisan approach to offering real support and relief to
the middle class and to the minimum wage earner. The minimum wage
increase will shortly be in their hands. I hope they will be judicious
and perhaps even forgo some of their jurisdictional concerns in order
to see that this is done for the people of America.
The Senate's reasonable approach recognizes that small businesses
have been the steady engine of our growing economy and that they have
been a source of new job creation, and a source of job training. People
with no skills often go to work at minimum wage and get the training
they need to advance to higher levels of pay and to other more skilled
jobs. That is all training which is done for free by small business.
The Senate's approach also recognizes that small businesses are
middle-class families, too. I am proud that this body has chosen a path
which attempts to preserve this segment of the economy, which employs
so many working men and women. The Senate has acknowledged the simple
fact that a raise in the minimum wage is of no benefit to a worker who
doesn't have a job or a job seeker who doesn't have a prospect.
As this Congress moves forward, we will need to confront a range of
issues facing working families: the rising cost of health insurance and
the availability of such insurance, the necessity and costs of
education and job training, and the desire to achieve an appropriate
balance between work and family life. The lessons we have learned in
this debate should not be forgotten as we approach new and equally
complex issues.
In addressing minimum wage, we have rejected the notion that it will
be a clean bill. Ultimately, we did so because it is not a clean issue,
it is a very complicated issue, and around here, clean more often than
not means ``do it my way'' and doesn't respect the democratic process
of the Senate and allow the Senate to work its will.
There were claims that no Democrats offered amendments to the bill.
That is false. The chairman of the Committee on Small Business, Senator
John Kerry, offered two amendments, and the Senator from Wisconsin, Mr.
Feingold, offered an amendment on ``Buy American'' standards. In fact,
it is my understanding that part of the delay we are experiencing on
final passage is that a Democrat was trying to figure out a way to get
a vote for a third cloture and a Republican is also trying to do
something very similar. While I believe these have now been resolved,
that is kind of what has been holding us up here in waiting for a final
vote. Throughout this debate, Members on both sides of the aisle were
not aiming to delay passage but were offering amendments to improve the
bill.
I remember when I first went into the Wyoming Legislature and
presented my first bill, I thought it was a pretty simple bill. It only
had three sentences in it. It dealt with unemployment insurance for
business owners. Well, this little, simple, three-sentence bill, when
it went to committee, got
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two amendments, and when it went to the floor, it got three more
amendments. When it went to the Senate, it made it out of committee
without any additional amendments but had two more added on the floor.
However, what I realized through the process was we had all of these
different people from different backgrounds looking at the same problem
from different perspectives, and every one of those amendments improved
the bill. They looked at the bill and saw things that I hadn't seen.
Afterwards I hoped that in the future, as I went through the process
of legislating, I would see those things and see bills from other
people's perspective. But that is the beauty of the system we have
here--100 Senators take a look at a bill and 435 people in the House
take a look at a bill and that should result in some changes. No bill I
have ever seen winds up the same as it started.
Of course, sometimes the biggest animosity around here is between the
House and the Senate, and that is true in State legislatures, too. I
finally figured out the reason for that is we here in the Senate work
on a bill, we make it perfect, we send it over there, and they decide
something else has to be done to it. That creates animosity. And they
do bills and send them here, and we decide there ought to be changes to
them, and that creates animosity here. Fortunately, we have a
conference committee process that is supposed to get the two sides
together to work out the differences. That also works, although it
takes more time. So we are not the fastest in governing, but I think we
are the most inclusive in governing. I think this bill has gone through
a very similar process.
I am pleased we have proven to the American people that we can indeed
work together and provide solutions to complex and difficult problems.
The Senate chose the right course of coupling an increased minimum wage
with provisions that will assist small business employers who will face
the greatest difficulties in paying such increased costs. I hope we do
not forget the wisdom of this approach as we address other workplace,
economic, and social issues.
It has been mentioned that 10 years ago when the last minimum wage
raise was done, that was the first time there were things put on the
bill to offset the impact on small businesses. I was running for office
and in Washington at the time that bill was being conferenced and
finally debated, and I was pleased to see the former Senator from
Wyoming, Mr. Simpson, was the chair on the conference committee, along
with Senator Kennedy. The two of them worked out a package that had a
raise in the minimum wage and some offsetting things for small
business. When the bill was signed in the Rose Garden, then-President
Clinton commented on what a great compromise it was that it would drive
our economy. Senator Kennedy received a lot of the compliments for
that, as he will this time. Senator Baucus and Senator Grassley will be
complimented as well.
I can't emphasize enough how pleased I am that the two of them worked
together to put this tax package together. It is not an easy job. In
fact, I think tax provisions are some of the most difficult and complex
matters there are to work on. The Senator from Montana, Mr. Baucus, and
the Senator from Iowa, Mr. Grassley, have worked together on most of
the Finance Committee issues. I have noticed through the years that
they are most successful when they work together.
I tried to build on that knowledge when I became the chairman of the
Health, Education, Labor, and Pensions Committee. It worked well for us
for the last 2 years, to work in a very bipartisan way. Almost every
issue the Committee had came through this body unanimously. Oh, we had
the pension bill, which was a 980-page bill and very complicated and
very difficult. And that one wasn't unanimous; it was only 98 to 2. I
think my colleagues can see my point on this--that when we work
together, we have amazing things happen in fairly short order. That
bill took an hour of debate with two amendments and a final vote, and
that was all agreed to before it was even brought to the floor. So when
we work together, there can be good things, such as the bill we have
right now.
The Senate has chosen the right course of coupling an increased wage
with provisions that will assist those small business employers who
will face the greatest difficulty in paying those increased costs. I
hope we don't forget the wisdom of that approach, as I mentioned
before. I am also heartened that in the course of this debate, we have
begun to recognize what I know from my own life to be true; that is,
that working families are not only those who are employed by
businesses, they are also those who own the businesses.
I know from personal experience that all small businesses have two
families--their own and the people who work for them. I also know that
small business owners feel the pressure of rising costs, the dilemma of
difficult options, and the uncomfortable squeeze of modern life in both
of their families, as many workers do on their own. And I know that the
smaller the business, the more likely it is that the employees and the
employers recognize each other's difficulties and how interdependent
and sometimes fragile their businesses and their jobs actually are. I
think there is a greater tendency for them to work together under those
circumstances.
America has heard a lot of partisan rhetoric during the course of
this debate, such as the talk of the so-called war on the middle class
and the claim of leaving people out. I would like to note for the
record that such rhetoric got us nowhere. There wasn't an attempt to
leave anybody out. The middle class is actually made up of those small
businessmen who we are trying to help, and in some cases the employees
who are working for them.
We didn't try to start a war over statistics, although we were
tempted. I do have to mention there were some charts out here to show
that wages used to be pretty close together, and the chart had five
quintiles. I am more used to quartiles than quintiles, but this had
five quintiles. So each 20 percent of the wage capability of the
population was shown on the chart, and it showed that from 1943 until
1980, the numbers were pretty close together. Then we saw another
chart, and it had this bar on the end which extended far beyond any of
the quintiles. I paid a little bit of attention to that chart. It
didn't just have quintiles on it; it had quintiles, plus one. If you
look at the quintiles, they were almost the same today as they were at
the time of the 1943 chart. However this big bar graph at the end--made
it look so skewed that it made people look really rich and I guess by
association holding the rest of the people down.
Well, instead of just having quintiles on there, the chart had
quintiles plus the top 1 percent earners in the United States. I am
pretty sure that if you go back to 1943 through whatever date you want
and you take the top 1 percent earners in the United States, you will
find that they earn drastically more than even the highest quintile. So
the chart doesn't treat the wage data equally. I suspect that Bill
Gates himself skewed that chart pretty badly. The top 1 percent always
makes a lot more money than everybody else and I think that is pretty
much the case through the history of the United States. So if we are
going to talk about quintiles, we need to talk about the quintiles
equally.
That is just one example of how we could have spent more time
concentrating on the charts and arguing back and forth. But our point
wasn't whether to increase the minimum wage; our point was whether we
could do it and keep the economy moving by eliminating some of the
impact of the increase on the small businesses that employ those
minimum wage workers.
We are ending the consideration of this issue basically where it
began and for many of us where we have been for the last few years--
with the majority of the Senate supporting a minimum wage increase as
long as there are provisions to soften the impact of that increase on
the small businesses which create minimum wage jobs. Every time I have
had to debate this, I have had a bill that had an increase in the
minimum wage and it also had some amendments that offset the impact.
Now, I didn't take the Finance Committee offsets; I took some other
offsets to do it.
One of the things I have noticed around here is that if you ever do
an amendment on a bill like this, it will
[[Page S1497]]
be considered a poison pill, and the second time you try to do that
bill, even if you have changed the wording, the arguments will be
exactly the same as before you changed the wording. So we sometimes get
locked into the concept and the history of what has gone on around
here.
We could have had this increase done earlier had there been some
willingness to offset it with a package, as was done the last time the
minimum wage was increased and as I suspect will happen every time in
the future that the minimum wage is increased because a higher wage is
of no use when the job itself is gone.
The Senate chose to look at the whole picture this time around. The
minimum wage could have been raised years ago had some on the other
side been willing to accept the important role that working families
and small businesses--those are a lot of the same people--play in
providing employment in this country. Some people like to talk about
two Americas. What the Senate is preparing to do today recognizes that
there is one America. We are all in this together, and we don't need to
do great injury to one group of Americans just to aid another. That
kind of partisan rhetoric isn't accurate, and it is aimed at spreading
a very skewed view of America. It is aimed to divide rather than unite
Americans around the simple solution.
Mandating the wage increase without proper relief to the working
families who employee many of America's low-skilled workers is an
assault on the middle class. Let's get our facts straight. Passing the
Senate's bipartisan minimum wage and small business relief package is
good for low-skilled workers and it is good for the middle class
working families of America.
It is time we did this. I hope we will have the vote soon. I look
forward to the speeches we can do afterwards, thanking all of the
people that have made this possible. I am very confident that is
exactly what is going to happen.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Madam President, I ask unanimous consent that the time
until 5 p.m. today be equally divided and controlled between Senators
Kennedy and Enzi or their designees; that at 5 p.m., all time
postcloture be considered yielded back; and without further intervening
action or debate, the Senate proceed to vote on passage of H.R. 2, the
minimum wage bill, as amended; that upon passage of the bill, the
motion to reconsider be laid upon the table; that there then be 4
minutes of debate, equally divided and controlled between the two
leaders or their designees, prior to a vote on the motion to invoke
cloture on the motion to proceed to S. Con. Res. 2.
I would say to all Senators, prior to the Chair considering the
unanimous-consent request, that we may not have the second vote. Unless
there is unanimous consent that we not have it, we will have it. We
will make that decision during the vote that takes place beginning at 5
o'clock.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The Chair recognizes the Republican leader.
Mr. McCONNELL. Madam President, let me just echo the remarks of the
majority leader. We are continuing to discuss the consent request under
which we would consider various options for our Iraq debate beginning
next week. We are making substantial progress and, hopefully, we will
have something soon to announce on that issue.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Madam President, I want to say, Senator Kennedy is not
here, and I am sorry that is the case. But he spent the last week or
two on the Senate floor. I want to express how much I appreciate the
attitude and demonstration of bipartisanship shown by Senator Kennedy
and Senator Enzi. I have said before they are an example of how people
with different political philosophies can do things constructive in
nature to get us to a point where we are today. They are both
outstanding legislators, and they are very fine individuals, as
indicated by their ability to get along on the most contentious issues.
A person does not have to be disagreeable to disagree. And these two
gentlemen certainly epitomize, in my estimation, how we should all work
together in spite of our political differences, to work toward a common
good to do things that are good for the American people.
So, Senator Enzi, who is here, thank you very much.
Senator Kennedy, who is not here, I appreciate very much his work.
The PRESIDING OFFICER. The Republican leader is recognized.
Mr. McCONNELL. Madam President, I, too, commend the distinguished
Senator from Wyoming for an outstanding job in helping to craft this
bill and representing our side very skillfully in putting together this
package.
I also want to extend my thanks on behalf of all of our colleagues to
Senator Grassley, the ranking member of the Finance Committee, for his
important contribution to this bill that we think made it significantly
better than it might otherwise have been.
So I commend them both for their outstanding work.
I yield the floor.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Madam President, Senator McConnell certainly jogs my memory
that I should have mentioned my friend Senator Baucus. He and Senator
Grassley also have an exemplary relationship. This bill is half from
the HELP Committee and half from the Finance Committee, and Senator
Baucus certainly has lifted a big load for us over here.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Madam President, I would like to thank both the leaders for
their kind words. I thank them on behalf of both Senator Kennedy and
myself. We do have a philosophy of working together, and it does work.
I am pleased we are at this point today. The bill the Senate has
crafted is the right approach to take on this issue. The approach is
combining an increase in the minimum wage with provisions that will
assist those small business employers who face the greatest
difficulties in paying such increased costs. The Senate has not
forgotten that while we may be able to mandate a wage, we cannot
mandate the existence of a job. I hope our colleagues in the House will
not forget that either.
In legislating, it is often important to find a third way. The third
way is represented by the substitute amendment that was the product of
extensive bipartisan cooperation. Democrats and Republicans working
together acknowledged the fact that mandated cost increases can have
negative economic effects, and together we developed a means of
addressing those concerns in the form of the bipartisan substitute
amendment. It will affect millions of Americans. I am glad we are at
this point.
I would like to thank all of the staffs who have been involved in
this issue, doing research and getting information that will help us to
be as sure as we can be that we have made the right decisions on the
best information possible.
From my staff, that includes my staff director, Katherine McGuire,
and Brian Hayes, Kyle Hicks, Ilyse Schuman, Amy Shank, Shana Christrup,
Andrew Patzman, Randi Reid, Tara Ord, Greg Dean, Craig Orfield, and
Michael Mahaffey. That is a lot of people, but it takes a lot of people
to do something like the tax package and the bill we have before us,
plus all of the other things that were considered during the process.
From the Republican leader's office, I thank Mike Solon, Malloy
McDaniel, and Rohit Kumar. I also thank Ed Egee with Senator Isakson.
From the Finance committee, I thank Russ Sullivan and Mark Prater; and
from the Republican whip's office, Manny Rossman and John O'Neill.
But I would be very remiss if I did not thank those in Senator
Kennedy's office and his staff: Michael Myers, Holly Fechner, Portia
Wu, Missy Rohrbach, and Lauren McGarity. They have
[[Page S1498]]
done just an outstanding job of keeping us on track and also searching
through all of the different things we have had to consider, even those
that nobody ever saw discussed here on the Senate floor. It was
tireless work, which often goes on late into the nights, well beyond
the time Senators are around here--of course, I do not want to give you
the impression that Senators are necessarily going home. Sometimes they
are working late as well, just in a different building. We get to spend
our days here and our nights in our office building. But without the
help of all of those people, this bill would not be at the point it is
now. We really appreciate their work.
I yield the floor and suggest the absence of a quorum, with the time
equally divided.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. KENNEDY. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KENNEDY. Madam President, in just a few moments the Senate will
vote on the issue of increasing the minimum wage. We have been debating
this issue for some time. At the final moments here, I, first of all,
thank my friend and colleague from Wyoming, Senator Enzi, for his
willingness to work together. We do not always agree, but we agree more
often than one might expect, and we have gotten good things done in our
committee.
I always enjoy working with him. We have had some differences on this
issue, but we always know we have a good deal of respect for each
other; I certainly for him. I know it is not appropriate to make
personal comments on the floor of the Senate, but I am, in any event.
It is Senator Enzi's birthday today, and we wish him the very best on
this particular occasion.
Mr. ENZI. Thank you.
Mr. KENNEDY. Just finally, I think those of us who are in this
Chamber understand we want to be one country with one history and one
destiny. We want to make sure that for all people, in all parts of our
Nation, they are going to have a part of the American dream. We, as a
nation, do not want to have a subclass, a subclass of workers who
cannot emerge out of a minimum wage for themselves or for their
families. We recognize that work has to pay.
What we are trying to do with the increase in the minimum wage is to
say to men and women of dignity--primarily to women because women are
the greatest recipients of the minimum wage, to their families and
their children, to men and women of color--that we understand if you
work hard in the country that has the strongest economy in the world,
you should not have to live in poverty. You should not have to live in
poverty. And raising the minimum wage is going to help to make sure
that particularly those children--those 6 million children--are going
to have a more hopeful future.
Additionally, we want to send a very important message to all of
those children. This is really just the beginning. We have a change in
direction in this country, as we have seen in the House of
Representatives and here in the Senate. And we want to give assurances
to those families that hopefully are going to get some boost in the
minimum wage that we are going to work on the education for those
children. We are going to work to make sure they are going to get the
kind of help and assistance so that education is going to be available
to them. We are going to work to make sure we get a reauthorization of
the SCHIP program, an expansion of the Medicaid Programs, because we
want to make sure they are going to be healthy, they are going to have
the opportunities for education. We are going to make sure as well, to
the extent we can, they are going to be able to live in safe and secure
neighborhoods.
We have a responsibility in this country of ours to make sure--
particularly for children in this Nation, but for workers in this
country--that their work is going to be recognized, respected, and they
are going to be treated justly and fairly. That is what the minimum
wage is all about. It is a moral issue, as the members of the church
have all told us about. And we, hopefully, will get a resounding vote
of support for a long-awaited increase in the minimum wage.
Mr. KENNEDY. Madam President, we have now spent 8 long days debating
whether to raise the minimum wage by $2.10 per hour. During this time,
we have had quite a bit to say about quite a variety of issues. We have
talked about education. We have talked about heath care. We have talked
about tax policy and immigration policy. We have actually talked very
little about raising the minimum wage.
We have not had nearly enough debate about what this bill would
actually do, so I can honestly say that I am pleased when my colleagues
on the other side of the aisle come down the floor with the intent of
actually talking about the Fair Minimum Wage Act.
Unfortunately, while I applaud them for addressing the issue at hand,
their criticisms of the Fair Minimum Wage Act are woefully misplaced.
My Republican colleagues are perpetuating some of the most common
misconceptions about raising the minimum wage, and it is important to
set the record straight.
My colleague from Tennessee, Senator Alexander, raised concerns about
the private sector costs of raising the minimum wage. He argued that an
increase will prove detrimental to the economy in general, or to the
business community in specific. He is correct that the Congressional
Budget Office has estimated that the bill will cost the private sector
more than $10 billion over 5 years. However, this is a mere drop in the
bucket of the national payroll. All Americans combined earn $5.4
trillion a year. A minimum wage increase to $7.25 would be less than
one-fifth of 1 percent of this national payroll--far too trivial to
cause inflation or other economic harm.
The simple fact is that employers can afford to increase wages in the
current economy. Workers are producing more, but earning less.
Productivity has increased by 31 percent since 1997, yet minimum-wage
workers have not received a raise. This increase ensures that minimum-
wage workers, not just employers, benefit from the fruits of their
labor.
Now Senator Alexander also suggests that we shouldn't interfere with
the market forces that set wages for low-wage workers. But we need to
intervene when there's a market failure that needs correcting, and
that's clearly the case with our stagnant minimum wage. Low-skilled
workers, unlike high-skilled workers, do not generally have the
bargaining power to demand wage increases. Even if they work harder,
all their extra efforts are going into profits. Corporate profits have
grown by 80 percent since Bush took office, while wages are stagnant.
We need to act to make sure minimum wage workers don't get left behind.
My colleague also expresses concern about the effect of a minimum
wage on small business. He claims that the majority of minimum wage
workers are employed by small businesses, and that small businesses
will suffer if the minimum wage is raised.
But the small business community doesn't agree. A recent Gallup poll
found that 80 percent of small business owners do not think that the
minimum wage affects their business, and three out of four small
businesses said that a 10 percent increase in the minimum wage would
have no effect on their company. Additionally, nearly half of small
business owners think that the minimum wage should be increased, and
only 16 percent of owners think the minimum wage should be reduced or
eliminated entirely.
In fact, historical evidence suggests that a minimum wage increase
can actually be beneficial to small business. A 2005 study by the
Fiscal Policy Institute found States with minimum wages above the
Federal level are generating more small businesses than states with a
minimum wage at the Federal level. Between 1998 and 2003, the number of
small businesses rose 5.4 percent in the ten States, including at had a
minimum wage higher than the Federal level, compared to 4.2 percent in
the other 40 States. The number of small retail businesses also grew
faster in these States.
I appreciate Senator Alexander's concerns about the economic impacts
of a minimum wage raise, those concerns are misguided. The economic
[[Page S1499]]
doomsday scenario that Senator Alexander predicts simply will not
materialize from this long-overdue increase in the minimum wage. The
Senator doesn't have to take my word for it--over 650 prominent
economists, including 5 Nobel Prize winners, agree that a modest
increase in the minimum wage--like the one proposed in the Fair Minimum
Wage Act--``can significantly improve the lives of low-income workers
and their families, without the adverse effects that critics have
claimed.''
In addition to arguing about the economic impacts this bill, several
of my colleagues have argued that raising the minimum wage is not an
effective anti-poverty program, but instead will benefit primarily
secondary earners and families well above the poverty line. This
counterintuitive assertion is not borne out by the facts. The vast
majority of minimum wage workers are hard-working Americans struggling
to get by on what the minimum wage pays them for their contribution to
our economy. And that is not easy.
A minimum wage increase benefits poor American families. According to
the Economic Policy Institute, almost 70 percent of those who would
benefit are adult workers, not teenagers seeking pocket change. Nearly
half of these adults are sole breadwinners for their families. Nearly
40 percent of the benefits from a minimum wage increase would go to
households with an average annual income of less than $17,000.
It is important to remember that those earning the minimum wage are
not just starting out in the workforce. Many hardworking people become
trapped in low-paying jobs and have trouble getting ahead. A report
from the Center for Economic Policy Research shows a third of minimum
wage earners from ages 25 and 54 will still be earning the minimum wage
three years later. Only 40 percent of them will have moved out of the
low-wage workforce 3 years later.
Certainly raising the minimum wage is only one of many steps that we
should take to address the problem of poverty in this nation. Several
of my Republican colleagues have suggested that we should examine ways
to improve the Earned Income Tax Credit, and I look forward to working
with them on this issue.
But none of this changes the fundamental fact that the Federal
minimum wage is at its lowest real value in 50 years and continues to
fall further and further behind each day. Minimum wage workers have
been waiting longer than ever before in history for an increase, and a
raise is long-overdue.
Now, my colleague from South Carolina, Senator DeMint, went so far as
to suggest that raising the minimum wage will actually harm poor
workers, because it will cause them to lose other government benefits.
That's just not the case.
The Fair Minimum Wage Act will bring working families out of poverty.
The minimum wage increase--plus food stamps and the earned income tax
credit--brings a family of four with one minimum wage earner from 11
percent below the poverty line to 5 percent above the poverty line.
Now it's true that some minimum wage workers may lose a portion of
their food stamp benefits, but their increased earnings and the
increased benefits they receive through the earned income tax credit
will more than offset any loss of benefits and provide them with
additional flexibility to meet their family's needs. They will also
remain eligible for housing assistance and other essential government
programs.
Minimum wage workers will also benefit from a raise in the long run.
They will be earning higher wages, paying more into Social Security,
and ultimately receiving more in retirement and disability benefits.
Finally, I'd like to address some comments made just this morning by
my colleague from Iowa, Senator Grassley. Now as Senator Grassley
knows, I have always taken the position that we should do this minimum
wage bill ``clean''--without any add-ons or tax giveaways. Because it's
just a myth that minimum wage increases hurt the business community,
there is certainly no need to pay off the business community when we
give minimum wage workers a raise. We've raised the minimum wage nine
times since the Fair Minimum Wage act was enacted in 1938, and only
once have we included a tax package for business. That was during the
Clinton administration--an era when we had substantial government
surpluses, not the dramatic deficits we're facing now. It's just not
responsible to pass unnecessary tax giveaways in the current fiscal
environment. Democrats are united in this position. While Senator
Grassley suggested this morning that Democrats wanted taxes added to
this bill, I remind him that every Democrat in the Senate voted for
cloture on the underlying bill--a clean increase in the minimum wage
with no tax giveaways.
I admit that the tax package contained in the Baucus substitute is
not particularly large or offensive, and I understand that it's
something we'll likely have to take to get this bill done. But I don't
support it, and I certainly don't support any additional tax giveaways
being added to this bill.
Senator Grassley suggested this morning that tax breaks are a
necessary part of any increase in the minimum wage. I would remind the
Senator that an overwhelming bipartisan majority in both Houses of the
Iowa State Legislature just voted to increase the Iowa state minimum
wage to $7.25--the same level provided in this bill--with no tax breaks
included. The Senator's State leaders hold the same views as a majority
of the U.S. Congress--that minimum wage workers deserve an immediate
raise, with no strings attached.
I hope that these comments lay to rest the fears of my Republican
colleagues. I hope that they can join me in supporting a fair increase
in the minimum wage for hardworking Americans across the country.
Madam President, I understand the time has expired. Is it necessary
to ask for the yeas and nays?
It is necessary.
The PRESIDING OFFICER. The yeas and nays have not been ordered.
Mr. KENNEDY. Madam President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. One minute remains on the Republican side.
Mr. ENZI. Madam President, I yield back.
The PRESIDING OFFICER. All time has been yielded back.
The question is on the engrossment of the amendment and third reading
of the bill.
The amendment was ordered to be engrossed and the bill to be read a
third time.
The bill was read the third time.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill pass?
The yeas and nays have been ordered.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from South Dakota (Mr.
Johnson) and the Senator from New York (Mr. Schumer) are necessarily
absent.
Mr. LOTT. The following Senator was necessarily absent: the Senator
from Oklahoma (Mr. Inhofe).
Further, if present and voting, the Senator from Oklahoma (Mr.
Inhofe) would have voted ``nay.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 94, nays 3, as follows:
[Rollcall Vote No. 42 Leg.]
YEAS--94
Akaka
Alexander
Allard
Baucus
Bayh
Bennett
Biden
Bingaman
Bond
Boxer
Brown
Brownback
Bunning
Burr
Byrd
Cantwell
Cardin
Carper
Casey
Chambliss
Clinton
Cochran
Coleman
Collins
Conrad
Corker
Cornyn
Craig
Crapo
Dodd
Dole
Domenici
Dorgan
Durbin
Ensign
Enzi
Feingold
Feinstein
Graham
Grassley
Gregg
Hagel
Harkin
Hatch
Hutchison
Inouye
Isakson
Kennedy
Kerry
Klobuchar
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Lott
Lugar
Martinez
McCain
McCaskill
McConnell
Menendez
Mikulski
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Obama
Pryor
Reed
Reid
Roberts
Rockefeller
Salazar
Sanders
Sessions
Shelby
Smith
Snowe
[[Page S1500]]
Specter
Stabenow
Stevens
Sununu
Tester
Thomas
Thune
Vitter
Voinovich
Warner
Webb
Whitehouse
Wyden
NAYS--3
Coburn
DeMint
Kyl
NOT VOTING--3
Inhofe
Johnson
Schumer
The bill (H.R. 2), as amended, was passed, as follows:
H.R. 2
Resolved, That the bill from the House of Representatives
(H.R. 2) entitled ``An Act to amend the Fair Labor Standards
Act of 1938 to provide for an increase in the Federal minimum
wage.'', do pass with the following amendment:
Strike out all after the enacting clause and insert:
TITLE I--FAIR MINIMUM WAGE
SEC. 100. SHORT TITLE.
This title may be cited as the ``Fair Minimum Wage Act of
2007''.
SEC. 101. MINIMUM WAGE.
(a) In General.--Section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to
read as follows:
``(1) except as otherwise provided in this section, not
less than--
``(A) $5.85 an hour, beginning on the 60th day after the
date of enactment of the Fair Minimum Wage Act of 2007;
``(B) $6.55 an hour, beginning 12 months after that 60th
day; and
``(C) $7.25 an hour, beginning 24 months after that 60th
day;''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect 60 days after the date of enactment of this
Act.
SEC. 102. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH
OF THE NORTHERN MARIANA ISLANDS.
(a) In General.--Section 6 of the Fair Labor Standards Act
of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of
the Northern Mariana Islands.
(b) Transition.--Notwithstanding subsection (a), the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
(1) $3.55 an hour, beginning on the 60th day after the date
of enactment of this Act; and
(2) increased by $0.50 an hour (or such lesser amount as
may be necessary to equal the minimum wage under section
6(a)(1) of such Act), beginning 6 months after the date of
enactment of this Act and every 6 months thereafter until the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under this subsection is equal to the minimum
wage set forth in such section.
TITLE II--SMALL BUSINESS TAX INCENTIVES
SEC. 200. SHORT TITLE; AMENDMENT OF CODE.
(a) Short Title.--This title may be cited as the ``Small
Business and Work Opportunity Act of 2007''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title 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.
Subtitle A--Small Business Tax Relief Provisions
PART I--GENERAL PROVISIONS
SEC. 201. EXTENSION OF INCREASED EXPENSING FOR SMALL
BUSINESSES.
Section 179 (relating to election to expense certain
depreciable business assets) is amended by striking ``2010''
each place it appears and inserting ``2011''.
SEC. 202. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE
COST RECOVERY FOR QUALIFIED LEASEHOLD
IMPROVEMENTS AND QUALIFIED RESTAURANT
IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST
RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL
SPACE.
(a) Extension of Leasehold and Restaurant Improvements.--
(1) In general.--Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each amended
by striking ``January 1, 2008'' and inserting ``April 1,
2008''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2007.
(b) Modification of Treatment of Qualified Restaurant
Property as 15-Year Property for Purposes of Depreciation
Deduction.--
(1) Treatment to include new construction.--Paragraph (7)
of section 168(e) (relating to classification of property) is
amended to read as follows:
``(7) Qualified restaurant property.--The term `qualified
restaurant property' means any section 1250 property which is
a building (or its structural components) or an improvement
to such building if more than 50 percent of such building's
square footage is devoted to preparation of, and seating for
on-premises consumption of, prepared meals.''.
(2) Effective date.--The amendment made by this subsection
shall apply to any property placed in service after the date
of the enactment of this Act, the original use of which
begins with the taxpayer after such date.
(c) Recovery Period for Depreciation of Certain
Improvements to Retail Space.--
(1) 15-year recovery period.--Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ``and''
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ``, and'', and by adding at
the end the following new clause:
``(ix) any qualified retail improvement property placed in
service before April 1, 2008.''.
(2) Qualified retail improvement property.--Section 168(e)
is amended by adding at the end the following new paragraph:
``(8) Qualified retail improvement property.--
``(A) In general.--The term `qualified retail improvement
property' means any improvement to an interior portion of a
building which is nonresidential real property if--
``(i) such portion is open to the general public and is
used in the retail trade or business of selling tangible
personal property to the general public, and
``(ii) such improvement is placed in service more than 3
years after the date the building was first placed in
service.
``(B) Improvements made by owner.--In the case of an
improvement made by the owner of such improvement, such
improvement shall be qualified retail improvement property
(if at all) only so long as such improvement is held by such
owner. Rules similar to the rules under paragraph (6)(B)
shall apply for purposes of the preceding sentence.
``(C) Certain improvements not included.--Such term shall
not include any improvement for which the expenditure is
attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefitting a common area,
or
``(iv) the internal structural framework of the
building.''.
(3) Requirement to use straight line method.--Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
``(I) Qualified retail improvement property described in
subsection (e)(8).''.
(4) Alternative system.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating
to subparagraph (E)(viii) the following new item:
``(E)(ix).....................................................39''.....
(5) Effective date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act.
SEC. 203. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL
BUSINESS.
(a) Cash Accounting Permitted.--
(1) In general.--Section 446 (relating to general rule for
methods of accounting) is amended by adding at the end the
following new subsection:
``(g) Certain Small Business Taxpayers Permitted To Use
Cash Accounting Method Without Limitation.--
``(1) In general.--An eligible taxpayer shall not be
required to use an accrual method of accounting for any
taxable year.
``(2) Eligible taxpayer.--For purposes of this subsection,
a taxpayer is an eligible taxpayer with respect to any
taxable year if--
``(A) for each of the prior taxable years ending on or
after the date of the enactment of this subsection, the
taxpayer (or any predecessor) met the gross receipts test in
effect under section 448(c) for such taxable year, and
``(B) the taxpayer is not subject to section 447 or 448.''.
(2) Expansion of gross receipts test.--
(A) In general.--Paragraph (3) of section 448(b) (relating
to entities with gross receipts of not more than $5,000,000)
is amended to read as follows:
``(3) Entities meeting gross receipts test.--Paragraphs (1)
and (2) of subsection (a) shall not apply to any corporation
or partnership for any taxable year if, for each of the prior
taxable years ending on or after the date of the enactment of
the Small Business and Work Opportunity Act of 2007, the
entity (or any predecessor) met the gross receipts test in
effect under subsection (c) for such prior taxable year.''.
(B) Conforming amendments.--Section 448(c) of such Code is
amended--
(i) by striking ``$5,000,000'' in the heading thereof,
(ii) by striking ``$5,000,000'' each place it appears in
paragraph (1) and inserting ``$10,000,000'', and
(iii) by adding at the end the following new paragraph:
``(4) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2008, the dollar
amount contained in paragraph (1) shall be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.
If any amount as adjusted under this subparagraph is not a
multiple of $100,000, such amount shall be rounded to the
nearest multiple of $100,000.''.
(b) Clarification of Inventory Rules for Small Business.--
(1) In general.--Section 471 (relating to general rule for
inventories) is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Small Business Taxpayers Not Required To Use
Inventories.--
``(1) In general.--A qualified taxpayer shall not be
required to use inventories under this section for a taxable
year.
``(2) Treatment of taxpayers not using inventories.--If a
qualified taxpayer does not use inventories with respect to
any property for any taxable year beginning after the date of
the enactment of this subsection, such property shall be
treated as a material or supply which is not incidental.
[[Page S1501]]
``(3) Qualified taxpayer.--For purposes of this subsection,
the term `qualified taxpayer' means--
``(A) any eligible taxpayer (as defined in section
446(g)(2)), and
``(B) any taxpayer described in section 448(b)(3).''.
(2) Conforming amendments.--
(A) Subpart D of part II of subchapter E of chapter 1 is
amended by striking section 474.
(B) The table of sections for subpart D of part II of
subchapter E of chapter 1 is amended by striking the item
relating to section 474.
(c) Effective Date and Special Rules.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after the date of the
enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer changing the taxpayer's method of accounting for any
taxable year under the amendments made by this section--
(A) such change shall be treated as initiated by the
taxpayer;
(B) such change shall be treated as made with the consent
of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of the
Internal Revenue Code of 1986 shall be taken into account
over a period (not greater than 4 taxable years) beginning
with such taxable year.
SEC. 204. EXTENSION AND MODIFICATION OF COMBINED WORK
OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK
CREDIT.
(a) Extension.--Section 51(c)(4)(B) (relating to
termination) is amended by striking ``2007'' and inserting
``2012''.
(b) Increase in Maximum Age for Designated Community
Residents.--
(1) In general.--Paragraph (5) of section 51(d) is amended
to read as follows:
``(5) Designated community residents.--
``(A) In general.--The term `designated community resident'
means any individual who is certified by the designated local
agency--
``(i) as having attained age 18 but not age 40 on the
hiring date, and
``(ii) as having his principal place of abode within an
empowerment zone, enterprise community, or renewal community.
``(B) Individual must continue to reside in zone or
community.--In the case of a designated community resident,
the term `qualified wages' shall not include wages paid or
incurred for services performed while the individual's
principal place of abode is outside an empowerment zone,
enterprise community, or renewal community.''.
(2) Conforming amendment.--Subparagraph (D) of section
51(d)(1) is amended to read as follows:
``(D) a designated community resident,''.
(c) Clarification of Treatment of Individuals Under
Individual Work Plans.--Subparagraph (B) of section 51(d)(6)
(relating to vocational rehabilitation referral) is amended
by striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and
by adding at the end the following new clause:
``(iii) an individual work plan developed and implemented
by an employment network pursuant to subsection (g) of
section 1148 of the Social Security Act with respect to which
the requirements of such subsection are met.''.
(d) Treatment of Disabled Veterans Under the Work
Opportunity Tax Credit.--
(1) Disabled veterans treated as members of targeted
group.--
(A) In general.--Subparagraph (A) of section 51(d)(3)
(relating to qualified veteran) is amended by striking
``agency as being a member of a family'' and all that follows
and inserting ``agency as--
``(i) being a member of a family receiving assistance under
a food stamp program under the Food Stamp Act of 1977 for at
least a 3-month period ending during the 12-month period
ending on the hiring date, or
``(ii) entitled to compensation for a service-connected
disability incurred after September 10, 2001.''.
(B) Definitions.--Paragraph (3) of section 51(d) is amended
by adding at the end the following new subparagraph:
``(C) Other definitions.--For purposes of subparagraph (A),
the terms `compensation' and `service-connected' have the
meanings given such terms under section 101 of title 38,
United States Code.''.
(2) Increase in amount of wages taken into account for
disabled veterans.--Paragraph (3) of section 51(b) is
amended--
(A) by inserting ``($12,000 per year in the case of any
individual who is a qualified veteran by reason of subsection
(d)(3)(A)(ii))'' before the period at the end, and
(B) by striking ``Only first $6,000 of'' in the heading
and inserting ``Limitation on''.
(e) Effective Date.--The amendments made by this section
shall apply to individuals who begin work for the employer
after the date of the enactment of this Act, in taxable years
ending after such date.
SEC. 205. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.
(a) Employment Taxes.--Chapter 25 (relating to general
provisions relating to employment taxes) is amended by adding
at the end the following new section:
``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.
``(a) General Rules.--For purposes of the taxes, and other
obligations, imposed by this subtitle--
``(1) a certified professional employer organization shall
be treated as the employer (and no other person shall be
treated as the employer) of any work site employee performing
services for any customer of such organization, but only with
respect to remuneration remitted by such organization to such
work site employee, and
``(2) exclusions, definitions, and other rules which are
based on the type of employer and which would (but for
paragraph (1)) apply shall apply with respect to such taxes
imposed on such remuneration.
``(b) Successor Employer Status.--For purposes of sections
3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
``(1) a certified professional employer organization
entering into a service contract with a customer with respect
to a work site employee shall be treated as a successor
employer and the customer shall be treated as a predecessor
employer during the term of such service contract, and
``(2) a customer whose service contract with a certified
professional employer organization is terminated with respect
to a work site employee shall be treated as a successor
employer and the certified professional employer organization
shall be treated as a predecessor employer.
``(c) Liability of Certified Professional Employer
Organization.--Solely for purposes of its liability for the
taxes, and other obligations, imposed by this subtitle--
``(1) a certified professional employer organization shall
be treated as the employer of any individual (other than a
work site employee or a person described in subsection (f))
who is performing services covered by a contract meeting the
requirements of section 7705(e)(2), but only with respect to
remuneration remitted by such organization to such
individual, and
``(2) exclusions, definitions, and other rules which are
based on the type of employer and which would (but for
paragraph (1)) apply shall apply with respect to such taxes
imposed on such remuneration.
``(d) Treatment of Credits.--
``(1) In general.--For purposes of any credit specified in
paragraph (2)--
``(A) such credit with respect to a work site employee
performing services for the customer applies to the customer,
not the certified professional employer organization,
``(B) the customer, and not the certified professional
employer organization, shall take into account wages and
employment taxes--
``(i) paid by the certified professional employer
organization with respect to the work site employee, and
``(ii) for which the certified professional employer
organization receives payment from the customer, and
``(C) the certified professional employer organization
shall furnish the customer with any information necessary for
the customer to claim such credit.
``(2) Credits specified.--A credit is specified in this
paragraph if such credit is allowed under--
``(A) section 41 (credit for increasing research activity),
``(B) section 45A (Indian employment credit),
``(C) section 45B (credit for portion of employer social
security taxes paid with respect to employee cash tips),
``(D) section 45C (clinical testing expenses for certain
drugs for rare diseases or conditions),
``(E) section 51 (work opportunity credit),
``(F) section 51A (temporary incentives for employing long-
term family assistance recipients),
``(G) section 1396 (empowerment zone employment credit),
``(H) 1400(d) (DC Zone employment credit),
``(I) Section 1400H (renewal community employment credit),
and
``(J) any other section as provided by the Secretary.
``(e) Special Rule for Related Party.--This section shall
not apply in the case of a customer which bears a
relationship to a certified professional employer
organization described in section 267(b) or 707(b). For
purposes of the preceding sentence, such sections shall be
applied by substituting `10 percent' for `50 percent'.
``(f) Special Rule for Certain Individuals.--For purposes
of the taxes imposed under this subtitle, an individual with
net earnings from self-employment derived from the customer's
trade or business is not a work site employee with respect to
remuneration paid by a certified professional employer
organization.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Certified Professional Employer Organization Defined.--
Chapter 79 (relating to definitions) is amended by adding at
the end the following new section:
``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS
DEFINED.
``(a) In General.--For purposes of this title, the term
`certified professional employer organization' means a person
who has been certified by the Secretary for purposes of
section 3511 as meeting the requirements of subsection (b).
``(b) General Requirements.--A person meets the
requirements of this subsection if such person--
``(1) demonstrates that such person (and any owner,
officer, and such other persons as may be specified in
regulations) meets such requirements as the Secretary shall
establish with respect to tax status, background, experience,
business location, and annual financial audits,
``(2) computes its taxable income using an accrual method
of accounting unless the Secretary approves another method,
``(3) agrees that it will satisfy the bond and independent
financial review requirements of subsection (c) on an ongoing
basis,
``(4) agrees that it will satisfy such reporting
obligations as may be imposed by the Secretary,
``(5) agrees to verify on such periodic basis as the
Secretary may prescribe that it continues to meet the
requirements of this subsection, and
``(6) agrees to notify the Secretary in writing within such
time as the Secretary may prescribe
[[Page S1502]]
of any change that materially affects whether it continues to
meet the requirements of this subsection.
``(c) Bond and Independent Financial Review Requirements.--
``(1) In general.--An organization meets the requirements
of this paragraph if such organization--
``(A) meets the bond requirements of paragraph (2), and
``(B) meets the independent financial review requirements
of paragraph (3).
``(2) Bond.--
``(A) In general.--A certified professional employer
organization meets the requirements of this paragraph if the
organization has posted a bond for the payment of taxes under
subtitle C (in a form acceptable to the Secretary) in an
amount at least equal to the amount specified in subparagraph
(B).
``(B) Amount of bond.--For the period April 1 of any
calendar year through March 31 of the following calendar
year, the amount of the bond required is equal to the greater
of--
``(i) 5 percent of the organization's liability under
section 3511 for taxes imposed by subtitle C during the
preceding calendar year (but not to exceed $1,000,000), or
``(ii) $50,000.
``(3) Independent financial review requirements.--A
certified professional employer organization meets the
requirements of this paragraph if such organization--
``(A) has, as of the most recent review date, caused to be
prepared and provided to the Secretary (in such manner as the
Secretary may prescribe) an opinion of an independent
certified public accountant that the certified professional
employer organization's financial statements are presented
fairly in accordance with generally accepted accounting
principles, and
``(B) provides, not later than the last day of the second
month beginning after the end of each calendar quarter, to
the Secretary from an independent certified public accountant
an assertion regarding Federal employment tax payments and an
examination level attestation on such assertion.
Such assertion shall state that the organization has withheld
and made deposits of all taxes imposed by chapters 21, 22,
and 24 of the Internal Revenue Code in accordance with
regulations imposed by the Secretary for such calendar
quarter and such examination level attestation shall state
that such assertion is fairly stated, in all material
respects.
``(4) Controlled group rules.--For purposes of the
requirements of paragraphs (2) and (3), all professional
employer organizations that are members of a controlled group
within the meaning of sections 414(b) and (c) shall be
treated as a single organization.
``(5) Failure to file assertion and attestation.--If the
certified professional employer organization fails to file
the assertion and attestation required by paragraph (3) with
respect to any calendar quarter, then the requirements of
paragraph (3) with respect to such failure shall be treated
as not satisfied for the period beginning on the due date for
such attestation.
``(6) Review date.--For purposes of paragraph (3)(A), the
review date shall be 6 months after the completion of the
organization's fiscal year.
``(d) Suspension and Revocation Authority.--The Secretary
may suspend or revoke a certification of any person under
subsection (b) for purposes of section 3511 if the Secretary
determines that such person is not satisfying the
representations or requirements of subsections (b) or (c), or
fails to satisfy applicable accounting, reporting, payment,
or deposit requirements.
``(e) Work Site Employee.--For purposes of this title--
``(1) In general.--The term `work site employee' means,
with respect to a certified professional employer
organization, an individual who--
``(A) performs services for a customer pursuant to a
contract which is between such customer and the certified
professional employer organization and which meets the
requirements of paragraph (2), and
``(B) performs services at a work site meeting the
requirements of paragraph (3).
``(2) Service contract requirements.--A contract meets the
requirements of this paragraph with respect to an individual
performing services for a customer if such contract is in
writing and provides that the certified professional employer
organization shall--
``(A) assume responsibility for payment of wages to such
individual, without regard to the receipt or adequacy of
payment from the customer for such services,
``(B) assume responsibility for reporting, withholding, and
paying any applicable taxes under subtitle C, with respect to
such individual's wages, without regard to the receipt or
adequacy of payment from the customer for such services,
``(C) assume responsibility for any employee benefits which
the service contract may require the organization to provide,
without regard to the receipt or adequacy of payment from the
customer for such services,
``(D) assume responsibility for hiring, firing, and
recruiting workers in addition to the customer's
responsibility for hiring, firing and recruiting workers,
``(E) maintain employee records relating to such
individual, and
``(F) agree to be treated as a certified professional
employer organization for purposes of section 3511 with
respect to such individual.
``(3) Work site coverage requirement.--The requirements of
this paragraph are met with respect to an individual if at
least 85 percent of the individuals performing services for
the customer at the work site where such individual performs
services are subject to 1 or more contracts with the
certified professional employer organization which meet the
requirements of paragraph (2) (but not taking into account
those individuals who are excluded employees within the
meaning of section 414(q)(5)).
``(f) Determination of Employment Status.--Except to the
extent necessary for purposes of section 3511, nothing in
this section shall be construed to affect the determination
of who is an employee or employer for purposes of this title.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(c) Conforming Amendments.--
(1) Section 3302 is amended by adding at the end the
following new subsection:
``(h) Treatment of Certified Professional Employer
Organizations.--If a certified professional employer
organization (as defined in section 7705), or a customer of
such organization, makes a contribution to the State's
unemployment fund with respect to a work site employee, such
organization shall be eligible for the credits available
under this section with respect to such contribution.''.
(2) Section 3303(a) is amended--
(A) by striking the period at the end of paragraph (3) and
inserting ``; and'' and by inserting after paragraph (3) the
following new paragraph:
``(4) if the taxpayer is a certified professional employer
organization (as defined in section 7705) that is treated as
the employer under section 3511, such certified professional
employer organization is permitted to collect and remit, in
accordance with paragraphs (1), (2), and (3), contributions
during the taxable year to the State unemployment fund with
respect to a work site employee.'', and
(B) in the last sentence--
(i) by striking ``paragraphs (1), (2), and (3)'' and
inserting ``paragraphs (1), (2), (3), and (4)'', and
(ii) by striking ``paragraph (1), (2), or (3)'' and
inserting ``paragraph (1), (2), (3), or (4)''.
(3) Section 6053(c) (relating to reporting of tips) is
amended by adding at the end the following new paragraph:
``(8) Certified professional employer organizations.--For
purposes of any report required by this subsection, in the
case of a certified professional employer organization that
is treated under section 3511 as the employer of a work site
employee, the customer with respect to whom a work site
employee performs services shall be the employer for purposes
of reporting under this section and the certified
professional employer organization shall furnish to the
customer any information necessary to complete such reporting
no later than such time as the Secretary shall prescribe.''.
(d) Clerical Amendments.--
(1) The table of sections for chapter 25 is amended by
adding at the end the following new item:
``Sec. 3511. Certified professional employer organizations.''.
(2) The table of sections for chapter 79 is amended by
inserting after the item relating to section 7704 the
following new item:
``Sec. 7705. Certified professional employer organizations defined.''.
(e) Reporting Requirements and Obligations.--The Secretary
of the Treasury shall develop such reporting and
recordkeeping rules, regulations, and procedures as the
Secretary determines necessary or appropriate to ensure
compliance with the amendments made by this section with
respect to entities applying for certification as certified
professional employer organizations or entities that have
been so certified. Such rules shall be designed in a manner
which streamlines, to the extent possible, the application of
requirements of such amendments, the exchange of information
between a certified professional employer organization and
its customers, and the reporting and recordkeeping
obligations of the certified professional employer
organization.
(f) User Fees.--Subsection (b) of section 7528 (relating to
Internal Revenue Service user fees) is amended by adding at
the end the following new paragraph:
``(4) Certified professional employer organizations.--The
fee charged under the program in connection with the
certification by the Secretary of a professional employer
organization under section 7705 shall not exceed $500.''.
(g) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to wages for services performed on or
after January 1 of the first calendar year beginning more
than 12 months after the date of the enactment of this Act.
(2) Certification program.--The Secretary of the Treasury
shall establish the certification program described in
section 7705(b) of the Internal Revenue Code of 1986, as
added by subsection (b), not later than 6 months before the
effective date determined under paragraph (1).
(h) No Inference.--Nothing contained in this section or the
amendments made by this section shall be construed to create
any inference with respect to the determination of who is an
employee or employer--
(1) for Federal tax purposes (other than the purposes set
forth in the amendments made by this section), or
(2) for purposes of any other provision of law.
PART II--SUBCHAPTER S PROVISIONS
SEC. 211. CAPITAL GAIN OF S CORPORATION NOT TREATED AS
PASSIVE INVESTMENT INCOME.
(a) In General.--Section 1362(d)(3) is amended by striking
subparagraphs (B), (C), (D), (E), and (F) and inserting the
following new subparagraph:
``(B) Passive investment income defined.--
[[Page S1503]]
``(i) In general.--Except as otherwise provided in this
subparagraph, the term `passive investment income' means
gross receipts derived from royalties, rents, dividends,
interest, and annuities.
``(ii) Exception for interest on notes from sales of
inventory.--The term `passive investment income' shall not
include interest on any obligation acquired in the ordinary
course of the corporation's trade or business from its sale
of property described in section 1221(a)(1).
``(iii) Treatment of certain lending or finance
companies.--If the S corporation meets the requirements of
section 542(c)(6) for the taxable year, the term `passive
investment income' shall not include gross receipts for the
taxable year which are derived directly from the active and
regular conduct of a lending or finance business (as defined
in section 542(d)(1)).
``(iv) Treatment of certain dividends.--If an S corporation
holds stock in a C corporation meeting the requirements of
section 1504(a)(2), the term `passive investment income'
shall not include dividends from such C corporation to the
extent such dividends are attributable to the earnings and
profits of such C corporation derived from the active conduct
of a trade or business.
``(v) Exception for banks, etc.--In the case of a bank (as
defined in section 581) or a depository institution holding
company (as defined in section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive
investment income' shall not include--
``(I) interest income earned by such bank or company, or
``(II) dividends on assets required to be held by such bank
or company, including stock in the Federal Reserve Bank, the
Federal Home Loan Bank, or the Federal Agricultural Mortgage
Bank or participation certificates issued by a Federal
Intermediate Credit Bank.''.
(b) Conforming Amendment.--Clause (i) of section
1042(c)(4)(A) is amended by striking ``section
1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
(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. 212. TREATMENT OF BANK DIRECTOR SHARES.
(a) In General.--Section 1361 (defining S corporation) is
amended by adding at the end the following new subsection:
``(f) Restricted Bank Director Stock.--
``(1) In general.--Restricted bank director stock shall not
be taken into account as outstanding stock of the S
corporation in applying this subchapter (other than section
1368(f)).
``(2) Restricted bank director stock.--For purposes of this
subsection, the term `restricted bank director stock' means
stock in a bank (as defined in section 581) or a depository
institution holding company (as defined in section 3(w)(1) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if
such stock--
``(A) is required to be held by an individual under
applicable Federal or State law in order to permit such
individual to serve as a director, and
``(B) is subject to an agreement with such bank or company
(or a corporation which controls (within the meaning of
section 368(c)) such bank or company) pursuant to which the
holder is required to sell back such stock (at the same price
as the individual acquired such stock) upon ceasing to hold
the office of director.
``(3) Cross reference.--
``For treatment of certain distributions with respect to restricted
bank director stock, see section 1368(f)''.
(b) Distributions.--Section 1368 (relating to
distributions) is amended by adding at the end the following
new subsection:
``(f) Restricted Bank Director Stock.--If a director
receives a distribution (not in part or full payment in
exchange for stock) from an S corporation with respect to any
restricted bank director stock (as defined in section
1361(f)), the amount of such distribution--
``(1) shall be includible in gross income of the director,
and
``(2) shall be deductible by the corporation for the
taxable year of such corporation in which or with which ends
the taxable year in which such amount in included in the
gross income of the director.''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
(2) Special rule for treatment as second class of stock.--
In the case of any taxable year beginning after December 31,
1996, restricted bank director stock (as defined in section
1361(f) of the Internal Revenue Code of 1986, as added by
this section) shall not be taken into account in determining
whether an S corporation has more than 1 class of stock.
SEC. 213. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE
RESERVE METHOD OF ACCOUNTING ON BECOMING S
CORPORATION.
(a) In General.--Section 1361, as amended by this Act, is
amended by adding at the end the following new subsection:
``(g) Special Rule for Bank Required To Change From the
Reserve Method of Accounting on Becoming S Corporation.--In
the case of a bank which changes from the reserve method of
accounting for bad debts described in section 585 or 593 for
its first taxable year for which an election under section
1362(a) is in effect, the bank may elect to take into account
any adjustments under section 481 by reason of such change
for the taxable year immediately preceding such first taxable
year.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 214. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED
SUBCHAPTER S SUBSIDIARY.
(a) In General.--Subparagraph (C) of section 1361(b)(3)
(relating to treatment of terminations of qualified
subchapter S subsidiary status) is amended--
(1) by striking ``For purposes of this title,'' and
inserting the following:
``(i) In general.--For purposes of this title,'', and
(2) by inserting at the end the following new clause:
``(ii) Termination by reason of sale of stock.--If the
failure to meet the requirements of subparagraph (B) is by
reason of the sale of stock of a corporation which is a
qualified subchapter S subsidiary, the sale of such stock
shall be treated as if--
``(I) the sale were a sale of an undivided interest in the
assets of such corporation (based on the percentage of the
corporation's stock sold), and
``(II) the sale were followed by an acquisition by such
corporation of all of its assets (and the assumption by such
corporation of all of its liabilities) in a transaction to
which section 351 applies.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006 .
SEC. 215. ELIMINATION OF ALL EARNINGS AND PROFITS
ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN
CORPORATIONS.
In the case of a corporation which is--
(1) described in section 1311(a)(1) of the Small Business
Job Protection Act of 1996, and
(2) not described in section 1311(a)(2) of such Act,
the amount of such corporation's accumulated earnings and
profits (for the first taxable year beginning after the date
of the enactment of this Act) shall be reduced by an amount
equal to the portion (if any) of such accumulated earnings
and profits which were accumulated in any taxable year
beginning before January 1, 1983, for which such corporation
was an electing small business corporation under subchapter S
of the Internal Revenue Code of 1986.
SEC. 216. EXPANSION OF QUALIFYING BENEFICIARIES OF AN
ELECTING SMALL BUSINESS TRUST.
(a) No Look Through for Eligibility Purposes.--Clause (v)
of section 1361(c)(2)(B) is amended by adding at the end the
following new sentence: ``This clause shall not apply for
purposes of subsection (b)(1)(C).''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
Subtitle B--Revenue Provisions
SEC. 221. MODIFICATION OF EFFECTIVE DATE OF LEASING
PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF
2004.
(a) Leases to Foreign Entities.--Section 849(b) of the
American Jobs Creation Act of 2004 is amended by adding at
the end the following new paragraph:
``(5) Leases to foreign entities.--In the case of tax-
exempt use property leased to a tax-exempt entity which is a
foreign person or entity, the amendments made by this part
shall apply to taxable years beginning after December 31,
2006, with respect to leases entered into on or before March
12, 2004.''.
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the enactment of the
American Jobs Creation Act of 2004.
SEC. 222. APPLICATION OF RULES TREATING INVERTED CORPORATIONS
AS DOMESTIC CORPORATIONS TO CERTAIN
TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.
(a) In General.--Section 7874(b) (relating to inverted
corporations treated as domestic corporations) is amended to
read as follows:
``(b) Inverted Corporations Treated as Domestic
Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this
title as a domestic corporation if such corporation would be
a surrogate foreign corporation if subsection (a)(2) were
applied by substituting `80 percent' for `60 percent'.
``(2) Special rule for certain transactions occurring after
march 20, 2002.--
``(A) In general.--If--
``(i) paragraph (1) does not apply to a foreign
corporation, but
``(ii) paragraph (1) would apply to such corporation if, in
addition to the substitution under paragraph (1), subsection
(a)(2) were applied by substituting `March 20, 2002' for
`March 4, 2003' each place it appears,
then paragraph (1) shall apply to such corporation but only
with respect to taxable years of such corporation beginning
after December 31, 2006.
``(B) Special rules.--Subject to such rules as the
Secretary may prescribe, in the case of a corporation to
which paragraph (1) applies by reason of this paragraph--
``(i) the corporation shall be treated, as of the close of
its last taxable year beginning before January 1, 2007, as
having transferred all of its assets, liabilities, and
earnings and profits to a domestic corporation in a
transaction with respect to which no tax is imposed under
this title,
``(ii) the bases of the assets transferred in the
transaction to the domestic corporation shall be the same as
the bases of the assets in the hands of the foreign
corporation, subject to any adjustments under this title for
built-in losses,
``(iii) the basis of the stock of any shareholder in the
domestic corporation shall be the same as the basis of the
stock of the shareholder in the foreign corporation for which
it is treated as exchanged, and
``(iv) the transfer of any earnings and profits by reason
of clause (i) shall be disregarded in
[[Page S1504]]
determining any deemed dividend or foreign tax creditable to
the domestic corporation with respect to such transfer.
``(C) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
this paragraph, including regulations to prevent the
avoidance of the purposes of this paragraph.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 223. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.
(a) Disallowance of Deduction.--
(1) In general.--Section 162(g) (relating to treble damage
payments under the antitrust laws) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively,
(B) by striking ``If'' and inserting:
``(1) Treble damages.--If'', and
(C) by adding at the end the following new paragraph:
``(2) Punitive damages.--No deduction shall be allowed
under this chapter for any amount paid or incurred for
punitive damages in connection with any judgment in, or
settlement of, any action. This paragraph shall not apply to
punitive damages described in section 104(c).''.
(2) Conforming amendment.--The heading for section 162(g)
is amended by inserting ``Or Punitive Damages'' after
``Laws''.
(b) Inclusion in Income of Punitive Damages Paid by Insurer
or Otherwise.--
(1) In general.--Part II of subchapter B of chapter 1
(relating to items specifically included in gross income) is
amended by adding at the end the following new section:
``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR
OTHERWISE.
``Gross income shall include any amount paid to or on
behalf of a taxpayer as insurance or otherwise by reason of
the taxpayer's liability (or agreement) to pay punitive
damages.''.
(2) Reporting requirements.--Section 6041 (relating to
information at source) is amended by adding at the end the
following new subsection:
``(h) Section To Apply to Punitive Damages Compensation.--
This section shall apply to payments by a person to or on
behalf of another person as insurance or otherwise by reason
of the other person's liability (or agreement) to pay
punitive damages.''.
(3) Conforming amendment.--The table of sections for part
II of subchapter B of chapter 1 is amended by adding at the
end the following new item:
``Sec. 91. Punitive damages compensated by insurance or otherwise.''.
(c) Effective Date.--The amendments made by this section
shall apply to damages paid or incurred on or after the date
of the enactment of this Act.
SEC. 224. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES,
AND OTHER AMOUNTS.
(a) In General.--Subsection (f) of section 162 (relating to
trade or business expenses) is amended to read as follows:
``(f) Fines, Penalties, and Other Amounts.--
``(1) In general.--Except as provided in paragraph (2), no
deduction otherwise allowable shall be allowed under this
chapter for any amount paid or incurred (whether by suit,
agreement, or otherwise) to, or at the direction of, a
government or entity described in paragraph (4) in relation
to the violation of any law or the investigation or inquiry
by such government or entity into the potential violation of
any law.
``(2) Exception for amounts constituting restitution or
paid to come into compliance with law.--Paragraph (1) shall
not apply to any amount which--
``(A) the taxpayer establishes--
``(i) constitutes restitution (including remediation of
property) for damage or harm caused by or which may be caused
by the violation of any law or the potential violation of any
law, or
``(ii) is paid to come into compliance with any law which
was violated or involved in the investigation or inquiry, and
``(B) is identified as restitution or as an amount paid to
come into compliance with the law, as the case may be, in the
court order or settlement agreement.
A taxpayer shall not meet the requirements of subparagraph
(A) solely by reason an identification under subparagraph
(B). This paragraph shall not apply to any amount paid or
incurred as reimbursement to the government or entity for the
costs of any investigation or litigation.
``(3) Exception for amounts paid or incurred as the result
of certain court orders.--Paragraph (1) shall not apply to
any amount paid or incurred by order of a court in a suit in
which no government or entity described in paragraph (4) is a
party.
``(4) Certain nongovernmental regulatory entities.--An
entity is described in this paragraph if it is--
``(A) a nongovernmental entity which exercises self-
regulatory powers (including imposing sanctions) in
connection with a qualified board or exchange (as defined in
section 1256(g)(7)), or
``(B) to the extent provided in regulations, a
nongovernmental entity which exercises self-regulatory powers
(including imposing sanctions) as part of performing an
essential governmental function.
``(5) Exception for taxes due.--Paragraph (1) shall not
apply to any amount paid or incurred as taxes due.''.
(b) Reporting of Deductible Amounts.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6050V the
following new section:
``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES,
PENALTIES, AND OTHER AMOUNTS.
``(a) Requirement of Reporting.--
``(1) In general.--The appropriate official of any
government or entity which is described in section 162(f)(4)
which is involved in a suit or agreement described in
paragraph (2) shall make a return in such form as determined
by the Secretary setting forth--
``(A) the amount required to be paid as a result of the
suit or agreement to which paragraph (1) of section 162(f)
applies,
``(B) any amount required to be paid as a result of the
suit or agreement which constitutes restitution or
remediation of property, and
``(C) any amount required to be paid as a result of the
suit or agreement for the purpose of coming into compliance
with any law which was violated or involved in the
investigation or inquiry.
``(2) Suit or agreement described.--
``(A) In general.--A suit or agreement is described in this
paragraph if--
``(i) it is--
``(I) a suit with respect to a violation of any law over
which the government or entity has authority and with respect
to which there has been a court order, or
``(II) an agreement which is entered into with respect to a
violation of any law over which the government or entity has
authority, or with respect to an investigation or inquiry by
the government or entity into the potential violation of any
law over which such government or entity has authority, and
``(ii) the aggregate amount involved in all court orders
and agreements with respect to the violation, investigation,
or inquiry is $600 or more.
``(B) Adjustment of reporting threshold.--The Secretary may
adjust the $600 amount in subparagraph (A)(ii) as necessary
in order to ensure the efficient administration of the
internal revenue laws.
``(3) Time of filing.--The return required under this
subsection shall be filed not later than--
``(A) 30 days after the date on which a court order is
issued with respect to the suit or the date the agreement is
entered into, as the case may be, or
``(B) the date specified Secretary.
``(b) Statements To Be Furnished to Individuals Involved in
the Settlement.--Every person required to make a return under
subsection (a) shall furnish to each person who is a party to
the suit or agreement a written statement showing--
``(1) the name of the government or entity, and
``(2) the information supplied to the Secretary under
subsection (a)(1).
The written statement required under the preceding sentence
shall be furnished to the person at the same time the
government or entity provides the Secretary with the
information required under subsection (a).
``(c) Appropriate Official Defined.--For purposes of this
section, the term `appropriate official' means the officer or
employee having control of the suit, investigation, or
inquiry or the person appropriately designated for purposes
of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is
amended by inserting after the item relating to section 6050V
the following new item:
``Sec. 6050W. Information with respect to certain fines, penalties, and
other amounts.''.
(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred on or after the date
of the enactment of this Act, except that such amendments
shall not apply to amounts paid or incurred under any binding
order or agreement entered into before such date. Such
exception shall not apply to an order or agreement requiring
court approval unless the approval was obtained before such
date.
SEC. 225. REVISION OF TAX RULES ON EXPATRIATION OF
INDIVIDUALS.
(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--Except as provided in subsections
(d) and (f), all property of a covered expatriate to whom
this section applies shall be treated as sold on the day
before the expatriation date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into
account under the preceding sentence.
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which, but for this
paragraph, would be includible in the gross income of any
individual by reason of this section shall be reduced (but
not below zero) by $600,000. For purposes of this paragraph,
allocable expatriation gain taken into account under
subsection (f)(2) shall be treated in the same manner as an
amount required to be includible in gross income.
``(B) Cost-of-living adjustment.--
``(i) In general.--In the case of an expatriation date
occurring in any calendar year after 2007, the $600,000
amount under subparagraph (A) shall be increased by an amount
equal to--
[[Page S1505]]
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2006' for `calendar year 1992' in
subparagraph (B) thereof.
``(ii) Rounding rules.--If any amount after adjustment
under clause (i) is not a multiple of $1,000, such amount
shall be rounded to the next lower multiple of $1,000.
``(4) Election to continue to be taxed as united states
citizen.--
``(A) In general.--If a covered expatriate elects the
application of this paragraph--
``(i) this section (other than this paragraph and
subsection (i)) shall not apply to the expatriate, but
``(ii) in the case of property to which this section would
apply but for such election, the expatriate shall be subject
to tax under this title in the same manner as if the
individual were a United States citizen.
``(B) Requirements.--Subparagraph (A) shall not apply to an
individual unless the individual--
``(i) provides security for payment of tax in such form and
manner, and in such amount, as the Secretary may require,
``(ii) consents to the waiver of any right of the
individual under any treaty of the United States which would
preclude assessment or collection of any tax which may be
imposed by reason of this paragraph, and
``(iii) complies with such other requirements as the
Secretary may prescribe.
``(C) Election.--An election under subparagraph (A) shall
apply to all property to which this section would apply but
for the election and, once made, shall be irrevocable. Such
election shall also apply to property the basis of which is
determined in whole or in part by reference to the property
with respect to which the election was made.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as
sold by reason of subsection (a), the payment of the
additional tax attributable to such property shall be
postponed until the due date of the return for the taxable
year in which such property is disposed of (or, in the case
of property disposed of in a transaction in which gain is not
recognized in whole or in part, until such other date as the
Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a)
applies.
``(3) Termination of postponement.--No tax may be postponed
under this subsection later than the due date for the return
of tax imposed by this chapter for the taxable year which
includes the date of death of the expatriate (or, if earlier,
the time that the security provided with respect to the
property fails to meet the requirements of paragraph (4),
unless the taxpayer corrects such failure within the time
specified by the Secretary).
``(4) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided to the Secretary with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond in an amount equal to the deferred tax
amount under paragraph (2) for the property, or
``(ii) the taxpayer otherwise establishes to the
satisfaction of the Secretary that the security is adequate.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer consents to the
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable. An election may be made under paragraph
(1) with respect to an interest in a trust with respect to
which gain is required to be recognized under subsection
(f)(1).
``(7) Interest.--For purposes of section 6601--
``(A) the last date for the payment of tax shall be
determined without regard to the election under this
subsection, and
``(B) section 6621(a)(2) shall be applied by substituting
`5 percentage points' for `3 percentage points' in
subparagraph (B) thereof.
``(c) Covered Expatriate.--For purposes of this section--
``(1) In general.--Except as provided in paragraph (2), the
term `covered expatriate' means an expatriate.
``(2) Exceptions.--An individual shall not be treated as a
covered expatriate if--
``(A) the individual--
``(i) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(ii) has not been a resident of the United States (as
defined in section 7701(b)(1)(A)(ii)) during the 5 taxable
years ending with the taxable year during which the
expatriation date occurs, or
``(B)(i) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(ii) the individual has been a resident of the United
States (as so defined) for not more than 5 taxable years
before the date of relinquishment.
``(d) Exempt Property; Special Rules for Pension Plans.--
``(1) Exempt property.--This section shall not apply to the
following:
``(A) United states real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the day before the
expatriation date, meet the requirements of section
897(c)(2).
``(B) Specified property.--Any property or interest in
property not described in subparagraph (A) which the
Secretary specifies in regulations.
``(2) Special rules for certain retirement plans.--
``(A) In general.--If a covered expatriate holds on the day
before the expatriation date any interest in a retirement
plan to which this paragraph applies--
``(i) such interest shall not be treated as sold for
purposes of subsection (a)(1), but
``(ii) an amount equal to the present value of the
expatriate's nonforfeitable accrued benefit shall be treated
as having been received by such individual on such date as a
distribution under the plan.
``(B) Treatment of subsequent distributions.--In the case
of any distribution on or after the expatriation date to or
on behalf of the covered expatriate from a plan from which
the expatriate was treated as receiving a distribution under
subparagraph (A), the amount otherwise includible in gross
income by reason of the subsequent distribution shall be
reduced by the excess of the amount includible in gross
income under subparagraph (A) over any portion of such amount
to which this subparagraph previously applied.
``(C) Treatment of subsequent distributions by plan.--For
purposes of this title, a retirement plan to which this
paragraph applies, and any person acting on the plan's
behalf, shall treat any subsequent distribution described in
subparagraph (B) in the same manner as such distribution
would be treated without regard to this paragraph.
``(D) Applicable plans.--This paragraph shall apply to--
``(i) any qualified retirement plan (as defined in section
4974(c)),
``(ii) an eligible deferred compensation plan (as defined
in section 457(b)) of an eligible employer described in
section 457(e)(1)(A), and
``(iii) to the extent provided in regulations, any foreign
pension plan or similar retirement arrangements or programs.
``(e) Definitions.--For purposes of this section--
``(1) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes
citizenship, and
``(B) any long-term resident of the United States who--
``(i) ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)), or
``(ii) commences to be treated as a resident of a foreign
country under the provisions of a tax treaty between the
United States and the foreign country and who does not waive
the benefits of such treaty applicable to residents of the
foreign country.
``(2) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date of the event described in clause (i) or (ii)
of paragraph (1)(B).
``(3) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing United States citizenship on the
earliest of--
``(A) the date the individual renounces such individual's
United States nationality before a diplomatic or consular
officer of the United States pursuant to paragraph (5) of
section 349(a) of the Immigration and Nationality Act (8
U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(4) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(f) Special Rules Applicable to Beneficiaries' Interests
in Trust.--
``(1) In general.--Except as provided in paragraph (2), if
an individual is determined under paragraph (3) to hold an
interest in a trust on the day before the expatriation date--
``(A) the individual shall not be treated as having sold
such interest,
``(B) such interest shall be treated as a separate share in
the trust, and
``(C)(i) such separate share shall be treated as a separate
trust consisting of the assets allocable to such share,
``(ii) the separate trust shall be treated as having sold
its assets on the day before the expatriation date for their
fair market value and
[[Page S1506]]
as having distributed all of its assets to the individual as
of such time, and
``(iii) the individual shall be treated as having
recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or loss of
the individual arising from a distribution described in
subparagraph (C)(ii). In determining the amount of such
distribution, proper adjustments shall be made for
liabilities of the trust allocable to an individual's share
in the trust.
``(2) Special rules for interests in qualified trusts.--
``(A) In general.--If the trust interest described in
paragraph (1) is an interest in a qualified trust--
``(i) paragraph (1) and subsection (a) shall not apply, and
``(ii) in addition to any other tax imposed by this title,
there is hereby imposed on each distribution with respect to
such interest a tax in the amount determined under
subparagraph (B).
``(B) Amount of tax.--The amount of tax under subparagraph
(A)(ii) shall be equal to the lesser of--
``(i) the highest rate of tax imposed by section 1(e) for
the taxable year which includes the day before the
expatriation date, multiplied by the amount of the
distribution, or
``(ii) the balance in the deferred tax account immediately
before the distribution determined without regard to any
increases under subparagraph (C)(ii) after the 30th day
preceding the distribution.
``(C) Deferred tax account.--For purposes of subparagraph
(B)(ii)--
``(i) Opening balance.--The opening balance in a deferred
tax account with respect to any trust interest is an amount
equal to the tax which would have been imposed on the
allocable expatriation gain with respect to the trust
interest if such gain had been included in gross income under
subsection (a).
``(ii) Increase for interest.--The balance in the deferred
tax account shall be increased by the amount of interest
determined (on the balance in the account at the time the
interest accrues), for periods after the 90th day after the
expatriation date, by using the rates and method applicable
under section 6621 for underpayments of tax for such periods,
except that section 6621(a)(2) shall be applied by
substituting `5 percentage points' for `3 percentage points'
in subparagraph (B) thereof.
``(iii) Decrease for taxes previously paid.--The balance in
the tax deferred account shall be reduced--
``(I) by the amount of taxes imposed by subparagraph (A) on
any distribution to the person holding the trust interest,
and
``(II) in the case of a person holding a nonvested
interest, to the extent provided in regulations, by the
amount of taxes imposed by subparagraph (A) on distributions
from the trust with respect to nonvested interests not held
by such person.
``(D) Allocable expatriation gain.--For purposes of this
paragraph, the allocable expatriation gain with respect to
any beneficiary's interest in a trust is the amount of gain
which would be allocable to such beneficiary's vested and
nonvested interests in the trust if the beneficiary held
directly all assets allocable to such interests.
``(E) Tax deducted and withheld.--
``(i) In general.--The tax imposed by subparagraph (A)(ii)
shall be deducted and withheld by the trustees from the
distribution to which it relates.
``(ii) Exception where failure to waive treaty rights.--If
an amount may not be deducted and withheld under clause (i)
by reason of the distributee failing to waive any treaty
right with respect to such distribution--
``(I) the tax imposed by subparagraph (A)(ii) shall be
imposed on the trust and each trustee shall be personally
liable for the amount of such tax, and
``(II) any other beneficiary of the trust shall be entitled
to recover from the distributee the amount of such tax
imposed on the other beneficiary.
``(F) Disposition.--If a trust ceases to be a qualified
trust at any time, a covered expatriate disposes of an
interest in a qualified trust, or a covered expatriate
holding an interest in a qualified trust dies, then, in lieu
of the tax imposed by subparagraph (A)(ii), there is hereby
imposed a tax equal to the lesser of--
``(i) the tax determined under paragraph (1) as if the day
before the expatriation date were the date of such cessation,
disposition, or death, whichever is applicable, or
``(ii) the balance in the tax deferred account immediately
before such date.
Such tax shall be imposed on the trust and each trustee shall
be personally liable for the amount of such tax and any other
beneficiary of the trust shall be entitled to recover from
the covered expatriate or the estate the amount of such tax
imposed on the other beneficiary.
``(G) Definitions and special rules.--For purposes of this
paragraph--
``(i) Qualified trust.--The term `qualified trust' means a
trust which is described in section 7701(a)(30)(E).
``(ii) Vested interest.--The term `vested interest' means
any interest which, as of the day before the expatriation
date, is vested in the beneficiary.
``(iii) Nonvested interest.--The term `nonvested interest'
means, with respect to any beneficiary, any interest in a
trust which is not a vested interest. Such interest shall be
determined by assuming the maximum exercise of discretion in
favor of the beneficiary and the occurrence of all
contingencies in favor of the beneficiary.
``(iv) Adjustments.--The Secretary may provide for such
adjustments to the bases of assets in a trust or a deferred
tax account, and the timing of such adjustments, in order to
ensure that gain is taxed only once.
``(v) Coordination with retirement plan rules.--This
subsection shall not apply to an interest in a trust which is
part of a retirement plan to which subsection (d)(2) applies.
``(3) Determination of beneficiaries' interest in trust.--
``(A) Determinations under paragraph (1).--For purposes of
paragraph (1), a beneficiary's interest in a trust shall be
based upon all relevant facts and circumstances, including
the terms of the trust instrument and any letter of wishes or
similar document, historical patterns of trust distributions,
and the existence of and functions performed by a trust
protector or any similar adviser.
``(B) Other determinations.--For purposes of this section--
``(i) Constructive ownership.--If a beneficiary of a trust
is a corporation, partnership, trust, or estate, the
shareholders, partners, or beneficiaries shall be deemed to
be the trust beneficiaries for purposes of this section.
``(ii) Taxpayer return position.--A taxpayer shall clearly
indicate on its income tax return--
``(I) the methodology used to determine that taxpayer's
trust interest under this section, and
``(II) if the taxpayer knows (or has reason to know) that
any other beneficiary of such trust is using a different
methodology to determine such beneficiary's trust interest
under this section.
``(g) Termination of Deferrals, Etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(1) any period during which recognition of income or gain
is deferred shall terminate on the day before the
expatriation date, and
``(2) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the
unpaid portion of such tax shall be due and payable at the
time and in the manner prescribed by the Secretary.
``(h) Imposition of Tentative Tax.--
``(1) In general.--If an individual is required to include
any amount in gross income under subsection (a) for any
taxable year, there is hereby imposed, immediately before the
expatriation date, a tax in an amount equal to the amount of
tax which would be imposed if the taxable year were a short
taxable year ending on the expatriation date.
``(2) Due date.--The due date for any tax imposed by
paragraph (1) shall be the 90th day after the expatriation
date.
``(3) Treatment of tax.--Any tax paid under paragraph (1)
shall be treated as a payment of the tax imposed by this
chapter for the taxable year to which subsection (a) applies.
``(4) Deferral of tax.--The provisions of subsection (b)
shall apply to the tax imposed by this subsection to the
extent attributable to gain includible in gross income by
reason of this section.
``(i) Special Liens for Deferred Tax Amounts.--
``(1) Imposition of lien.--
``(A) In general.--If a covered expatriate makes an
election under subsection (a)(4) or (b) which results in the
deferral of any tax imposed by reason of subsection (a), the
deferred amount (including any interest, additional amount,
addition to tax, assessable penalty, and costs attributable
to the deferred amount) shall be a lien in favor of the
United States on all property of the expatriate located in
the United States (without regard to whether this section
applies to the property).
``(B) Deferred amount.--For purposes of this subsection,
the deferred amount is the amount of the increase in the
covered expatriate's income tax which, but for the election
under subsection (a)(4) or (b), would have occurred by reason
of this section for the taxable year including the
expatriation date.
``(2) Period of lien.--The lien imposed by this subsection
shall arise on the expatriation date and continue until--
``(A) the liability for tax by reason of this section is
satisfied or has become unenforceable by reason of lapse of
time, or
``(B) it is established to the satisfaction of the
Secretary that no further tax liability may arise by reason
of this section.
``(3) Certain rules apply.--The rules set forth in
paragraphs (1), (3), and (4) of section 6324A(d) shall apply
with respect to the lien imposed by this subsection as if it
were a lien imposed by section 6324A.
``(j) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Inclusion in Income of Gifts and Bequests Received by
United States Citizens and Residents From Expatriates.--
Section 102 (relating to gifts, etc. not included in gross
income) is amended by adding at the end the following new
subsection:
``(d) Gifts and Inheritances From Covered Expatriates.--
``(1) Treatment of gifts and inheritances.--
``(A) In general.--Subsection (a) shall not exclude from
gross income the value of any property acquired by gift,
bequest, devise, or inheritance from a covered expatriate
after the expatriation date.
``(B) Determination of basis.--Notwithstanding sections
1015 or 1022, the basis of any property described in
subparagraph (A) in the hands of the donee or the person
acquiring such property from the decedent shall be equal to
the fair market value of the property at the time of the
gift, bequest, devise, or inheritance.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Paragraph (1) shall not apply to any property
if either--
``(A) the gift, bequest, devise, or inheritance is--
``(i) shown on a timely filed return of tax imposed by
chapter 12 as a taxable gift by the covered expatriate, or
[[Page S1507]]
``(ii) included in the gross estate of the covered
expatriate for purposes of chapter 11 and shown on a timely
filed return of tax imposed by chapter 11 of the estate of
the covered expatriate, or
``(B) no such return was timely filed but no such return
would have been required to be filed even if the covered
expatriate were a citizen or long-term resident of the United
States.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section
877A shall have the same meaning as when used in section
877A.''.
(c) Definition of Termination of United States
Citizenship.--Section 7701(a) is amended by adding at the end
the following new paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to be
treated as a United States citizen before the date on which
the individual's citizenship is treated as relinquished under
section 877A(e)(3).
``(B) Dual citizens.--Under regulations prescribed by the
Secretary, subparagraph (A) shall not apply to an individual
who became at birth a citizen of the United States and a
citizen of another country.''.
(d) Ineligibility for Visa or Admission to United States.--
(1) In general.--Section 212(a)(10)(E) of the Immigration
and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to
read as follows:
``(E) Former citizens not in compliance with expatriation
revenue provisions.--Any alien who is a former citizen of the
United States who relinquishes United States citizenship
(within the meaning of section 877A(e)(3) of the Internal
Revenue Code of 1986) and who is not in compliance with
section 877A of such Code (relating to expatriation) is
inadmissible.''.
(2) Availability of information.--
(A) In general.--Section 6103(l) (relating to disclosure of
returns and return information for purposes other than tax
administration) is amended by adding at the end the following
new paragraph:
``(21) Disclosure to deny visa or admission to certain
expatriates.--Upon written request of the Attorney General or
the Attorney General's delegate, the Secretary shall disclose
whether an individual is in compliance with section 877A (and
if not in compliance, any items of noncompliance) to officers
and employees of the Federal agency responsible for
administering section 212(a)(10)(E) of the Immigration and
Nationality Act solely for the purpose of, and to the extent
necessary in, administering such section 212(a)(10)(E).''.
(B) Safeguards.--Section 6103(p)(4) (relating to
safeguards) is amended by striking ``or (20)'' each place it
appears and inserting ``(20), or (21)''.
(3) Effective dates.--The amendments made by this
subsection shall apply to individuals who relinquish United
States citizenship on or after the date of the enactment of
this Act.
(e) Conforming Amendments.--
(1) Section 877 is amended by adding at the end the
following new subsection:
``(h) Application.--This section shall not apply to an
expatriate (as defined in section 877A(e)) whose expatriation
date (as so defined) occurs on or after the date of the
enactment of this subsection.''.
(2) Section 2107 is amended by adding at the end the
following new subsection:
``(f) Application.--This section shall not apply to any
expatriate subject to section 877A.''.
(3) Section 2501(a)(3) is amended by adding at the end the
following new subparagraph:
``(C) Application.--This paragraph shall not apply to any
expatriate subject to section 877A.''.
(4) Section 6039G(a) is amended by inserting ``or 877A''
after ``section 877(b)''.
(5) The second sentence of section 6039G(d) is amended by
inserting ``or who relinquishes United States citizenship
(within the meaning of section 877A(e)(3))'' after ``section
877(a))''.
(f) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:
``Sec. 877A. Tax responsibilities of expatriation.''.
(g) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(within the meaning of section 877A(e) of the Internal
Revenue Code of 1986, as added by this section) whose
expatriation date (as so defined) occurs on or after the date
of the enactment of this Act.
(2) Gifts and bequests.--Section 102(d) of the Internal
Revenue Code of 1986 (as added by subsection (b)) shall apply
to gifts and bequests received on or after the date of the
enactment of this Act, from an individual or the estate of an
individual whose expatriation date (as so defined) occurs
after such date.
(3) Due date for tentative tax.--The due date under section
877A(h)(2) of the Internal Revenue Code of 1986, as added by
this section, shall in no event occur before the 90th day
after the date of the enactment of this Act.
SEC. 226. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED
UNDER NONQUALIFIED DEFERRED COMPENSATION
ARRANGEMENTS.
(a) In General.--Section 409A(a) of the Internal Revenue
Code of 1986 (relating to inclusion of gross income under
nonqualified deferred compensation plans) is amended--
(1) by striking ``and (4)'' in subclause (I) of paragraph
(1)(A)(i) and inserting ``(4), and (5)'', and
(2) by adding at the end the following new paragraph:
``(5) Annual limitation on aggregate deferred amounts.--
``(A) Limitation.--The requirements of this paragraph are
met if the plan provides that the aggregate amount of
compensation which is deferred for any taxable year with
respect to a participant under the plan may not exceed the
applicable dollar amount for the taxable year.
``(B) Inclusion of future earnings.--If an amount is
includible under paragraph (1) in the gross income of a
participant for any taxable year by reason of any failure to
meet the requirements of this paragraph, any income (whether
actual or notional) for any subsequent taxable year shall be
included in gross income under paragraph (1)(A) in such
subsequent taxable year to the extent such income--
``(i) is attributable to compensation (or income
attributable to such compensation) required to be included in
gross income by reason of such failure (including by reason
of this subparagraph), and
``(ii) is not subject to a substantial risk of forfeiture
and has not been previously included in gross income.
``(C) Aggregation rule.--For purposes of this paragraph,
all nonqualified deferred compensation plans maintained by
all employers treated as a single employer under subsection
(d)(6) shall be treated as 1 plan.
``(D) Applicable dollar amount.--For purposes of this
paragraph--
``(i) In general.--The term `applicable dollar amount'
means, with respect to any participant, the lesser of--
``(I) the average annual compensation which was payable
during the base period to the participant by the employer
maintaining the nonqualified deferred compensation plan (or
any predecessor of the employer) and which was includible in
the participant's gross income for taxable years in the base
period, or
``(II) $1,000,000.
``(ii) Base period.--
``(I) In general.--The term `base period' means, with
respect to any computation year, the 5-taxable year period
ending with the taxable year preceding the computation year.
``(II) Elections made before computation year.--If, before
the beginning of the computation year, an election described
in paragraph (4)(B) is made by the participant to have
compensation for services performed in the computation year
deferred under a nonqualified deferred compensation plan, the
base period shall be the 5-taxable year period ending with
the taxable year preceding the taxable year in which the
election is made.
``(III) Computation year.--For purposes of this clause, the
term `computation year' means any taxable year of the
participant for which the limitation under subparagraph (A)
is being determined.
``(IV) Special rule for employees of less than 5 years.--If
a participant did not perform services for the employer
maintaining the nonqualified deferred compensation plan (or
any predecessor of the employer) during the entire 5-taxable
year period referred to in subparagraph (A) or (B), only the
portion of such period during which the participant performed
such services shall be taken into account.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006,
except that--
(A) the amendments shall only apply to amounts deferred
after December 31, 2006 (and to earnings on such amounts),
and
(B) taxable years beginning on or before December 31, 2006,
shall be taken into account in determining the average annual
compensation of a participant during any base period for
purposes of section 409A(a)(5)(D) of the Internal Revenue
Code of 1986 (as added by such amendments).
(2) Guidance relating to certain existing arrangements.--
Not later than 60 days after the date of the enactment of
this Act, the Secretary of the Treasury shall issue guidance
providing a limited period during which a nonqualified
deferred compensation plan adopted before December 31, 2006,
may, without violating the requirements of section 409A(a) of
such Code, be amended--
(A) to provide that a participant may, no later than
December 31, 2007, cancel or modify an outstanding deferral
election with regard to all or a portion of amounts deferred
after December 31, 2006, to the extent necessary for the plan
to meet the requirements of section 409A(a)(5) of such Code
(as added by the amendments made by this section), but only
if amounts subject to the cancellation or modification are,
to the extent not previously included in gross income,
includible in income of the participant when no longer
subject to substantial risk of forfeiture, and
(B) to conform to the requirements of section 409A(a)(5) of
such Code (as added by the amendments made by this section)
with regard to amounts deferred after December 31, 2006.
SEC. 227. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION
FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE
TO FRAUD.
(a) In General.--Section 7206 (relating to fraud and false
statements) is amended--
(1) by striking ``Any person who--'' and inserting ``(a) In
General.--'', and
(2) by adding at the end the following new subsection:
``(b) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--If any portion of any
underpayment (as defined in section 6664(a)) or overpayment
(as defined in section 6401(a)) of tax required to be shown
on a return is attributable to fraudulent action described in
subsection (a), the applicable dollar amount under subsection
(a) shall in no event be less than an amount equal to such
portion. A rule similar to the rule under section 6663(b)
shall apply for purposes of determining the portion so
attributable.''.
[[Page S1508]]
(b) Increase in Penalties.--
(1) Attempt to evade or defeat tax.--Section 7201 is
amended--
(A) by striking ``$100,000'' and inserting ``$500,000'',
(B) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(C) by striking ``5 years'' and inserting ``10 years''.
(2) Willful failure to file return, supply information, or
pay tax.--Section 7203 is amended--
(A) in the first sentence--
(i) by striking ``Any person'' and inserting the following:
``(a) In General.--Any person'', and
(ii) by striking ``$25,000'' and inserting ``$50,000'',
(B) in the third sentence, by striking ``section'' and
inserting ``subsection'', and
(C) by adding at the end the following new subsection:
``(b) Aggravated Failure To File.--
``(1) In general.--In the case of any failure described in
paragraph (2), the first sentence of subsection (a) shall be
applied by substituting--
``(A) `felony' for `misdemeanor',
``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
``(C) `10 years' for `1 year'.''.
``(2) Failure described.--A failure described in this
paragraph is a failure to make a return described in
subsection (a) for a period of 3 or more consecutive taxable
years if the aggregate tax liability for such period is not
less than $100,000.''.
(3) Fraud and false statements.--Section 7206(a) (as
redesignated by subsection (a)) is amended--
(A) by striking ``$100,000'' and inserting ``$500,000'',
(B) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(C) by striking ``3 years'' and inserting ``5 years''.
(c) Effective Date.--The amendments made by this section
shall apply to actions, and failures to act, occurring after
the date of the enactment of this Act.
SEC. 228. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST
ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE
FINANCIAL ARRANGEMENTS.
(a) Determination of Penalty.--
(1) In general.--Notwithstanding any other provision of
law, in the case of an applicable taxpayer--
(A) the determination as to whether any interest or
applicable penalty is to be imposed with respect to any
arrangement described in paragraph (2), or to any
underpayment of Federal income tax attributable to items
arising in connection with any such arrangement, shall be
made without regard to the rules of subsections (b), (c), and
(d) of section 6664 of the Internal Revenue Code of 1986, and
(B) if any such interest or applicable penalty is imposed,
the amount of such interest or penalty shall be equal to
twice that determined without regard to this section.
(2) Applicable taxpayer.--For purposes of this subsection--
(A) In general.--The term ``applicable taxpayer'' means a
taxpayer which--
(i) has underreported its United States income tax
liability with respect to any item which directly or
indirectly involves--
(I) any financial arrangement which in any manner relies on
the use of offshore payment mechanisms (including credit,
debit, or charge cards) issued by banks or other entities in
foreign jurisdictions, or
(II) any offshore financial arrangement (including any
arrangement with foreign banks, financial institutions,
corporations, partnerships, trusts, or other entities), and
(ii) has neither signed a closing agreement pursuant to the
Voluntary Offshore Compliance Initiative established by the
Department of the Treasury under Revenue Procedure 2003-11
nor voluntarily disclosed its participation in such
arrangement by notifying the Internal Revenue Service of such
arrangement prior to the issue being raised by the Internal
Revenue Service during an examination.
(B) Authority to waive.--The Secretary of the Treasury or
the Secretary's delegate may waive the application of
paragraph (1) to any taxpayer if the Secretary or the
Secretary's delegate determines that the use of such offshore
payment mechanisms is incidental to the transaction and, in
addition, in the case of a trade or business, such use is
conducted in the ordinary course of the type of trade or
business of the taxpayer.
(C) Issues raised.--For purposes of subparagraph (A)(ii),
an item shall be treated as an issue raised during an
examination if the individual examining the return--
(i) communicates to the taxpayer knowledge about the
specific item, or
(ii) has made a request to the taxpayer for information and
the taxpayer could not make a complete response to that
request without giving the examiner knowledge of the specific
item.
(b) Applicable Penalty.--For purposes of this section, the
term ``applicable penalty'' means any penalty, addition to
tax, or fine imposed under chapter 68 of the Internal Revenue
Code of 1986.
(c) Effective Date.--The provisions of this section shall
apply to interest, penalties, additions to tax, and fines
with respect to any taxable year if, as of the date of the
enactment of this Act, the assessment of any tax, penalty, or
interest with respect to such taxable year is not prevented
by the operation of any law or rule of law.
SEC. 229. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY
ORDERS.
(a) In General.--Section 6657 (relating to bad checks) is
amended--
(1) by striking ``$750'' and inserting ``$1,250'', and
(2) by striking ``$15'' and inserting ``$25''.
(b) Effective Date.--The amendments made by this section
apply to checks or money orders received after the date of
the enactment of this Act.
SEC. 230. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT
INSTRUMENTS.
(a) In General.--Section 1275(d) (relating to regulation
authority) is amended--
(1) by striking ``The Secretary'' and inserting the
following:
``(1) In general.--The Secretary'', and
(2) by adding at the end the following new paragraph:
``(2) Treatment of contingent payment convertible debt.--
``(A) In general.--In the case of a debt instrument which--
``(i) is convertible into stock of the issuing corporation,
into stock or debt of a related party (within the meaning of
section 267(b) or 707(b)(1)), or into cash or other property
in an amount equal to the approximate value of such stock or
debt, and
``(ii) provides for contingent payments,
any regulations which require original issue discount to be
determined by reference to the comparable yield of a
noncontingent fixed-rate debt instrument shall be applied as
if the regulations require that such comparable yield be
determined by reference to a noncontingent fixed-rate debt
instrument which is convertible into stock.
``(B) Special rule.--For purposes of subparagraph (A), the
comparable yield shall be determined without taking into
account the yield resulting from the conversion of a debt
instrument into stock.''.
(b) Cross Reference.--Section 163(e)(6) (relating to cross
references) is amended by adding at the end the following:
``For the treatment of contingent payment convertible debt,
see section 1275(d)(2).''.
(c) Effective Date.--The amendments made by this section
shall apply to debt instruments issued on or after the date
of the enactment of this Act.
SEC. 231. EXTENSION OF IRS USER FEES.
Subsection (c) of section 7528 (relating to Internal
Revenue Service user fees) is amended by striking ``September
30, 2014'' and inserting ``September 30, 2016''.
SEC. 232. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES
FOR EMPLOYMENT TAX LIABILITIES.
(a) In General.--Section 6330(f) (relating to jeopardy and
State refund collection) is amended--
(1) by striking ``; or'' at the end of paragraph (1) and
inserting a comma,
(2) by adding ``or'' at the end of paragraph (2), and
(3) by inserting after paragraph (2) the following new
paragraph:
``(3) the Secretary has served a levy in connection with
the collection of taxes under chapter 21, 22, 23, or 24,''.
(b) Effective Date.--The amendments made by this section
shall apply to levies issued on or after the date that is 120
days after the date of the enactment of this Act.
SEC. 233. MODIFICATIONS TO WHISTLEBLOWER REFORMS.
(a) Modification of Tax Threshold for Awards.--Subparagraph
(B) of section 7623(b)(5), as added by the Tax Relief and
Health Care Act of 2006, is amended by striking
``$2,000,000'' and inserting ``$20,000''.
(b) Whistleblower Office.--
(1) In general.--Section 7623 is amended by adding at the
end the following new subsections:
``(c) Whistleblower Office.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Whistleblower
Office' which--
``(A) shall at all times operate at the direction of the
Commissioner and coordinate and consult with other divisions
in the Internal Revenue Service as directed by the
Commissioner,
``(B) shall analyze information received from any
individual described in subsection (b) and either investigate
the matter itself or assign it to the appropriate Internal
Revenue Service office,
``(C) shall monitor any action taken with respect to such
matter,
``(D) shall inform such individual that it has accepted the
individual's information for further review,
``(E) may require such individual and any legal
representative of such individual to not disclose any
information so provided,
``(F) in its sole discretion, may ask for additional
assistance from such individual or any legal representative
of such individual, and
``(G) shall determine the amount to be awarded to such
individual under subsection (b).
``(2) Funding for office.--There is authorized to be
appropriated $10,000,000 for each fiscal year for the
Whistleblower Office. These funds shall be used to maintain
the Whistleblower Office and also to reimburse other Internal
Revenue Service offices for related costs, such as costs of
investigation and collection.
``(3) Request for assistance.--
``(A) In general.--Any assistance requested under paragraph
(1)(F) shall be under the direction and control of the
Whistleblower Office or the office assigned to investigate
the matter under subparagraph (A). No individual or legal
representative whose assistance is so requested may by reason
of such request represent himself or herself as an employee
of the Federal Government.
``(B) Funding of assistance.--From the amounts available
for expenditure under subsection (b), the Whistleblower
Office may, with the agreement of the individual described in
[[Page S1509]]
subsection (b), reimburse the costs incurred by any legal
representative of such individual in providing assistance
described in subparagraph (A).
``(d) Reports.--The Secretary shall each year conduct a
study and report to Congress on the use of this section,
including--
``(1) an analysis of the use of this section during the
preceding year and the results of such use, and
``(2) any legislative or administrative recommendations
regarding the provisions of this section and its
application.''.
(2) Conforming amendment.--Section 406 of division A of the
Tax Relief and Health Care Act of 2006 is amended by striking
subsections (b) and (c).
(3) Report on implementation.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of
the Treasury shall submit to Congress a report on the
establishment and operation of the Whistleblower Office under
section 7623(c) of the Internal Revenue Code of 1986.
(c) Publicity of Award Appeals.--Paragraph (4) of section
7623(b), as added by the Tax Relief and Health Care Act of
2006, is amended to read as follows:
``(4) Appeal of award determination.--
``(A) In general.--Any determination regarding an award
under paragraph (1), (2), or (3) may, within 30 days of such
determination, be appealed to the Tax Court (and the Tax
Court shall have jurisdiction with respect to such matter).
``(B) Publicity of appeals.--Notwithstanding sections 7458
and 7461, the Tax Court may, in order to preserve the
anonymity, privacy, or confidentiality of any person under
this subsection, provide by rules adopted under section 7453
that portions of filings, hearings, testimony, evidence, and
reports in connection with proceedings under this subsection
may be closed to the public or to inspection by the
public.''.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to information
provided on or after the date of the enactment of this Act.
(2) Publicity of award appeals.--The amendment made by
subsection (c) shall take effect as if included in the
amendments made by section 406 of the Tax Relief and Health
Care Act of 2006.
SEC. 234. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY
DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE
REMUNERATION.
(a) In General.--Paragraph (3) of section 162(m) is amended
to read as follows:
``(3) Covered employee.--For purposes of this subsection,
the term `covered employee' means, with respect to any
taxpayer for any taxable year, an individual who--
``(A) was the chief executive officer of the taxpayer, or
an individual acting in such a capacity, at any time during
the taxable year,
``(B) is 1 of the 4 highest compensated officers of the
taxpayer for the taxable year (other than the individual
described in subparagraph (A)), or
``(C) was a covered employee of the taxpayer (or any
predecessor) for any preceding taxable year beginning after
December 31, 2006.
In the case of an individual who was a covered employee for
any taxable year beginning after December 31, 2006, the term
`covered employee' shall include a beneficiary of such
employee with respect to any remuneration for services
performed by such employee as a covered employee (whether or
not such services are performed during the taxable year in
which the remuneration is paid).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.
Subtitle C--General Provisions
SEC. 241. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL
BUSINESSES.
(a) In General.--Section 212 of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601
note) is amended by striking subsection (a) and inserting the
following:
``(a) Compliance Guide.--
``(1) In general.--For each rule or group of related rules
for which an agency is required to prepare a final regulatory
flexibility analysis under section 605(b) of title 5, United
States Code, the agency shall publish 1 or more guides to
assist small entities in complying with the rule and shall
entitle such publications `small entity compliance guides'.
``(2) Publication of guides.--The publication of each guide
under this subsection shall include--
``(A) the posting of the guide in an easily identified
location on the website of the agency; and
``(B) distribution of the guide to known industry contacts,
such as small entities, associations, or industry leaders
affected by the rule.
``(3) Publication date.--An agency shall publish each guide
(including the posting and distribution of the guide as
described under paragraph (2))--
``(A) on the same date as the date of publication of the
final rule (or as soon as possible after that date); and
``(B) not later than the date on which the requirements of
that rule become effective.
``(4) Compliance actions.--
``(A) In general.--Each guide shall explain the actions a
small entity is required to take to comply with a rule.
``(B) Explanation.--The explanation under subparagraph
(A)--
``(i) shall include a description of actions needed to meet
the requirements of a rule, to enable a small entity to know
when such requirements are met; and
``(ii) if determined appropriate by the agency, may include
a description of possible procedures, such as conducting
tests, that may assist a small entity in meeting such
requirements, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
requirements, relating to the rule.
``(5) Agency preparation of guides.--The agency shall, in
its sole discretion, taking into account the subject matter
of the rule and the language of relevant statutes, ensure
that the guide is written using sufficiently plain language
likely to be understood by affected small entities. Agencies
may prepare separate guides covering groups or classes of
similarly affected small entities and may cooperate with
associations of small entities to develop and distribute such
guides. An agency may prepare guides and apply this section
with respect to a rule or a group of related rules.
``(6) Reporting.--Not later than 1 year after the date of
enactment of the Fair Minimum Wage Act of 2007, and annually
thereafter, the head of each agency shall submit a report to
the Committee on Small Business and Entrepreneurship of the
Senate, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction describing the status of the agency's compliance
with paragraphs (1) through (5).''.
(b) Technical and Conforming Amendment.--Section 211(3) of
the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 601 note) is amended by inserting ``and
entitled'' after ``designated''.
SEC. 242. SMALL BUSINESS CHILD CARE GRANT PROGRAM.
(a) Establishment.--The Secretary of Health and Human
Services (referred to in this section as the ``Secretary'')
shall establish a program to award grants to States, on a
competitive basis, to assist States in providing funds to
encourage the establishment and operation of employer-
operated child care programs.
(b) Application.--To be eligible to receive a grant under
this section, a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary may require,
including an assurance that the funds required under
subsection (e) will be provided.
(c) Amount and Period of Grant.--The Secretary shall
determine the amount of a grant to a State under this section
based on the population of the State as compared to the
population of all States receiving grants under this section.
The Secretary shall make the grant for a period of 3 years.
(d) Use of Funds.--
(1) In general.--A State shall use amounts provided under a
grant awarded under this section to provide assistance to
small businesses (or consortia formed in accordance with
paragraph (3)) located in the State to enable the small
businesses (or consortia) to establish and operate child care
programs. Such assistance may include--
(A) technical assistance in the establishment of a child
care program;
(B) assistance for the startup costs related to a child
care program;
(C) assistance for the training of child care providers;
(D) scholarships for low-income wage earners;
(E) the provision of services to care for sick children or
to provide care to school-aged children;
(F) the entering into of contracts with local resource and
referral organizations or local health departments;
(G) assistance for care for children with disabilities;
(H) payment of expenses for renovation or operation of a
child care facility; or
(I) assistance for any other activity determined
appropriate by the State.
(2) Application.--In order for a small business or
consortium to be eligible to receive assistance from a State
under this section, the small business involved shall prepare
and submit to the State an application at such time, in such
manner, and containing such information as the State may
require.
(3) Preference.--
(A) In general.--In providing assistance under this
section, a State shall give priority to an applicant that
desires to form a consortium to provide child care in a
geographic area within the State where such care is not
generally available or accessible.
(B) Consortium.--For purposes of subparagraph (A), a
consortium shall be made up of 2 or more entities that shall
include small businesses and that may include large
businesses, nonprofit agencies or organizations, local
governments, or other appropriate entities.
(4) Limitations.--With respect to grant funds received
under this section, a State may not provide in excess of
$500,000 in assistance from such funds to any single
applicant.
(e) Matching Requirement.--To be eligible to receive a
grant under this section, a State shall provide assurances to
the Secretary that, with respect to the costs to be incurred
by a covered entity receiving assistance in carrying out
activities under this section, the covered entity will make
available (directly or through donations from public or
private entities) non-Federal contributions to such costs in
an amount equal to--
(1) for the first fiscal year in which the covered entity
receives such assistance, not less than 50 percent of such
costs ($1 for each $1 of assistance provided to the covered
entity under the grant);
(2) for the second fiscal year in which the covered entity
receives such assistance, not less
[[Page S1510]]
than 66\2/3\ percent of such costs ($2 for each $1 of
assistance provided to the covered entity under the grant);
and
(3) for the third fiscal year in which the covered entity
receives such assistance, not less than 75 percent of such
costs ($3 for each $1 of assistance provided to the covered
entity under the grant).
(f) Requirements of Providers.--To be eligible to receive
assistance under a grant awarded under this section, a child
care provider--
(1) who receives assistance from a State shall comply with
all applicable State and local licensing and regulatory
requirements and all applicable health and safety standards
in effect in the State; and
(2) who receives assistance from an Indian tribe or tribal
organization shall comply with all applicable regulatory
standards.
(g) State-Level Activities.--A State may not retain more
than 3 percent of the amount described in subsection (c) for
State administration and other State-level activities.
(h) Administration.--
(1) State responsibility.--A State shall have
responsibility for administering a grant awarded for the
State under this section and for monitoring covered entities
that receive assistance under such grant.
(2) Audits.--A State shall require each covered entity
receiving assistance under the grant awarded under this
section to conduct an annual audit with respect to the
activities of the covered entity. Such audits shall be
submitted to the State.
(3) Misuse of funds.--
(A) Repayment.--If the State determines, through an audit
or otherwise, that a covered entity receiving assistance
under a grant awarded under this section has misused the
assistance, the State shall notify the Secretary of the
misuse. The Secretary, upon such a notification, may seek
from such a covered entity the repayment of an amount equal
to the amount of any such misused assistance plus interest.
(B) Appeals process.--The Secretary shall by regulation
provide for an appeals process with respect to repayments
under this paragraph.
(i) Reporting Requirements.--
(1) 2-year study.--
(A) In general.--Not later than 2 years after the date on
which the Secretary first awards grants under this section,
the Secretary shall conduct a study to determine--
(i) the capacity of covered entities to meet the child care
needs of communities within States;
(ii) the kinds of consortia that are being formed with
respect to child care at the local level to carry out
programs funded under this section; and
(iii) who is using the programs funded under this section
and the income levels of such individuals.
(B) Report.--Not later than 28 months after the date on
which the Secretary first awards grants under this section,
the Secretary shall prepare and submit to the appropriate
committees of Congress a report on the results of the study
conducted in accordance with subparagraph (A).
(2) 4-year study.--
(A) In general.--Not later than 4 years after the date on
which the Secretary first awards grants under this section,
the Secretary shall conduct a study to determine the number
of child care facilities that are funded through covered
entities that received assistance through a grant awarded
under this section and that remain in operation, and the
extent to which such facilities are meeting the child care
needs of the individuals served by such facilities.
(B) Report.--Not later than 52 months after the date on
which the Secretary first awards grants under this section,
the Secretary shall prepare and submit to the appropriate
committees of Congress a report on the results of the study
conducted in accordance with subparagraph (A).
(j) Definitions.--In this section:
(1) Covered entity.--The term ``covered entity'' means a
small business or a consortium formed in accordance with
subsection (d)(3).
(2) Indian community.--The term ``Indian community'' means
a community served by an Indian tribe or tribal organization.
(3) Indian tribe; tribal organization.--The terms ``Indian
tribe'' and ``tribal organization'' have the meanings given
the terms in section 658P of the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858n).
(4) Small business.--The term ``small business'' means an
employer who employed an average of at least 2 but not more
than 50 employees on the business days during the preceding
calendar year.
(5) State.--The term ``State'' has the meaning given the
term in section 658P of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858n).
(k) Application to Indian Tribes and Tribal
Organizations.--In this section:
(1) In general.--Except as provided in subsection (f)(1),
and in paragraphs (2) and (3), the term ``State'' includes an
Indian tribe or tribal organization.
(2) Geographic references.--The term ``State'' includes an
Indian community in subsections (c) (the second and third
place the term appears), (d)(1) (the second place the term
appears), (d)(3)(A) (the second place the term appears), and
(i)(1)(A)(i).
(3) State-level activities.--The term ``State-level
activities'' includes activities at the tribal level.
(l) Authorization of Appropriations.--
(1) In general.--There is authorized to be appropriated to
carry out this section, $50,000,000 for the period of fiscal
years 2008 through 2012.
(2) Studies and administration.--With respect to the total
amount appropriated for such period in accordance with this
subsection, not more than $2,500,000 of that amount may be
used for expenditures related to conducting studies required
under, and the administration of, this section.
(m) Termination of Program.--The program established under
subsection (a) shall terminate on September 30, 2012.
SEC. 243. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED
INCOME CREDIT.
Not later than 180 days after the date of the enactment of
this Act, the Secretary of the Treasury shall report to
Congress on a study of the benefits, costs, risks, and
barriers to workers and to businesses (with a special
emphasis on small businesses) if the advance earned income
tax credit program (under section 3507 of the Internal
Revenue Code of 1986) included all recipients of the earned
income tax credit (under section 32 of such Code) and what
steps would be necessary to implement such inclusion.
SEC. 244. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.
(a) Findings.--The Senate finds that--
(1) the personal saving rate in the United States is at its
lowest point since the Great Depression, with the rate having
fallen into negative territory;
(2) the United States ranks at the bottom of the Group of
Twenty (G-20) nations in terms of net national saving rate;
(3) approximately half of all the working people of the
United States work for an employer that does not offer any
kind of retirement plan;
(4) existing savings policies enacted by Congress provide
limited incentives to save for low- and moderate-income
families; and
(5) the Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security for all the people of
the United States;
(2) it is important to begin retirement saving as early as
possible to take full advantage of the power of compound
interest; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.
SEC. 245. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.
(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.
``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--
``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
[[Page S1511]]
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.
SEC. 246. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.
Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;
``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.
SEC. 247. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.
It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.
SEC. 248. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.
It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.
SEC. 249. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.
Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment of an
employer under clause (i) and the Administrator of General
Services shall list the employer on the List of Parties
Excluded from Federal Procurement and Nonprocurement Programs
for a period of 7 years.
``(iii) Waiver.--
``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.
``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--
``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.
``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.
Mr. DURBIN. Madam President, I move to reconsider the vote.
Mrs. FEINSTEIN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GRASSLEY. Madam President, after great effort by many people, the
Senate has adopted the Fair Minimum Wage Act as amended by the Baucus
substitute amendment containing the Small Business and Work Opportunity
Act of 2007. This bipartisan small business package will help ensure
that small businesses are able to cope with an increase in the minimum
wage.
Credit must go to the dedicated members of my staff, who spent many
hours helping to put this package together. Kolan Davis, Mark Prater,
Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy Barre, Anne Freeman,
Grant Menke, Stanford Swinton, and Nick Wyatt showed great dedication
to the tasks before them.
Of course this package could not have been put together without the
efforts of Chairman Baucus and his staff. I particularly want to thank
Russ Sullivan, Bill Dauster, Pat Heck, Judy Miller, Rebecca Baxter,
Melissa Mueller, Pat Bousliman, and Ryan Abraham.
Mr. McCONNELL. Madam President, I rise to applaud the Senate for its
keen sense of balance and judgment in passing H.R. 2, a bill to
increase the minimum wage. After important input from both sides, we
have met the needs of both America's workers, who will earn a higher
wage, and America's small businesses, which fuel our economy.
The President and the Republican Congress were clear on the need to
couple an increase in the minimum wage with small-business tax relief,
and this legislation does just that. This is a testament to what we can
accomplish when we work together to move critical legislation forward.
[[Page S1512]]
The American people that keep this economy running have created more
than 7.2 million new jobs since August 2003--that's 40 months straight
of job growth. The economy added 167,000 new jobs last December,
exceeding market expectations.
Our unemployment rate is a staggeringly low 4.5 percent or as I like
to put it, our employment rate is 95.5 percent. A 4.5 percent
unemployment rate is lower than the 5.1 percent average unemployment
rate of 2005, which was already a great year.
And a low rate of 4.5 percent is lower than the average unemployment
rate of the 1960s, the 1970s, the 1980s, and even lower than the
average unemployment rate of the boom years my friends on the other
side of the aisle like to point to, the 1990s.
America's small businesses are the key to unlocking this economic
success. Small businesses employ half of all private-sector employees
and have generated between 60 to 80 percent of net new jobs annually
over the last 10 years.
Here's the bottom line. Since August 2003, the American people have
created over 7.2 million new jobs, more than the entire European Union
plus Japan combined.
So understandably, this side of the aisle had this objective in mind
regarding this bill: What is the best way to raise the minimum wage
while keeping our high-flying economy aloft?
How could we encourage economic growth and not hinder it? How could
we make sure that an increase in wages wouldn't create a decrease in
jobs?
This Senate has successfully done that, by linking an increase in the
hourly minimum wage, from $5.15 to $7.25 over slightly more than 2
years, with targeted tax and regulatory relief to small businesses, so
that the small businesses that create the lion's share of new jobs in
this country can remain competitive and employ even more people.
The President last December emphasized the need to pair minimum wage
increase legislation with just this kind of targeted tax and regulatory
relief.
In my initial speech to the Senate of the 110th Congress last month,
I said we Republicans were open and willing to get things done with
Democrats. And I said one of the first goals we should accomplish,
working together, was increasing the minimum wage while providing
relief for small businesses.
Around the same time, the distinguished majority leader struck a
similar note, pledging that when it came to a wage increase plus small-
business tax relief, ``we are going to do it.''
I am pleased to report that we have done it. An overwhelming majority
of Senators acknowledged that creating new jobs and expanding the
economy are more important than partisan wrangling.
And most importantly, we have taken care of the workers who will
benefit from a higher wage and the small businesses that grow the
economy at the same time.
I am pleased this Senate is doing that, and in doing so reinforcing a
vital precedent. I note that the last time the minimum wage was
increased, under a Republican Congress and a Democrat President, the
same precedent was set.
We look forward to working with the House of Representatives to send
a final bill to the President that will be a victory for both those who
earn the minimum wage and those who pay it.
When that happens, we will prove that the words of bipartisanship and
comity during this Senate's first days were more than empty rhetoric.
We will demonstrate that this Senate can come together to exercise
balance and judgment, and improve the lives of both the workers who
earn the minimum wage and the small businesses that employ them and
keep America's economy running.
And we will show that divided government need not be divisive.
The PRESIDING OFFICER. Under the previous order, the majority leader
is recognized.
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