Congressional Record, Volume 153 Issue 174 (Friday, November 9, 2007)

[Congressional Record Volume 153, Number 174 (Friday, November 9, 2007)]
[House]
[Pages H13428-H13462]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TEMPORARY TAX RELIEF ACT OF 2007

Mr. RANGEL. Mr. Speaker, pursuant to House Resolution 809, I call up
the bill (H.R. 3996) to amend the Internal Revenue Code of 1986 to
extend certain expiring provisions, and for other purposes, and ask for
its immediate consideration.
The Clerk read the title of the bill.
The text of the bill is as follows:

H.R. 3996

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

SECTION 1. SHORT TITLE, ETC.

(a) Short Title.--This Act may be cited as the ``Temporary
Tax Relief Act of 2007''.
(b) Reference.--Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code of
1986.
(c) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title, etc.

TITLE I--AMT RELIEF

Sec. 101. Extension of alternative minimum tax relief for nonrefundable
personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption
amount.

TITLE II--ONE-YEAR EXTENDERS

Subtitle A--Extenders Primarily Affecting Individuals

Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Treatment of certain dividends of regulated investment
companies.
Sec. 204. Parity in the application of certain limits to mental health
benefits.
Sec. 205. Qualified conservation contributions.
Sec. 206. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 207. Deduction for certain expenses of elementary and secondary
school teachers.
Sec. 208. Election to include combat pay as earned income for purposes
of earned income tax credit.
Sec. 209. Modification of mortgage revenue bonds for veterans.
Sec. 210. Distributions from retirement plans to individuals called to
active duty.
Sec. 211. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
Sec. 212. Qualified investment entities.
Sec. 213. Refundable child credit.
Sec. 214. State legislators' travel expenses away from home.

Subtitle B--Extenders Primarily Affecting Businesses

Sec. 221. Research credit.
Sec. 222. Indian employment credit.
Sec. 223. New markets tax credit.
Sec. 224. Railroad track maintenance.
Sec. 225. Fifteen-year straight-line cost recovery for qualified
leasehold improvements and qualified restaurant property.
Sec. 226. Seven-year cost recovery period for motorsports racing track
facility.
Sec. 227. Accelerated depreciation for business property on Indian
reservation.
Sec. 228. Expensing of environmental remediation costs.
Sec. 229. Deduction allowable with respect to income attributable to
domestic production activities in Puerto Rico.
Sec. 230. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 231. Extension and modification of credit to holders of qualified
zone academy bonds.
Sec. 232. Tax incentives for investment in the District of Columbia.
Sec. 233. Extension of economic development credit for American Samoa.
Sec. 234. Enhanced charitable deduction for contributions of food
inventory.
Sec. 235. Enhanced charitable deduction for contributions of book
inventory to public schools.
Sec. 236. Enhanced deduction for qualified computer contributions.
Sec. 237. Basis adjustment to stock of S corporations making charitable
contributions of property.
Sec. 238. Extension of work opportunity tax credit for Hurricane
Katrina employees.

Subtitle C--Other Extenders

Sec. 241. Disclosure for combined employment tax reporting.
Sec. 242. Disclosure of return information to apprise appropriate
officials of terrorist activities.
Sec. 243. Disclosure upon request of information relating to terrorist
activities.
Sec. 244. Disclosure of return information to carry out income
contingent repayment of student loans.
Sec. 245. Authority for undercover operations.
Sec. 246. Increase in limit on cover over of rum excise tax to Puerto
Rico and the Virgin Islands.
Sec. 247. Disclosure of return information for certain veterans
programs.

TITLE III--MORTGAGE FORGIVENESS DEBT RELIEF

Sec. 301. Discharges of indebtedness on principal residence excluded
from gross income.
Sec. 302. Long-term extension of deduction for mortgage insurance
premiums.
Sec. 303. Alternative tests for qualifying as cooperative housing
corporation.
Sec. 304. Gain from sale of principal residence allocated to
nonqualified use not excluded from income.

TITLE IV--ADMINISTRATIVE PROVISIONS

Sec. 401. Repeal of authority to enter into private debt collection
contracts.

[[Page H13429]]

Sec. 402. Delay of application of withholding requirement on certain
governmental payments for goods and services.
Sec. 403. Clarification of entitlement of Virgin Islands residents to
protections of limitations on assessment and collection
of tax.
Sec. 404. Revision of tax rules on expatriation.
Sec. 405. Repeal of suspension of certain penalties and interest.
Sec. 406. Increase in information return penalties.
Sec. 407. Unused merchandise drawback.

TITLE I--AMT RELIEF

SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR
NONREFUNDABLE PERSONAL CREDITS.

(a) In General.--Paragraph (2) of section 26(a) (relating
to special rule for taxable years 2000 through 2006) is
amended--
(1) by striking ``or 2006'' and inserting ``2006, or
2007'', and
(2) by striking ``2006'' in the heading thereof and
inserting ``2007''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.

SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX
EXEMPTION AMOUNT.

(a) In General.--Paragraph (1) of section 55(d) (relating
to exemption amount) is amended--
(1) by striking ``($62,550 in the case of taxable years
beginning in 2006)'' in subparagraph (A) and inserting
``($66,250 in the case of taxable years beginning in 2007)'',
and
(2) by striking ``($42,500 in the case of taxable years
beginning in 2006)'' in subparagraph (B) and inserting
``($44,350 in the case of taxable years beginning in 2007)''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.

TITLE II--ONE-YEAR EXTENDERS

Subtitle A--Extenders Primarily Affecting Individuals

SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.

(a) In General.--Subparagraph (I) of section 164(b)(5) is
amended by striking ``January 1, 2008'' and inserting
``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RELATED
EXPENSES.

(a) In General.--Subsection (e) of section 222 (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 203. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED
INVESTMENT COMPANIES.

(a) Interest-Related Dividends.--Subparagraph (C) of
section 871(k)(1) (defining interest-related dividend) is
amended by striking ``December 31, 2007'' and inserting
``December 31, 2008''.
(b) Short-Term Capital Gain Dividends.--Subparagraph (C) of
section 871(k)(2) (defining short-term capital gain dividend)
is amended by striking ``December 31, 2007'' and inserting
``December 31, 2008''.
(c) Effective Date.--The amendments made by this section
shall apply to dividends with respect to taxable years of
regulated investment companies beginning after December 31,
2007.

SEC. 204. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.

(a) In General.--Paragraph (3) of section 9812(f) (relating
to application of section) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to benefits for services furnished after December
31, 2007.

SEC. 205. QUALIFIED CONSERVATION CONTRIBUTIONS.

(a) In General.--Clause (vi) of section 170(b)(1)(E)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made in taxable years beginning
after December 31, 2007.

SEC. 206. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS FOR CHARITABLE PURPOSES.

(a) In General.--Subparagraph (F) of section 408(d)(8)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions made in taxable years beginning
after December 31, 2007.

SEC. 207. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND
SECONDARY SCHOOL TEACHERS.

(a) In General.--Subparagraph (D) of section 62(a)(2)
(relating to certain expenses of elementary and secondary
school teachers) is amended by striking ``or 2007'' and
inserting ``2007, or 2008''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2007.

SEC. 208. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR
PURPOSES OF EARNED INCOME TAX CREDIT.

(a) In General.--Subclause (II) of section 32(c)(2)(B)(vi)
(defining earned income) is amended by striking ``January 1,
2008'' and inserting ``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years ending after December 31, 2007.

SEC. 209. MODIFICATION OF MORTGAGE REVENUE BONDS FOR
VETERANS.

(a) Qualified Mortgage Bonds Used To Finance Residences for
Veterans Without Regard to First-Time Homebuyer
Requirement.--Subparagraph (D) of section 143(d)(2) (relating
to exceptions) is amended by striking ``January 1, 2008'' and
inserting ``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to bonds issued after December 31, 2007.

SEC. 210. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS
CALLED TO ACTIVE DUTY.

(a) In General.--Clause (iv) of section 72(t)(2)(G) is
amended by striking ``December 31, 2007'' and inserting
``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to individuals ordered or called to active duty
on or after December 31, 2007.

SEC. 211. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF
NONRESIDENTS NOT CITIZENS.

(a) In General.--Paragraph (3) of section 2105(d) (relating
to stock in a RIC) is amended by striking ``December 31,
2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to decedents dying after December 31, 2007.

SEC. 212. QUALIFIED INVESTMENT ENTITIES.

(a) In General.--Clause (ii) of section 897(h)(4)(A)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 2008.

SEC. 213. REFUNDABLE CHILD CREDIT.

(a) Modification of Threshold Amount.--Clause (i) of
section 24(d)(1)(B) is amended by inserting ``($8,500 in the
case of taxable years beginning in 2008)'' after ``$10,000''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2007.

SEC. 214. STATE LEGISLATORS' TRAVEL EXPENSES AWAY FROM HOME.

(a) In General.--Paragraph (2) of section 162(h) (relating
to legislative days) is amended by adding at the end the
following flush sentence: ``In the case of taxable years
beginning in 2008, a legislature shall be treated for
purposes of this paragraph as in session on any day in which
it is formally called into session without regard to whether
legislation was considered on such day.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2007.

Subtitle B--Extenders Primarily Affecting Businesses

SEC. 221. RESEARCH CREDIT.

(a) In General.--Subparagraph (B) of section 41(h)(1)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Conforming Amendment.--Subparagraph (D) of section
45C(b)(1) (relating to qualified clinical testing expenses)
is amended by striking ``December 31, 2007'' and inserting
``December 31, 2008''.
(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred after December 31,
2007.

SEC. 222. INDIAN EMPLOYMENT CREDIT.

(a) In General.--Subsection (f) of section 45A (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 223. NEW MARKETS TAX CREDIT.

Subparagraph (D) of section 45D(f)(1) (relating to national
limitation on amount of investments designated) is amended by
striking ``and 2008'' and inserting ``2008, and 2009''.

SEC. 224. RAILROAD TRACK MAINTENANCE.

(a) In General.--Subsection (f) of section 45G (relating to
application of section) is amended by striking ``January 1,
2008'' and inserting ``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to expenditures paid or incurred during taxable
years beginning after December 31, 2007.

SEC. 225. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY FOR
QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED
RESTAURANT PROPERTY.

(a) 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 ``January 1,
2009''.
(b) Effective Date.--The amendments made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 226. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS
RACING TRACK FACILITY.

(a) In General.--Subparagraph (D) of section 168(i)(15)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 227. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON
INDIAN RESERVATION.

(a) In General.--Paragraph (8) of section 168(j) (relating
to termination) is amended

[[Page H13430]]

by striking ``December 31, 2007'' and inserting ``December
31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 228. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

(a) In General.--Subsection (h) of section 198 (relating to
termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to expenditures paid or incurred after December
31, 2007.

SEC. 229. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME
ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES
IN PUERTO RICO.

(a) In General.--Subparagraph (C) of section 199(d)(8)
(relating to termination) is amended--
(1) by striking ``first 2 taxable years'' and inserting
``first 3 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2009''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 230. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS
TO CONTROLLING EXEMPT ORGANIZATIONS.

(a) In General.--Clause (iv) of section 512(b)(13)(E)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to payments received or accrued after December
31, 2007.

SEC. 231. EXTENSION AND MODIFICATION OF CREDIT TO HOLDERS OF
QUALIFIED ZONE ACADEMY BONDS.

(a) In General.--Subsection (e) of section 1397E (relating
to limitation on amount of bonds designated) is amended by
striking ``1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005,
2006, and 2007'' and inserting ``each of calendar years 1998
through 2008''.
(b) Modification of Arbitrage Rules.--
(1) In general.--Subsection (g) of section 1397E (relating
to special rules relating to arbitrage) is amended to read as
follows:
``(g) Special Rules Relating to Arbitrage.--
``(1) In general.--An issue shall be treated as meeting the
requirements of this subsection if the issuer satisfies the
requirements of section 148 with respect to the proceeds of
the issue.
``(2) Special rule for investments during expenditure
period.--An issue shall not be treated as failing to meet the
requirements of paragraph (1) by reason of any investment of
available project proceeds during the 5-year period described
in subsection (f)(1)(A) (including any extension of such
period under subsection (f)(2)).
``(3) Special rule for reserve funds.--An issue shall not
be treated as failing to meet the requirements of paragraph
(1) by reason of any fund which is expected to be used to
repay such issue if--
``(A) such fund is funded at a rate not more rapid than
equal annual installments,
``(B) such fund is funded in a manner that such fund will
not exceed the amount necessary to repay the issue if
invested at the maximum rate permitted under subparagraph
(C), and
``(C) the yield on such fund is not greater than the
discount rate determined under subsection (d)(3) with respect
to the issue.''.
(2) Application of available project proceeds to other
requirements.--Subsections (d)(1)(A), (d)(2)(A), (f)(1)(A),
(f)(1)(B), (f)(1)(C), and (f)(3) of section 1397E are each
amended by striking ``proceeds'' and inserting ``available
project proceeds''
(3) Available project proceeds defined.--Subsection (i) of
section 1397E (relating to definitions) is amended by adding
at the end the following new paragraph:
``(4) Available project proceeds.--The term `available
project proceeds' means--
``(A) the excess of--
``(i) the proceeds from the sale of an issue, over
``(ii) the issuance costs financed by the issue (to the
extent that such costs do not exceed 2 percent of such
proceeds), and
``(B) the proceeds from any investment of the excess
described in subparagraph (A).''.
(c) Effective Date.--
(1) Extension.--The amendment made by subsection (a) shall
apply to obligations issued after December 31, 2007.
(2) Modification of arbitrage rules.--The amendments made
by subsection (b) shall apply to obligations issued after the
date of the enactment of this Act.

SEC. 232. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF
COLUMBIA.

(a) Designation of Zone.--
(1) In general.--Subsection (f) of section 1400 is amended
by striking ``2007'' both places it appears and inserting
``2008''.
(2) Effective date.--The amendments made by this subsection
shall apply to periods beginning after December 31, 2007.
(b) Tax-Exempt Economic Development Bonds.--
(1) In general.--Subsection (b) of section 1400A is amended
by striking ``2007'' and inserting ``2008''.
(2) Effective date.--The amendment made by this subsection
shall apply to bonds issued after December 31, 2007.
(c) Zero Percent Capital Gains Rate.--
(1) In general.--Subsection (b) of section 1400B is amended
by striking ``2008'' each place it appears and inserting
``2009''.
(2) Conforming amendments.--
(A) Section 1400B(e)(2) is amended--
(i) by striking ``2012'' and inserting ``2013'', and
(ii) by striking ``2012'' in the heading thereof and
inserting ``2013''.
(B) Section 1400B(g)(2) is amended by striking ``2012'' and
inserting ``2013''.
(C) Section 1400F(d) is amended by striking ``2012'' and
inserting ``2013''.
(3) Effective dates.--
(A) Extension.--The amendments made by paragraph (1) shall
apply to acquisitions after December 31, 2007.
(B) Conforming amendments.--The amendments made by
paragraph (2) shall take effect on the date of the enactment
of this Act.
(d) First-Time Homebuyer Credit.--
(1) In general.--Subsection (i) of section 1400C is amended
by striking ``2008'' and inserting ``2009''.
(2) Effective date.--The amendment made by this subsection
shall apply to property purchased after December 31, 2007.

SEC. 233. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR
AMERICAN SAMOA.

(a) In General.--Subsection (d) of section 119 of division
A of the Tax Relief and Health Care Act of 2006 is amended--
(1) by striking ``first two taxable years'' and inserting
``first 3 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 234. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF
FOOD INVENTORY.

(a) In General.--Clause (iv) of section 170(e)(3)(C)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after December 31, 2007.

SEC. 235. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF
BOOK INVENTORY TO PUBLIC SCHOOLS.

(a) In General.--Clause (iv) of section 170(e)(3)(D)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after December 31, 2007.

SEC. 236. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER
CONTRIBUTIONS.

(a) In General.--Subparagraph (G) of section 170(e)(6)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made during taxable years
beginning after December 31, 2007.

SEC. 237. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING
CHARITABLE CONTRIBUTIONS OF PROPERTY.

(a) In General.--The last sentence of section 1367(a)(2)
(relating to decreases in basis) is amended by striking
``December 31, 2007'' and inserting ``December 31, 2008''.
(b) Technical Amendment Related to Section 1203 of the
Pension Protection Act of 2006.--Subsection (d) of section
1366 is amended by adding at the end the following new
paragraph:
``(4) Application of limitation on charitable
contributions.--In the case of any charitable contribution of
property to which the second sentence of section 1367(a)(2)
applies, paragraph (1) shall not apply to the extent of the
excess (if any) of--
``(A) the shareholder's pro rata share of such
contribution, over
``(B) the shareholder's pro rata share of the adjusted
basis of such property.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
made in taxable years beginning after December 31, 2007.
(2) Technical amendment.--The amendment made by subsection
(b)shall take effect as if included in the provision of the
Pension Protection Act of 2006 to which it relates.

SEC. 238. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR
HURRICANE KATRINA EMPLOYEES.

(a) In General.--Paragraph (1) of section 201(b) of the
Katrina Emergency Tax Relief Act of 2005 is amended by
striking ``2-year'' and inserting ``3-year''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to individuals hired after August 27, 2007.

Subtitle C--Other Extenders

SEC. 241. DISCLOSURE FOR COMBINED EMPLOYMENT TAX REPORTING.

(a) In General.--Subparagraph (B) of section 6103(d)(5)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures after December 31, 2007.

SEC. 242. DISCLOSURE OF RETURN INFORMATION TO APPRISE
APPROPRIATE OFFICIALS OF TERRORIST ACTIVITIES.

(a) In General.--Clause (iv) of section 6103(i)(3)(C)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures after December 31, 2007.

[[Page H13431]]

SEC. 243. DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO
TERRORIST ACTIVITIES.

(a) In General.--Subparagraph (E) of section 6103(i)(7)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures after December 31, 2007.

SEC. 244. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.

(a) In General.--Subparagraph (D) of section 6103(l)(13)
(relating to termination) is amended by striking ``December
31, 2007'' and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to requests made after December 31, 2007.

SEC. 245. AUTHORITY FOR UNDERCOVER OPERATIONS.

(a) In General.--Paragraph (6) of section 7608(c) (relating
to application of section) is amended by striking ``January
1, 2008'' each place it appears and inserting ``January 1,
2009''.
(b) Effective Date.--The amendment made by this section
shall take effect on January 1, 2008.

SEC. 246. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX
TO PUERTO RICO AND THE VIRGIN ISLANDS.

(a) In General.--Paragraph (1) of section 7652(f) is
amended by striking ``January 1, 2008'' and inserting
``January 1, 2009''.
(b) Effective Date.--The amendment made by this section
shall apply to distilled spirits brought into the United
States after December 31, 2007.

SEC. 247. DISCLOSURE OF RETURN INFORMATION FOR CERTAIN
VETERANS PROGRAMS.

(a) In General.--The last sentence of paragraph (7) of
section 6103(l) is amended by striking ``September 30, 2008''
and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to requests made after September 30, 2008.

TITLE III--MORTGAGE FORGIVENESS DEBT RELIEF

SEC. 301. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL RESIDENCE
EXCLUDED FROM GROSS INCOME.

(a) In General.--Paragraph (1) of section 108(a) is amended
by striking ``or'' at the end of subparagraph (C), by
striking the period at the end of subparagraph (D) and
inserting ``, or'', and by inserting after subparagraph (D)
the following new subparagraph:
``(E) the indebtedness discharged is qualified principal
residence indebtedness.''.
(b) Special Rules Relating to Qualified Principal Residence
Indebtedness.--Section 108 is amended by adding at the end
the following new subsection:
``(h) Special Rules Relating to Qualified Principal
Residence Indebtedness.--
``(1) Basis reduction.--The amount excluded from gross
income by reason of subsection (a)(1)(E) shall be applied to
reduce (but not below zero) the basis of the principal
residence of the taxpayer.
``(2) Qualified principal residence indebtedness.--For
purposes of this section, the term `qualified principal
residence indebtedness' means acquisition indebtedness
(within the meaning of section 163(h)(3)(B), applied by
substituting `$2,000,000 ($1,000,000' for `$1,000,000
($500,000' in clause (ii) thereof) with respect to the
principal residence of the taxpayer.
``(3) Exception for certain discharges not related to
taxpayer's financial condition.--Subsection (a)(1)(E) shall
not apply to the discharge of a loan if the discharge is on
account of services performed for the lender or any other
factor not directly related to a decline in the value of the
residence or to the financial condition of the taxpayer.
``(4) Ordering rule.--If any loan is discharged, in whole
or in part, and only a portion of such loan is qualified
principal residence indebtedness, subsection (a)(1)(E) shall
apply only to so much of the amount discharged as exceeds the
amount of the loan (as determined immediately before such
discharge) which is not qualified principal residence
indebtedness.
``(5) Principal residence.--For purposes of this
subsection, the term `principal residence' has the same
meaning as when used in section 121.''.
(c) Coordination.--
(1) Subparagraph (A) of section 108(a)(2) is amended by
striking ``and (D)'' and inserting ``(D), and (E)''.
(2) Paragraph (2) of section 108(a) is amended by adding at
the end the following new subparagraph:
``(C) Principal residence exclusion takes precedence over
insolvency exclusion unless elected otherwise.--Paragraph
(1)(B) shall not apply to a discharge to which paragraph
(1)(E) applies unless the taxpayer elects to apply paragraph
(1)(B) in lieu of paragraph (1)(E).''.
(d) Effective Date.--The amendments made by this section
shall apply to discharges of indebtedness on or after January
1, 2007.

SEC. 302. LONG-TERM EXTENSION OF DEDUCTION FOR MORTGAGE
INSURANCE PREMIUMS.

(a) In General.--Subparagraph (E) of section 163(h)(3)
(relating to mortgage insurance premiums treated as interest)
is amended by striking clauses (iii) and (iv) and inserting
the following new clause:
``(iii) Application.--Clause (i) shall not apply with
respect to any mortgage insurance contract issued before
January 1, 2007, or after December 31, 2014.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to contracts issued after December 31, 2006.

SEC. 303. ALTERNATIVE TESTS FOR QUALIFYING AS COOPERATIVE
HOUSING CORPORATION.

(a) In General.--Subparagraph (D) of section 216(b)(1)
(defining cooperative housing corporation) is amended to read
as follows:
``(D) meeting 1 or more of the following requirements for
the taxable year in which the taxes and interest described in
subsection (a) are paid or incurred:
``(i) 80 percent or more of the corporation's gross income
for such taxable year is derived from tenant-stockholders.
``(ii) At all times during such taxable year, 80 percent or
more of the total square footage of the corporation's
property is used or available for use by the tenant-
stockholders for residential purposes or purposes ancillary
to such residential use.
``(iii) 90 percent or more of the expenditures of the
corporation paid or incurred during such taxable year are
paid or incurred for the acquisition, construction,
management, maintenance, or care of the corporation's
property for the benefit of the tenant-stockholders.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.

SEC. 304. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO
NONQUALIFIED USE NOT EXCLUDED FROM INCOME.

(a) In General.--Subsection (b) of section 121 (relating to
limitations) is amended by adding at the end the following
new paragraph:
``(4) Exclusion of gain allocated to nonqualified use.--
``(A) In general.--Subsection (a) shall not apply to so
much of the gain from the sale or exchange of property as is
allocated to periods of nonqualified use.
``(B) Gain allocated to periods of nonqualified use.--For
purposes of subparagraph (A), gain shall be allocated to
periods of nonqualified use based on the ratio which--
``(i) the aggregate periods of nonqualified use during the
period such property was owned by the taxpayer, bears to
``(ii) the period such property was owned by the taxpayer.
``(C) Period of nonqualified use.--For purposes of this
paragraph--
``(i) In general.--The term `period of nonqualified use'
means any period (other than the portion of any period
preceding January 1, 2008) during which the property is not
used as the principal residence of the taxpayer or the
taxpayer's spouse or former spouse.
``(ii) Exceptions.--The term `period of nonqualified use'
does not include--

``(III) any other period of temporary absence (not to
exceed an aggregate period of 2 years) due to change of
employment, health conditions, or such other unforeseen
circumstances as may be specified by the Secretary.

``(D) Coordination with recognition of gain attributable to
depreciation.--For purposes of this paragraph--
``(i) subparagraph (A) shall be applied after the
application of subsection (d)(6), and
``(ii) subparagraph (B) shall be applied without regard to
any gain to which subsection (d)(6) applies.''.
(b) Effective Date.--The amendment made by this section
shall apply to sales and exchanges after December 31, 2007.

TITLE IV--ADMINISTRATIVE PROVISIONS

SEC. 401. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT
COLLECTION CONTRACTS.

(a) In General.--Subchapter A of chapter 64 is amended by
striking section 6306.
(b) Conforming Amendments.--
(1) Subchapter B of chapter 76 is amended by striking
section 7433A.
(2) Section 7811 is amended by striking subsection (g).
(3) Section 1203 of the Internal Revenue Service
Restructuring Act of 1998 is amended by striking subsection
(e).
(4) The table of sections for subchapter A of chapter 64 is
amended by striking the item relating to section 6306.
(5) The table of sections for subchapter B of chapter 76 is
amended by striking the item relating to section 7433A.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Exception for existing contracts, etc.--The amendments
made by this section shall not apply to any contract which
was entered into before July 18, 2007, and is not renewed or
extended on or after such date.
(3) Unauthorized contracts and extensions treated as
void.--Any qualified tax collection contract (as defined in
section 6306

[[Page H13432]]

of the Internal Revenue Code of 1986, as in effect before its
repeal) which is entered into on or after July 18, 2007, and
any extension or renewal on or after such date of any
qualified tax collection contract (as so defined) shall be
void.

SEC. 402. DELAY OF APPLICATION OF WITHHOLDING REQUIREMENT ON
CERTAIN GOVERNMENTAL PAYMENTS FOR GOODS AND
SERVICES.

(a) In General.--Subsection (b) of section 511 of the Tax
Increase Prevention and Reconciliation Act of 2005 is amended
by striking ``December 31, 2010'' and inserting ``December
31, 2011''.
(b) Report to Congress.--Not later than 6 months after the
date of the enactment of this Act, the Secretary of the
Treasury shall submit to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of
the Senate a report with respect to the withholding
requirements of section 3402(t) of the Internal Revenue Code
of 1986, including a detailed analysis of--
(1) the problems, if any, which are anticipated in
administering and complying with such requirements,
(2) the burdens, if any, that such requirements will place
on governments and businesses (taking into account such
mechanisms as may be necessary to administer such
requirements), and
(3) the application of such requirements to small
expenditures for services and goods by governments.

SEC. 403. CLARIFICATION OF ENTITLEMENT OF VIRGIN ISLANDS
RESIDENTS TO PROTECTIONS OF LIMITATIONS ON
ASSESSMENT AND COLLECTION OF TAX.

(a) In General.--Subsection (c) of section 932 (relating to
treatment of Virgin Islands residents) is amended by adding
at the end the following new paragraph:
``(5) Treatment of income tax return filed with virgin
islands.--An income tax return filed with the Virgin Islands
by an individual claiming to be described in paragraph (1)
for the taxable year shall be treated for purposes of
subtitle F in the same manner as if such return were an
income tax return filed with the United States for such
taxable year. The preceding sentence shall not apply where
such return is false or fraudulent with the intent to evade
tax or otherwise is a willful attempt in any manner to defeat
or evade tax.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after 1986.

SEC. 404. REVISION OF TAX RULES ON EXPATRIATION.

(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.--All property of a covered expatriate
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, determined without
regard to paragraph (3).
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which would (but for this
paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced (but
not below zero) by $600,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2008, the dollar amount in
subparagraph (A) shall be increased by an amount equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.

``(ii) Rounding.--If any amount as adjusted under clause
(i) is not a multiple of $1,000, such amount shall be rounded
to the nearest multiple of $1,000.
``(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 time for payment of the
additional tax attributable to such property shall be
extended 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 extension.--The due date for payment
of tax may not be extended 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 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 which is furnished to, and accepted by,
the Secretary, which is conditioned on the payment of tax
(and interest thereon), and which meets the requirements of
section 6325, or
``(ii) it is another form of security for such payment
(including letters of credit) that meets such requirements as
the Secretary may prescribe.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer makes an irrevocable
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.
``(7) Interest.--For purposes of section 6601, the last
date for the payment of tax shall be determined without
regard to the election under this subsection.
``(c) Exception for Certain Property.--Subsection (a) shall
not apply to--
``(1) any deferred compensation item (as defined in
subsection (d)(4)),
``(2) any specified tax deferred account (as defined in
subsection (e)(2)), and
``(3) any interest in a nongrantor trust (as defined in
subsection (f)(3)).
``(d) Treatment of Deferred Compensation Items.--
``(1) Withholding on eligible deferred compensation
items.--
``(A) In general.--In the case of any eligible deferred
compensation item, the payor shall deduct and withhold from
any taxable payment to a covered expatriate with respect to
such item a tax equal to 30 percent thereof.
``(B) Taxable payment.--For purposes of subparagraph (A),
the term `taxable payment' means with respect to a covered
expatriate any payment to the extent it would be includible
in the gross income of the covered expatriate if such
expatriate continued to be subject to tax as a citizen or
resident of the United States. A deferred compensation item
shall be taken into account as a payment under the preceding
sentence when such item would be so includible.
``(2) Other deferred compensation items.--In the case of
any deferred compensation item which is not an eligible
deferred compensation item--
``(A)(i) with respect to any deferred compensation item to
which clause (ii) does not apply, an amount equal to the
present value of the covered expatriate's accrued benefit
shall be treated as having been received by such individual
on the day before the expatriation date as a distribution
under the plan, and
``(ii) with respect to any deferred compensation item
referred to in paragraph (4)(D), the rights of the covered
expatriate to such item shall be treated as becoming
transferable and not subject to a substantial risk of
forfeiture on the day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the plan to reflect such treatment.
``(3) Eligible deferred compensation items.--For purposes
of this subsection, the term `eligible deferred compensation
item' means any deferred compensation item with respect to
which--
``(A) the payor of such item is--
``(i) a United States person, or
``(ii) a person who is not a United States person but who
elects to be treated as a United States person for purposes
of paragraph (1) and meets such requirements as the Secretary
may provide to ensure that the payor will meet the
requirements of paragraph (1), and
``(B) the covered expatriate--
``(i) notifies the payor of his status as a covered
expatriate, and
``(ii) makes an irrevocable waiver of any right to claim
any reduction under any treaty with the United States in
withholding on such item.
``(4) Deferred compensation item.--For purposes of this
subsection, the term `deferred compensation item' means--
``(A) any interest in a plan or arrangement described in
section 219(g)(5),
``(B) any interest in a foreign pension plan or similar
retirement arrangement or program,

[[Page H13433]]

``(C) any item of deferred compensation, and
``(D) any property, or right to property, which the
individual is entitled to receive in connection with the
performance of services to the extent not previously taken
into account under section 83 or in accordance with section
83.
``(5) Exception.--Paragraphs (1) and (2) shall not apply to
any deferred compensation item which is attributable to
services performed outside the United States while the
covered expatriate was not a citizen or resident of the
United States.
``(6) Special rules.--
``(A) Application of withholding rules.--Rules similar to
the rules of subchapter B of chapter 3 shall apply for
purposes of this subsection.
``(B) Application of tax.--Any item subject to the
withholding tax imposed under paragraph (1) shall be subject
to tax under section 871.
``(C) Coordination with other withholding requirements.--
Any item subject to withholding under paragraph (1) shall not
be subject to withholding under section 1441 or chapter 24.
``(e) Treatment of Specified Tax Deferred Accounts.--
``(1) Account treated as distributed.--In the case of any
interest in a specified tax deferred account held by a
covered expatriate on the day before the expatriation date--
``(A) the covered expatriate shall be treated as receiving
a distribution of his entire interest in such account on the
day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the account to reflect such treatment.
``(2) Specified tax deferred account.--For purposes of
paragraph (1), the term `specified tax deferred account'
means an individual retirement plan (as defined in section
7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition
program (as defined in section 529), a Coverdell education
savings account (as defined in section 530), a health savings
account (as defined in section 223), and an Archer MSA (as
defined in section 220).
``(f) Special Rules for Nongrantor Trusts.--
``(1) In general.--In the case of a distribution (directly
or indirectly) of any property from a nongrantor trust to a
covered expatriate--
``(A) the trustee shall deduct and withhold from such
distribution an amount equal to 30 percent of the taxable
portion of the distribution, and
``(B) if the fair market value of such property exceeds its
adjusted basis in the hands of the trust, gain shall be
recognized to the trust as if such property were sold to the
expatriate at its fair market value.
``(2) Taxable portion.--For purposes of this subsection,
the term `taxable portion' means, with respect to any
distribution, that portion of the distribution which would be
includible in the gross income of the covered expatriate if
such expatriate continued to be subject to tax as a citizen
or resident of the United States.
``(3) Nongrantor trust.--For purposes of this subsection,
the term `nongrantor trust' means the portion of any trust
that the individual is not considered the owner of under
subpart E of part I of subchapter J. The determination under
the preceding sentence shall be made immediately before the
expatriation date.
``(4) Special rules relating to withholding.--For purposes
of this subsection--
``(A) rules similar to the rules of subsection (d)(6) shall
apply, and
``(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty with
the United States in withholding on any distribution to which
paragraph (1)(A) applies.
``(5) Application.--This subsection shall apply to a
nongrantor trust only if the covered expatriate was a
beneficiary of the trust on the day before the expatriation
date.
``(g) Definitions and Special Rules Relating to
Expatriation.--For purposes of this section--
``(1) Covered expatriate.--
``(A) In general.--The term `covered expatriate' means an
expatriate who meets the requirements of subparagraph (A),
(B), or (C) of section 877(a)(2).
``(B) Exceptions.--An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of
section 877(a)(2) if--
``(i) 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 been a resident of the United States (as defined
in section 7701(b)(1)(A)(ii)) for not more than 10 taxable
years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or

``(ii)(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 10 taxable years
before the date of relinquishment.
``(C) Covered expatriates also subject to tax as citizens
or residents.--In the case of any covered expatriate who is
subject to tax as a citizen or resident of the United States
for any period beginning after the expatriation date, such
individual shall not be treated as a covered expatriate
during such period for purposes of subsections (d)(1) and (f)
and section 2801.
``(2) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes his
citizenship, and
``(B) any long-term resident of the United States who
ceases to be a lawful permanent resident of the United States
(within the meaning of section 7701(b)(6)).
``(3) 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 on which the individual ceases to be a
lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).
``(4) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of--
``(A) the date the individual renounces his 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.
``(5) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(6) Early distribution tax.--The term `early distribution
tax' means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
``(h) Other Rules.--
``(1) Termination of deferrals, etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(A) any time period for acquiring property which would
result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall
terminate on the day before the expatriation date, and
``(B) 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.
``(2) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning of
section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(3) Coordination with section 684.--If the expatriation
of any individual would result in the recognition of gain
under section 684, this section shall be applied after the
application of section 684.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Tax on Gifts and Bequests Received by United States
Citizens and Residents From Expatriates.--
(1) In general.--Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:

``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

``SEC. 2801. IMPOSITION OF TAX.

[[Page H13434]]

(a) on any covered gift or bequest shall be reduced by the
amount of any gift or estate tax paid to a foreign country
with respect to such covered gift or bequest.
``(e) Covered Gift or Bequest.--
``(1) In general.--For purposes of this chapter, the term
`covered gift or bequest' means--
``(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition, is a
covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately before
such death, was a covered expatriate.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Such term shall not include--
``(A) any property shown on a timely filed return of tax
imposed by chapter 12 which is a taxable gift by the covered
expatriate, and
``(B) any property 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.
``(3) Transfers in trust.--
``(A) Domestic trusts.--In the case of a covered gift or
bequest made to a domestic trust--
``(i) subsection (a) shall apply in the same manner as if
such trust were a United States citizen, and
``(ii) the tax imposed by subsection (a) on such gift or
bequest shall be paid by such trust.
``(B) Foreign trusts.--
``(i) In general.--In the case of a covered gift or bequest
made to a foreign trust, subsection (a) shall apply to any
distribution attributable to such gift or bequest from such
trust (whether from income or corpus) to a United States
citizen or resident in the same manner as if such
distribution were a covered gift or bequest.
``(ii) Deduction for tax paid by recipient.--There shall be
allowed as a deduction under section 164 the amount of tax
imposed by this section which is paid or accrued by a United
States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on
the portion of such distribution which is included in the
gross income of such citizen or resident.
``(iii) Election to be treated as domestic trust.--Solely
for purposes of this section, a foreign trust may elect to be
treated as a domestic trust. Such an election may be revoked
with the consent of the Secretary.
``(f) Covered Expatriate.--For purposes of this section,
the term `covered expatriate' has the meaning given to such
term by section 877A(g)(1).''.
(2) Clerical amendment.--The table of chapters for subtitle
B is amended by inserting after the item relating to chapter
14 the following new item:

``Chapter 15. Gifts and Bequests From Expatriates.''.

(c) Definition of Termination of United States
Citizenship.--
(1) In general.--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(g)(4).
``(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.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 877(e) is amended to read as
follows:
``(1) In general.--Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
shall be treated for purposes of this section and sections
2107, 2501, and 6039G in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.''.
(B) Paragraph (6) of section 7701(b) is amended by adding
at the end the following flush sentence:
``An individual shall cease to be treated as a lawful
permanent resident of the United States if such individual
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, does not waive the benefits
of such treaty applicable to residents of the foreign
country, and notifies the Secretary of the commencement of
such treatment.''.
(C) Section 7701 is amended by striking subsection (n) and
by redesignating subsections (o) and (p) as subsections (n)
and (o), respectively.
(d) Information Returns.--Section 6039G is amended--
(1) by inserting ``or 877A'' after ``section 877(b)'' in
subsection (a), and
(2) by inserting ``or 877A'' after ``section 877(a)'' in
subsection (d).
(e) 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.''.
(f) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(as defined in section 877A(g) of the Internal Revenue Code
of 1986, as added by this section) whose expatriation date
(as so defined) is on or after the date of the enactment of
this Act.
(2) Gifts and bequests.--Chapter 15 of the Internal Revenue
Code of 1986 (as added by subsection (b)) shall apply to
covered gifts and bequests (as defined in section 2801 of
such Code, as so added) received on or after the date of the
enactment of this Act, regardless of when the transferor
expatriated.

SEC. 405. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND
INTEREST.

(a) In General.--Section 6404 is amended by striking
subsection (g) and by redesignating subsection (h) as
subsection (g).
(b) Effective Date.--The amendment made by subsection (a)
shall apply to notices provided by the Secretary of the
Treasury, or his delegate, after the date which is 6 months
after the date of the enactment of the Small Business and
Work Opportunity Tax Act of 2007.

SEC. 406. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure To File Correct Information Returns.--
(1) In general.--Subsections (a)(1), (b)(1)(A), and
(b)(2)(A) of section 6721 are each amended by striking
``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a)(1),
(d)(1)(A), and (e)(3)(A) of section 6721 are each amended by
striking ``$250,000'' and inserting ``$600,000''.
(b) Reduction Where Correction Within 30 Days.--
(1) In general.--Subparagraph (A) of section 6721(b)(1) is
amended by striking ``$15'' and inserting ``$25''.
(2) Aggregate annual limitation.--Subsections (b)(1)(B) and
(d)(1)(B) of section 6721 are each amended by striking
``$75,000'' and inserting ``$200,000''.
(c) Reduction Where Correction on or Before August 1.--
(1) In general.--Subparagraph (A) of section 6721(b)(2) is
amended by striking ``$30'' and inserting ``$60''.
(2) Aggregate annual limitation.--Subsections (b)(2)(B) and
(d)(1)(C) of section 6721 are each amended by striking
``$150,000'' and inserting ``$400,000''.
(d) Aggregate Annual Limitations for Persons With Gross
Receipts of Not More Than $5,000,000.--Paragraph (1) of
section 6721(d) is amended--
(1) by striking ``$100,000'' in subparagraph (A) and
inserting ``$250,000'',
(2) by striking ``$25,000'' in subparagraph (B) and
inserting ``$75,000'', and
(3) by striking ``$50,000'' in subparagraph (C) and
inserting ``$150,000''.
(e) Penalty in Case of Intentional Disregard.--Paragraph
(2) of section 6721(e) is amended by striking ``$100'' and
inserting ``$250''.
(f) Failure To Furnish Correct Payee Statements.--
(1) In general.--Subsection (a) of section 6722 is amended
by striking ``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a) and
(c)(2)(A) of section 6722 are each amended by striking
``$100,000'' and inserting ``$600,000''.
(3) Penalty in case of intentional disregard.--Paragraph
(1) of section 6722(c) is amended by striking ``$100'' and
inserting ``$250''.
(g) Failure To Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$100'', and
(2) by striking ``$100,000'' and inserting ``$600,000''.
(h) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.

SEC. 407. UNUSED MERCHANDISE DRAWBACK.

(a) In General.--Section 313(j)(2) of the Tariff Act of
1930 (19 U.S.C. 1313(j)(2)) is amended by adding at the end
the following: ``For purposes of subparagraph (A) of this
paragraph, wine of the same color shall be deemed to be
commercially interchangeable.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to House Resolution 809, the
amendment in the nature of a substitute printed in the bill is adopted
and the bill, as amended, is considered read.
The text of the bill, as amended, is as follows:

H.R. 3996

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

SECTION 1. SHORT TITLE, ETC.

Sec. 1. Short title, etc.

[[Page H13435]]

TITLE I--AMT RELIEF

Sec. 101. Extension of alternative minimum tax relief for nonrefundable
personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption
amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with
long-term unused credits for prior year minimum tax
liability, etc.

TITLE II--ADDITIONAL INDIVIDUAL TAX RELIEF

Sec. 201. Refundable child credit.
Sec. 202. Additional standard deduction for real property taxes for
nonitemizers.

TITLE III--ONE-YEAR EXTENDERS

Subtitle A--Extenders Primarily Affecting Individuals

Sec. 301. Deduction for State and local sales taxes.
Sec. 302. Deduction of qualified tuition and related expenses.
Sec. 303. Treatment of certain dividends of regulated investment
companies.
Sec. 304. Parity in the application of certain limits to mental health
benefits.
Sec. 305. Qualified conservation contributions.
Sec. 306. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 307. Deduction for certain expenses of elementary and secondary
school teachers.
Sec. 308. Election to include combat pay as earned income for purposes
of earned income tax credit.
Sec. 309. Modification of mortgage revenue bonds for veterans.
Sec. 310. Distributions from retirement plans to individuals called to
active duty.
Sec. 311. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
Sec. 312. Qualified investment entities.
Sec. 313. State legislators' travel expenses away from home.

Subtitle B--Extenders Primarily Affecting Businesses

Sec. 321. Research credit.
Sec. 322. Indian employment credit.
Sec. 323. New markets tax credit.
Sec. 324. Railroad track maintenance.
Sec. 325. Fifteen-year straight-line cost recovery for qualified
leasehold improvements and qualified restaurant property.
Sec. 326. Seven-year cost recovery period for motorsports racing track
facility.
Sec. 327. Accelerated depreciation for business property on Indian
reservation.
Sec. 328. Expensing of environmental remediation costs.
Sec. 329. Deduction allowable with respect to income attributable to
domestic production activities in Puerto Rico.
Sec. 330. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 331. Extension and modification of credit to holders of qualified
zone academy bonds.
Sec. 332. Tax incentives for investment in the District of Columbia.
Sec. 333. Extension of economic development credit for American Samoa.
Sec. 334. Enhanced charitable deduction for contributions of food
inventory.
Sec. 335. Enhanced charitable deduction for contributions of book
inventory to public schools.
Sec. 336. Enhanced deduction for qualified computer contributions.
Sec. 337. Basis adjustment to stock of S corporations making charitable
contributions of property.
Sec. 338. Extension of work opportunity tax credit for Hurricane
Katrina employees.

Subtitle C--Other Extenders

Sec. 341. Disclosure for combined employment tax reporting.
Sec. 342. Disclosure of return information to apprise appropriate
officials of terrorist activities.
Sec. 343. Disclosure upon request of information relating to terrorist
activities.
Sec. 344. Disclosure of return information to carry out income
contingent repayment of student loans.
Sec. 345. Authority for undercover operations.
Sec. 346. Increase in limit on cover over of rum excise tax to Puerto
Rico and the Virgin Islands.
Sec. 347. Disclosure of return information for certain veterans
programs.

TITLE IV--MORTGAGE FORGIVENESS DEBT RELIEF

Sec. 401. Discharges of indebtedness on principal residence excluded
from gross income.
Sec. 402. Long-term extension of deduction for mortgage insurance
premiums.
Sec. 403. Alternative tests for qualifying as cooperative housing
corporation.
Sec. 404. Gain from sale of principal residence allocated to
nonqualified use not excluded from income.

TITLE V--ADMINISTRATIVE PROVISIONS

Sec. 501. Repeal of authority to enter into private debt collection
contracts.
Sec. 502. Delay of application of withholding requirement on certain
governmental payments for goods and services.
Sec. 503. Clarification of entitlement of Virgin Islands residents to
protections of limitations on assessment and collection
of tax.
Sec. 504. Revision of tax rules on expatriation.
Sec. 505. Repeal of suspension of certain penalties and interest.
Sec. 506. Unused merchandise drawback.

TITLE VI--REVENUE PROVISIONS

Subtitle A--Nonqualified Deferred Compensation From Certain Tax
Indifferent Parties

Sec. 601. Nonqualified deferred compensation from certain tax
indifferent parties.

Subtitle B--Provisions Related to Certain Investment Partnerships

Sec. 611. Income of partners for performing investment management
services treated as ordinary income received for
performance of services.
Sec. 612. Indebtedness incurred by a partnership in acquiring
securities and commodities not treated as acquisition
indebtedness for organizations which are partners with
limited liability.
Sec. 613. Application to partnership interests and tax sharing
agreements of rule treating certain gain on sales between
related persons as ordinary income.

Subtitle C--Other Provisions

Sec. 621. Delay in application of worldwide allocation of interest.
Sec. 622. Broker reporting of customer's basis in securities
transactions.
Sec. 623. Modification of penalty for failure to file partnership
returns.
Sec. 624. Penalty for failure to file S corporation returns.
Sec. 625. Time for payment of corporate estimated taxes.

TITLE I--AMT RELIEF

SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR
NONREFUNDABLE PERSONAL CREDITS.

SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX
EXEMPTION AMOUNT.

SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR
INDIVIDUALS WITH LONG-TERM UNUSED CREDITS FOR
PRIOR YEAR MINIMUM TAX LIABILITY, ETC.

(a) In General.--Paragraph (2) of section 53(e) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(2) AMT refundable credit amount.--For purposes of
paragraph (1), the term `AMT refundable credit amount' means,
with respect to any taxable year, the amount (not in excess
of the long-term unused minimum tax credit for such taxable
year) equal to the greater of--
``(A) 50 percent of the long-term unused minimum tax credit
for such taxable year, or
``(B) the amount (if any) of the AMT refundable credit
amount determined under this paragraph for the taxpayer's
preceding taxable year.''.
(b) Treatment of Certain Underpayments, Interest, and
Penalties Attributable to the Treatment of Incentive Stock
Options.--Section 53 of such Code is amended by adding at the
end the following new subsection:
``(f) Treatment of Certain Underpayments, Interest, and
Penalties Attributable to the Treatment of Incentive Stock
Options.--
``(1) Abatement.--Any underpayment of tax outstanding on
the date of the enactment of this subsection which is
attributable to the application of section 56(b)(3) for any
taxable year ending before January 1, 2007 (and any interest
or penalty with respect to such underpayment which is
outstanding on such date of enactment), is hereby abated. No
credit shall be allowed under this section with respect to
any amount abated under this paragraph.
``(2) Increase in credit for certain interest and penalties
already paid.--Any interest or penalty paid before the date
of the enactment of this subsection which would (but for such
payment) have been abated under paragraph (1) shall be
treated for purposes of this section as an amount of adjusted
net minimum tax imposed for the taxable year of the
underpayment to which such interest or penalty relates.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply to taxable years
beginning after December 31, 2006.
(2) Abatement.--Section 53(f)(1) of the Internal Revenue
Code of 1986, as added by subsection (b), shall take effect
on the date of the enactment of this Act.

[[Page H13436]]

TITLE II--ADDITIONAL INDIVIDUAL TAX RELIEF

SEC. 201. REFUNDABLE CHILD CREDIT.

SEC. 202. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY
TAXES FOR NONITEMIZERS.

(a) In General.--Section 63(c)(1) (defining standard
deduction) is amended by striking ``and'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, and'', and by adding at
the end the following new subparagraph:
``(C) in the case of any taxable year beginning in 2008,
the real property tax deduction.''.
(b) Definition.--Section 63(c) is amended by adding at the
end the following new paragraph:
``(8) Real property tax deduction.--For purposes of
paragraph (1), the real property tax deduction is so much of
the amount of State and local real property taxes (within the
meaning of section 164) paid or accrued by the taxpayer
during the taxable year which do not exceed $350 ($700 in the
case of a joint return).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

TITLE III--ONE-YEAR EXTENDERS

Subtitle A--Extenders Primarily Affecting Individuals

SEC. 301. DEDUCTION FOR STATE AND LOCAL SALES TAXES.

SEC. 302. DEDUCTION OF QUALIFIED TUITION AND RELATED
EXPENSES.

SEC. 303. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED
INVESTMENT COMPANIES.

SEC. 304. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO
MENTAL HEALTH BENEFITS.

SEC. 305. QUALIFIED CONSERVATION CONTRIBUTIONS.

SEC. 306. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS FOR CHARITABLE PURPOSES.

SEC. 307. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND
SECONDARY SCHOOL TEACHERS.

SEC. 308. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR
PURPOSES OF EARNED INCOME TAX CREDIT.

SEC. 309. MODIFICATION OF MORTGAGE REVENUE BONDS FOR
VETERANS.

SEC. 310. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS
CALLED TO ACTIVE DUTY.

SEC. 311. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF
NONRESIDENTS NOT CITIZENS.

SEC. 312. QUALIFIED INVESTMENT ENTITIES.

SEC. 313. STATE LEGISLATORS' TRAVEL EXPENSES AWAY FROM HOME.

Subtitle B--Extenders Primarily Affecting Businesses

SEC. 321. RESEARCH CREDIT.

SEC. 322. INDIAN EMPLOYMENT CREDIT.

SEC. 323. NEW MARKETS TAX CREDIT.

Subparagraph (D) of section 45D(f)(1) (relating to national
limitation on amount of investments designated) is amended by
striking ``and 2008'' and inserting ``2008, and 2009''.

SEC. 324. RAILROAD TRACK MAINTENANCE.

SEC. 325. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY FOR
QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED
RESTAURANT PROPERTY.

SEC. 326. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS
RACING TRACK FACILITY.

SEC. 327. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON
INDIAN RESERVATION.

(a) In General.--Paragraph (8) of section 168(j) (relating
to termination) is amended by striking ``December 31, 2007''
and inserting ``December 31, 2008''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2007.

SEC. 328. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

SEC. 329. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME
ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES
IN PUERTO RICO.

(a) In General.--Subparagraph (C) of section 199(d)(8)
(relating to termination) is amended--

[[Page H13437]]

(1) by striking ``first 2 taxable years'' and inserting
``first 3 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2009''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

SEC. 330. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS
TO CONTROLLING EXEMPT ORGANIZATIONS.

SEC. 331. EXTENSION AND MODIFICATION OF CREDIT TO HOLDERS OF
QUALIFIED ZONE ACADEMY BONDS.

(a) In General.--Subsection (e) of section 1397E (relating
to limitation on amount of bonds designated) is amended by
striking ``1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005,
2006, and 2007'' and inserting ``each of calendar years 1998
through 2008''.
(b) Modification of Arbitrage Rules.--
(1) In general.--Subsection (g) of section 1397E (relating
to special rules relating to arbitrage) is amended to read as
follows:
``(g) Special Rules Relating to Arbitrage.--
``(1) In general.--An issue shall be treated as meeting the
requirements of this subsection if the issuer satisfies the
requirements of section 148 with respect to the proceeds of
the issue.
``(2) Special rule for investments during expenditure
period.--An issue shall not be treated as failing to meet the
requirements of paragraph (1) by reason of any investment of
available project proceeds during the 5-year period described
in subsection (f)(1)(A) (including any extension of such
period under subsection (f)(2)).
``(3) Special rule for reserve funds.--An issue shall not
be treated as failing to meet the requirements of paragraph
(1) by reason of any fund which is expected to be used to
repay such issue if--
``(A) such fund is funded at a rate not more rapid than
equal annual installments,
``(B) such fund is funded in a manner that such fund will
not exceed the amount necessary to repay the issue if
invested at the maximum rate permitted under subparagraph
(C), and
``(C) the yield on such fund is not greater than the
discount rate determined under subsection (d)(3) with respect
to the issue.''.
(2) Application of available project proceeds to other
requirements.--Subsections (d)(1)(A), (d)(2)(A), (f)(1)(A),
(f)(1)(B), (f)(1)(C), and (f)(3) of section 1397E are each
amended by striking ``proceeds'' and inserting ``available
project proceeds''.
(3) Available project proceeds defined.--Subsection (i) of
section 1397E (relating to definitions) is amended by adding
at the end the following new paragraph:
``(4) Available project proceeds.--The term `available
project proceeds' means--
``(A) the excess of--
``(i) the proceeds from the sale of an issue, over
``(ii) the issuance costs financed by the issue (to the
extent that such costs do not exceed 2 percent of such
proceeds), and
``(B) the proceeds from any investment of the excess
described in subparagraph (A).''.
(c) Effective Date.--
(1) Extension.--The amendment made by subsection (a) shall
apply to obligations issued after December 31, 2007.
(2) Modification of arbitrage rules.--The amendments made
by subsection (b) shall apply to obligations issued after the
date of the enactment of this Act.

SEC. 332. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF
COLUMBIA.

SEC. 333. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR
AMERICAN SAMOA.

SEC. 334. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF
FOOD INVENTORY.

SEC. 335. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF
BOOK INVENTORY TO PUBLIC SCHOOLS.

SEC. 336. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER
CONTRIBUTIONS.

SEC. 337. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING
CHARITABLE CONTRIBUTIONS OF PROPERTY.

(a) In General.--The last sentence of section 1367(a)(2)
(relating to decreases in basis) is amended by striking
``December 31, 2007'' and inserting ``December 31, 2008''.
(b) Technical Amendment Related to Section 1203 of the
Pension Protection Act of 2006.--Subsection (d) of section
1366 is amended by adding at the end the following new
paragraph:
``(4) Application of limitation on charitable
contributions.--In the case of any charitable contribution of
property to which the second sentence of section 1367(a)(2)
applies, paragraph (1) shall not apply to the extent of the
excess (if any) of--
``(A) the shareholder's pro rata share of such
contribution, over
``(B) the shareholder's pro rata share of the adjusted
basis of such property.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
made in taxable years beginning after December 31, 2007.
(2) Technical amendment.--The amendment made by subsection
(b) shall take effect as if included in the provision of the
Pension Protection Act of 2006 to which it relates.

SEC. 338. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR
HURRICANE KATRINA EMPLOYEES.

Subtitle C--Other Extenders

SEC. 341. DISCLOSURE FOR COMBINED EMPLOYMENT TAX REPORTING.

SEC. 342. DISCLOSURE OF RETURN INFORMATION TO APPRISE
APPROPRIATE OFFICIALS OF TERRORIST ACTIVITIES.

SEC. 343. DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO
TERRORIST ACTIVITIES.

SEC. 344. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.

SEC. 345. AUTHORITY FOR UNDERCOVER OPERATIONS.

[[Page H13438]]

SEC. 346. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX
TO PUERTO RICO AND THE VIRGIN ISLANDS.

SEC. 347. DISCLOSURE OF RETURN INFORMATION FOR CERTAIN
VETERANS PROGRAMS.

TITLE IV--MORTGAGE FORGIVENESS DEBT RELIEF

SEC. 401. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL RESIDENCE
EXCLUDED FROM GROSS INCOME.

SEC. 402. LONG-TERM EXTENSION OF DEDUCTION FOR MORTGAGE
INSURANCE PREMIUMS.

SEC. 403. ALTERNATIVE TESTS FOR QUALIFYING AS COOPERATIVE
HOUSING CORPORATION.

SEC. 404. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO
NONQUALIFIED USE NOT EXCLUDED FROM INCOME.

``(I) any portion of the 5-year period described in
subsection (a) which is after the last date that such
property is used as the principal residence of the taxpayer
or the taxpayer's spouse,
``(II) any period (not to exceed an aggregate period of 10
years) during which the taxpayer or the taxpayer's spouse is
serving on qualified official extended duty (as defined in
subsection (d)(9)(C)) described in clause (i), (ii), or (iii)
of subsection (d)(9)(A), and
``(III) any other period of temporary absence (not to
exceed an aggregate period of 2 years) due to change of
employment, health conditions, or such other unforeseen
circumstances as may be specified by the Secretary.

TITLE V--ADMINISTRATIVE PROVISIONS

SEC. 501. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT
COLLECTION CONTRACTS.

SEC. 502. DELAY OF APPLICATION OF WITHHOLDING REQUIREMENT ON
CERTAIN GOVERNMENTAL PAYMENTS FOR GOODS AND
SERVICES.

SEC. 503. CLARIFICATION OF ENTITLEMENT OF VIRGIN ISLANDS
RESIDENTS TO PROTECTIONS OF LIMITATIONS ON
ASSESSMENT AND COLLECTION OF TAX.

(a) In General.--Subsection (c) of section 932 (relating to
treatment of Virgin Islands residents) is amended by adding
at the end the following new paragraph:

[[Page H13439]]

``(5) Treatment of income tax return filed with virgin
islands.--An income tax return filed with the Virgin Islands
by an individual claiming to be described in paragraph (1)
for the taxable year shall be treated for purposes of
subtitle F in the same manner as if such return were an
income tax return filed with the United States for such
taxable year. The preceding sentence shall not apply where
such return is false or fraudulent with the intent to evade
tax or otherwise is a willful attempt in any manner to defeat
or evade tax.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after 1986.

SEC. 504. REVISION OF TAX RULES ON EXPATRIATION.

(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.

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, determined without
regard to paragraph (3).
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which would (but for this
paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced (but
not below zero) by $600,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2008, the dollar amount in
subparagraph (A) shall be increased by an amount equal to--

[[Page H13440]]

trust, gain shall be recognized to the trust as if such
property were sold to the expatriate at its fair market
value.
``(2) Taxable portion.--For purposes of this subsection,
the term `taxable portion' means, with respect to any
distribution, that portion of the distribution which would be
includible in the gross income of the covered expatriate if
such expatriate continued to be subject to tax as a citizen
or resident of the United States.
``(3) Nongrantor trust.--For purposes of this subsection,
the term `nongrantor trust' means the portion of any trust
that the individual is not considered the owner of under
subpart E of part I of subchapter J. The determination under
the preceding sentence shall be made immediately before the
expatriation date.
``(4) Special rules relating to withholding.--For purposes
of this subsection--
``(A) rules similar to the rules of subsection (d)(6) shall
apply, and
``(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty with
the United States in withholding on any distribution to which
paragraph (1)(A) applies.
``(5) Application.--This subsection shall apply to a
nongrantor trust only if the covered expatriate was a
beneficiary of the trust on the day before the expatriation
date.
``(g) Definitions and Special Rules Relating to
Expatriation.--For purposes of this section--
``(1) Covered expatriate.--
``(A) In general.--The term `covered expatriate' means an
expatriate who meets the requirements of subparagraph (A),
(B), or (C) of section 877(a)(2).
``(B) Exceptions.--An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of
section 877(a)(2) if--
``(i) the individual--

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.
``(5) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(6) Early distribution tax.--The term `early distribution
tax' means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
``(h) Other Rules.--
``(1) Termination of deferrals, etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(A) any time period for acquiring property which would
result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall
terminate on the day before the expatriation date, and
``(B) 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.
``(2) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning of
section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(3) Coordination with section 684.--If the expatriation
of any individual would result in the recognition of gain
under section 684, this section shall be applied after the
application of section 684.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Tax on Gifts and Bequests Received by United States
Citizens and Residents From Expatriates.--
(1) In general.--Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:

``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

``SEC. 2801. IMPOSITION OF TAX.

``(a) In General.--If, during any calendar year, any United
States citizen or resident receives any covered gift or
bequest, there is hereby imposed a tax equal to the product
of--
``(1) the highest rate of tax specified in the table
contained in section 2001(c) as in effect on the date of such
receipt (or, if greater, the highest rate of tax specified in
the table applicable under section 2502(a) as in effect on
the date), and
``(2) the value of such covered gift or bequest.
``(b) Tax To Be Paid by Recipient.--The tax imposed by
subsection (a) on any covered gift or bequest shall be paid
by the person receiving such gift or bequest.
``(c) Exception for Certain Gifts.--Subsection (a) shall
apply only to the extent that the value of covered gifts and
bequests received by any person during the calendar year
exceeds $10,000.
``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax
imposed by subsection (a) on any covered gift or bequest
shall be reduced by the amount of any gift or estate tax paid
to a foreign country with respect to such covered gift or
bequest.
``(e) Covered Gift or Bequest.--
``(1) In general.--For purposes of this chapter, the term
`covered gift or bequest' means--
``(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition, is a
covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately before
such death, was a covered expatriate.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Such term shall not include--
``(A) any property shown on a timely filed return of tax
imposed by chapter 12 which is a taxable gift by the covered
expatriate, and
``(B) any property 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.
``(3) Transfers in trust.--
``(A) Domestic trusts.--In the case of a covered gift or
bequest made to a domestic trust--
``(i) subsection (a) shall apply in the same manner as if
such trust were a United States citizen, and
``(ii) the tax imposed by subsection (a) on such gift or
bequest shall be paid by such trust.
``(B) Foreign trusts.--
``(i) In general.--In the case of a covered gift or bequest
made to a foreign trust, subsection (a) shall apply to any
distribution attributable to such gift or bequest from such
trust (whether from income or corpus) to a United States
citizen or resident in the same manner as if such
distribution were a covered gift or bequest.
``(ii) Deduction for tax paid by recipient.--There shall be
allowed as a deduction under section 164 the amount of tax
imposed by this section which is paid or accrued by a United
States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on
the portion of such distribution which is included in the
gross income of such citizen or resident.
``(iii) Election to be treated as domestic trust.--Solely
for purposes of this section, a foreign trust may elect to be
treated as a domestic trust. Such an election may be revoked
with the consent of the Secretary.
``(f) Covered Expatriate.--For purposes of this section,
the term `covered expatriate' has the meaning given to such
term by section 877A(g)(1).''.
(2) Clerical amendment.--The table of chapters for subtitle
B is amended by inserting after the item relating to chapter
14 the following new item:

``Chapter 15. Gifts and Bequests From Expatriates.''.

[[Page H13441]]

not apply to an individual who became at birth a citizen of
the United States and a citizen of another country.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 877(e) is amended to read as
follows:
``(1) In general.--Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
shall be treated for purposes of this section and sections
2107, 2501, and 6039G in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.''.
(B) Paragraph (6) of section 7701(b) is amended by adding
at the end the following flush sentence:
``An individual shall cease to be treated as a lawful
permanent resident of the United States if such individual
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, does not waive the benefits
of such treaty applicable to residents of the foreign
country, and notifies the Secretary of the commencement of
such treatment.''.
(C) Section 7701 is amended by striking subsection (n) and
by redesignating subsections (o) and (p) as subsections (n)
and (o), respectively.
(d) Information Returns.--Section 6039G is amended--
(1) by inserting ``or 877A'' after ``section 877(b)'' in
subsection (a), and
(2) by inserting ``or 877A'' after ``section 877(a)'' in
subsection (d).
(e) 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. 505. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND
INTEREST.

SEC. 506. UNUSED MERCHANDISE DRAWBACK.

(a) In General.--Section 313(j)(2) of the Tariff Act of
1930 (19 U.S.C. 1313(j)(2)) is amended by adding at the end
the following: ``For purposes of subparagraph (A) of this
paragraph, wine of the same color having a price variation
not to exceed 50 percent between the imported wine and the
exported wine shall be deemed to be commercially
interchangeable.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to claims filed for drawback under
section 313(j)(2) of the Tariff Act of 1930 on or after the
date of the enactment of this Act.

TITLE VI--REVENUE PROVISIONS

Subtitle A--Nonqualified Deferred Compensation From Certain Tax
Indifferent Parties

SEC. 601. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX
INDIFFERENT PARTIES.

(a) In General.--Subpart B of part II of subchapter E of
chapter 1 (relating to taxable year for which items of gross
income included) is amended by inserting after section 457
the following new section:

``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN
TAX INDIFFERENT PARTIES.

``(a) In General.--Any compensation which is deferred under
a nonqualified deferred compensation plan of a nonqualified
entity shall be taken into account for purposes of this
chapter when there is no substantial risk of forfeiture of
the rights to such compensation.
``(b) Nonqualified Entity.--For purposes of this section,
the term `nonqualified entity' means--
``(1) any foreign corporation unless substantially all of
such income is--
``(A) effectively connected with the conduct of a trade or
business in the United States, or
``(B) subject to a comprehensive foreign income tax, and
``(2) any partnership unless substantially all of such
income is allocated to persons other than--
``(A) foreign persons with respect to whom such income is
not subject to a comprehensive foreign income tax, and
``(B) organizations which are exempt from tax under this
title.
``(c) Ascertainability of Amounts of Compensation.--
``(1) In general.--If the amount of any compensation is not
ascertainable at the time that such compensation is otherwise
to be taken into account under subsection (a)--
``(A) such amount shall be so taken into account when
ascertainable, and
``(B) the tax imposed under this chapter for the taxable
year in which such compensation is taken into account under
subparagraph (A) shall be increased by the sum of--
``(i) the amount of interest determined under paragraph
(2), and
``(ii) an amount equal to 20 percent of the amount of such
compensation.
``(2) Interest.--For purposes of paragraph (1)(B)(i), the
interest determined under this paragraph for any taxable year
is the amount of interest at the underpayment rate under
section 6621 plus 1 percentage point on the underpayments
that would have occurred had the deferred compensation been
includible in gross income for the taxable year in which
first deferred or, if later, the first taxable year in which
such deferred compensation is not subject to a substantial
risk of forfeiture.
``(d) Other Definitions and Special Rules.--For purposes of
this section--
``(1) Substantial risk of forfeiture.--The rights of a
person to compensation shall be treated as subject to a
substantial risk of forfeiture only if such person's rights
to such compensation are conditioned upon the future
performance of substantial services by any individual.
``(2) Comprehensive foreign income tax.--The term
`comprehensive foreign income tax' means, with respect to any
foreign person, the income tax of a foreign country if--
``(A) such person is eligible for the benefits of a
comprehensive income tax treaty between such foreign country
and the United States, or
``(B) such person demonstrates to the satisfaction of the
Secretary that such foreign country has a comprehensive
income tax.
Such term shall not include any tax unless such tax includes
rules for the deductibility of deferred compensation which
are similar to the rules of this title.
``(3) Nonqualified deferred compensation plan.--The term
`nonqualified deferred compensation plan' has the meaning
given such term under section 409A(d), except that such term
shall include any plan that provides a right to compensation
based on the appreciation in value of a specified number of
equity units of the service recipient.
``(4) Application of rules.--Rules similar to the rules of
paragraphs (5) and (6) of section 409A(d) shall apply.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section, including regulations
disregarding a substantial risk of forfeiture in cases where
necessary to carry out the purposes of this section.''.
(b) Conforming Amendment.--Section 26(b)(2) is amended by
striking ``and'' at the end of subparagraph (S), by striking
the period at the end of subparagraph (T) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(U) section 457A(c)(1)(B) (relating to ascertainability
of amounts of compensation).''.
(c) Clerical Amendment.--The table of sections of subpart B
of part II of subchapter E of chapter 1 is amended by
inserting after the item relating to section 457 the
following new item:

``Sec. 457A. Nonqualified deferred compensation from certain tax
indifferent parties.''.
(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to amounts deferred which are attributable to services
performed after December 31, 2007.
(2) Application to existing deferrals.--In the case of any
amount deferred to which the amendments made by this section
do not apply solely by reason of the fact that the amount is
attributable to services performed before January 1, 2008, to
the extent such amount is not includible in gross income in a
taxable year beginning before 2017, such amounts shall be
includible in gross income in the later of--
(A) the last taxable year beginning before 2017, or
(B) the taxable year in which there is no substantial risk
of forfeiture of the rights to such compensation (determined
in the same manner as determined for purposes of section 457A
of the Internal Revenue Code of 1986, as added by this
section).
(3) Accelerated payments.--No later than 60 days after the
date of the enactment of this Act, the Secretary shall issue
guidance providing a limited period of time during which a
nonqualified deferred compensation arrangement attributable
to services performed on or before December 31, 2007, may,
without violating the requirements of section 409A(a) of the
Internal Revenue Code of 1986, be amended to conform the date
of distribution to the date the amounts are required to be
included in income.

Subtitle B--Provisions Related to Certain Investment Partnerships

SEC. 611. INCOME OF PARTNERS FOR PERFORMING INVESTMENT
MANAGEMENT SERVICES TREATED AS ORDINARY INCOME
RECEIVED FOR PERFORMANCE OF SERVICES.

(a) In General.--Part I of subchapter K of chapter 1 is
amended by adding at the end the following new section:

``SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING INVESTMENT
MANAGEMENT SERVICES TO PARTNERSHIP.

``(a) Treatment of Distributive Share of Partnership
Items.--For purposes of this title, in the case of an
investment services partnership interest--
``(1) In general.--Notwithstanding section 702(b)--
``(A) any net income with respect to such interest for any
partnership taxable year shall be

[[Page H13442]]

treated as ordinary income for the performance of services,
and
``(B) any net loss with respect to such interest for such
year, to the extent not disallowed under paragraph (2) for
such year, shall be treated as an ordinary loss.
``(2) Treatment of losses.--
``(A) Limitation.--Any net loss with respect to such
interest shall be allowed for any partnership taxable year
only to the extent that such loss does not exceed the excess
(if any) of--
``(i) the aggregate net income with respect to such
interest for all prior partnership taxable years, over
``(ii) the aggregate net loss with respect to such interest
not disallowed under this subparagraph for all prior
partnership taxable years.
``(B) Carryforward.--Any net loss for any partnership
taxable year which is not allowed by reason of subparagraph
(A) shall be treated as an item of loss with respect to such
partnership interest for the succeeding partnership taxable
year.
``(C) Basis adjustment.--No adjustment to the basis of a
partnership interest shall be made on account of any net loss
which is not allowed by reason of subparagraph (A).
``(D) Exception for basis attributable to purchase of a
partnership interest.--In the case of an investment services
partnership interest acquired by purchase, paragraph (1)(B)
shall not apply to so much of any net loss with respect to
such interest for any taxable year as does not exceed the
excess of--
``(i) the basis of such interest immediately after such
purchase, over
``(ii) the aggregate net loss with respect to such interest
to which paragraph (1)(B) did not apply by reason of this
subparagraph for all prior taxable years.

Any net loss to which paragraph (1)(B) does not apply by
reason of this subparagraph shall not be taken into account
under subparagraph (A).
``(E) Prior partnership years.--Any reference in this
paragraph to prior partnership taxable years shall only
include prior partnership taxable years to which this section
applies.
``(3) Net income and loss.--For purposes of this section--
``(A) Net income.--The term `net income' means, with
respect to any investment services partnership interest, for
any partnership taxable year, the excess (if any) of--
``(i) all items of income and gain taken into account by
the holder of such interest under section 702 with respect to
such interest for such year, over
``(ii) all items of deduction and loss so taken into
account.
``(B) Net loss.--The term `net loss' means with respect to
such interest for such year, the excess (if any) of the
amount described in subparagraph (A)(ii) over the amount
described in subparagraph (A)(i).
``(b) Dispositions of Partnership Interests.--
``(1) Gain.--Any gain on the disposition of an investment
services partnership interest shall be treated as ordinary
income for the performance of services.
``(2) Loss.--Any loss on the disposition of an investment
services partnership interest shall be treated as an ordinary
loss to the extent of the excess (if any) of--
``(A) the aggregate net income with respect to such
interest for all partnership taxable years, over
``(B) the aggregate net loss with respect to such interest
allowed under subsection (a)(2) for all partnership taxable
years.
``(3) Disposition of portion of interest.--In the case of
any disposition of an investment services partnership
interest, the amount of net loss which otherwise would have
(but for subsection (a)(2)(C)) applied to reduce the basis of
such interest shall be disregarded for purposes of this
section for all succeeding partnership taxable years.
``(4) Distributions of partnership property.--In the case
of any distribution of appreciated property by a partnership
with respect to any investment services partnership interest,
gain shall be recognized by the partnership in the same
manner as if the partnership sold such property at fair
market value at the time of the distribution. For purposes of
this paragraph, the term `appreciated property' means any
property with respect to which gain would be determined if
sold as described in the preceding sentence.
``(5) Application of section 751.--In applying section
751(a), an investment services partnership interest shall be
treated as an inventory item.
``(c) Investment Services Partnership Interest.--For
purposes of this section--
``(1) In general.--The term `investment services
partnership interest' means any interest in a partnership
which is held by any person if such person provides (directly
or indirectly) a substantial quantity of any of the following
services with respect to the assets of the partnership in the
conduct of the trade or business of providing such services:
``(A) Advising as to the advisability of investing in,
purchasing, or selling any specified asset.
``(B) Managing, acquiring, or disposing of any specified
asset.
``(C) Arranging financing with respect to acquiring
specified assets.
``(D) Any activity in support of any service described in
subparagraphs (A) through (C).
For purposes of this paragraph, the term `specified asset'
means securities (as defined in section 475(c)(2) without
regard to the last sentence thereof), real estate,
commodities (as defined in section 475(e)(2))), or options or
derivative contracts with respect to securities (as so
defined), real estate, or commodities (as so defined).
``(2) Exception for certain capital interests.--
``(A) In general.--If--
``(i) a portion of an investment services partnership
interest is acquired on account of a contribution of invested
capital, and
``(ii) the partnership makes a reasonable allocation of
partnership items between the portion of the distributive
share that is with respect to invested capital and the
portion of such distributive share that is not with respect
to invested capital,

then subsection (a) shall not apply to the portion of the
distributive share that is with respect to invested capital.
An allocation will not be treated as reasonable for purposes
of this subparagraph if such allocation would result in the
partnership allocating a greater portion of income to
invested capital than any other partner not providing
services would have been allocated with respect to the same
amount of invested capital.
``(B) Special rule for dispositions.--In any case to which
subparagraph (A) applies, subsection (b) shall not apply to
any gain or loss allocable to invested capital. The portion
of any gain or loss attributable to invested capital is the
proportion of such gain or loss which is based on the
distributive share of gain or loss that would have been
allocable to invested capital under subparagraph (A) if the
partnership sold all of its assets immediately before the
disposition.
``(C) Invested capital.--For purposes of this paragraph,
the term `invested capital' means, the fair market value at
the time of contribution of any money or other property
contributed to the partnership.
``(D) Treatment of certain loans.--
``(i) Proceeds of partnership loans not treated as invested
capital of service providing partners.--For purposes of this
paragraph, an investment services partnership interest shall
not be treated as acquired on account of a contribution of
invested capital to the extent that such capital is
attributable to the proceeds of any loan or other advance
made or guaranteed, directly or indirectly, by any partner or
the partnership.
``(ii) Loans from nonservice providing partners to the
partnership treated as invested capital.--For purposes of
this paragraph, any loan or other advance to the partnership
made or guaranteed, directly or indirectly, by a partner not
providing services to the partnership shall be treated as
invested capital of such partner and amounts of income and
loss treated as allocable to invested capital shall be
adjusted accordingly.
``(d) Other Income and Gain in Connection With Investment
Management Services.--
``(1) In general.--If--
``(A) a person performs (directly or indirectly) investment
management services for any entity,
``(B) such person holds a disqualified interest with
respect to such entity, and
``(C) the value of such interest (or payments thereunder)
is substantially related to the amount of income or gain
(whether or not realized) from the assets with respect to
which the investment management services are performed,
any income or gain with respect to such interest shall be
treated as ordinary income for the performance of services.
Rules similar to the rules of subsection (c)(2) shall apply
where such interest was acquired on account of invested
capital in such entity.
``(2) Definitions.--For purposes of this subsection--
``(A) Disqualified interest.--The term `disqualified
interest' means, with respect to any entity--
``(i) any interest in such entity other than indebtedness,
``(ii) convertible or contingent debt of such entity,
``(iii) any option or other right to acquire property
described in clause (i) or (ii), and
``(iv) any derivative instrument entered into (directly or
indirectly) with such entity or any investor in such entity.

Such term shall not include a partnership interest and shall
not include stock in a taxable corporation.
``(B) Taxable corporation.--The term `taxable corporation'
means--
``(i) a domestic C corporation, or
``(ii) a foreign corporation subject to a comprehensive
foreign income tax (as defined in section 457A(d)(4)).
``(C) Investment management services.--The term `investment
management services' means a substantial quantity of any of
the services described in subsection (c)(1) which are
provided in the conduct of the trade or business of providing
such services.
``(e) Regulations.--The Secretary shall prescribe such
regulations as are necessary or appropriate to carry out the
purposes of this section, including regulations to--
``(1) prevent the avoidance of the purposes of this
section, and
``(2) coordinate this section with the other provisions of
this subchapter.
``(f) Cross Reference.--For 40 percent no fault penalty on
certain underpayments due to the avoidance of this section,
see section 6662.''.
(b) Application to Real Estate Investment Trusts.--
Subsection (c) of section 856 is amended by adding at the end
the following new paragraph:
``(8) Exception from recharacterization of income from
investment services partnership interests.--
``(A) In general.--Paragraphs (2), (3), and (4) shall be
applied without regard to section 710 (relating to special
rules for partners providing investment management services
to partnership).
``(B) Special rule for partnerships owned by reits.--
Section 7704 shall be applied without regard to section 710
in the case of a partnership which meets each of the
following requirements:

[[Page H13443]]

``(i) Such partnership is treated as publicly traded under
section 7704 solely by reason of interests in such
partnership being convertible into interests in a real estate
investment trust which is publicly traded.
``(ii) 50 percent or more of the capital and profits
interests of such partnership are owned, directly or
indirectly, at all times during the taxable year by such real
estate investment trust (determined with the application of
section 267(c)).
``(iii) Such partnership meets the requirements of
paragraphs (2), (3), and (4) (applied without regard to
section 710).''.
(c) Imposition of Penalty on Underpayments.--
(1) In general.--Subsection (b) of section 6662 is amended
by inserting after paragraph (5) the following new paragraph:
``(6) The application of subsection (d) of section 710 or
the regulations prescribed under section 710(e) to prevent
the avoidance of the purposes of section 710.''.
(2) Amount of penalty.--
(A) In general.--Section 6662 is amended by adding at the
end the following new subsection:
``(i) Increase in Penalty in Case of Property Transferred
for Investment Management Services.--In the case of any
portion of an underpayment to which this section applies by
reason of subsection (b)(6), subsection (a) shall be applied
with respect to such portion by substituting `40 percent' for
`20 percent'.''.
(B) Conforming amendments.--Subparagraph (B) of section
6662A(e)(2) is amended--
(i) by striking ``section 6662(h)'' and inserting
``subsection (h) or (i) of section 6662'', and
(ii) by striking ``gross valuation misstatement penalty''
in the heading and inserting ``certain increased underpayment
penalties''.
(3) Reasonable cause exception not applicable.--Subsection
(c) of section 6664 is amended--
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively,
(B) by striking ``paragraph (2)'' in paragraph (4), as so
redesignated, and inserting ``paragraph (3)'', and
(C) by inserting after paragraph (1) the following new
paragraph:
``(2) Exception.--Paragraph (1) shall not apply to any
portion of an underpayment to which this section applies by
reason of subsection (b)(6).''.
(d) Conforming Amendments.--
(1) Subsection (d) of section 731 is amended by inserting
``section 710(b)(4) (relating to distributions of partnership
property),'' before ``section 736''.
(2) Section 741 is amended by inserting ``or section 710
(relating to special rules for partners providing investment
management services to partnership)'' before the period at
the end.
(3) Paragraph (13) of section 1402(a) is amended--
(A) by striking ``other than guaranteed'' and inserting
``other than--
``(A) guaranteed'',
(B) by striking the semi-colon at the end and inserting ``,
and'', and
(C) by adding at the end the following new subparagraph:
``(B) any income treated as ordinary income under section
710 received by an individual who provides investment
management services (as defined in section 710(d)(2));''.
(4) Paragraph (12) of section 211(a) of the Social Security
Act is amended--
(A) by striking ``other than guaranteed'' and inserting
``other than--
``(A) guaranteed'',
(B) by striking the semi-colon at the end and inserting ``,
and'', and
(C) by adding at the end the following new subparagraph:
``(B) any income treated as ordinary income under section
710 of the Internal Revenue Code of 1986 received by an
individual who provides investment management services (as
defined in section 710(d)(2) of such Code);''.
(5) The table of sections for part I of subchapter K of
chapter 1 is amended by adding at the end the following new
item:

``Sec. 710. Special rules for partners providing investment management
services to partnership.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years ending after November 1, 2007.
(2) Partnership taxable years which include effective
date.--In applying section 710(a) of the Internal Revenue
Code of 1986 (as added by this section) in the case of any
partnership taxable year which includes November 1, 2007, the
amount of the net income referred to in such section shall be
treated as being the lesser of the net income for the entire
partnership taxable year or the net income determined by only
taking into account items attributable to the portion of the
partnership taxable year which is after such date.
(3) Dispositions of partnership interests.--Section 710(b)
of the Internal Revenue Code of 1986 (as added by this
section) shall apply to dispositions and distributions after
November 1, 2007.
(4) Other income and gain in connection with investment
management services.--Section 710(d) of such Code (as added
by this section) shall take effect on November 1, 2007.
(5) Publicly traded partnerships.--For purposes of applying
section 7704, the amendments made by this section shall apply
to taxable years beginning after December 31, 2009.

SEC. 612. INDEBTEDNESS INCURRED BY A PARTNERSHIP IN ACQUIRING
SECURITIES AND COMMODITIES NOT TREATED AS
ACQUISITION INDEBTEDNESS FOR ORGANIZATIONS
WHICH ARE PARTNERS WITH LIMITED LIABILITY.

(a) In General.--Subsection (c) of section 514 (relating to
acquisition indebtedness) is amended by adding at the end the
following new paragraph:
``(10) Securities and commodities acquired by partnerships
in which an organization is a partner with limited
liability.--
``(A) In general.--In the case of any organization which is
a partner with limited liability in a partnership, the term
`acquisition indebtedness' does not, for purposes of this
section, include indebtedness incurred or continued by such
partnership in purchasing or carrying any qualified security
or commodity.
``(B) Qualified security or commodity.--For purposes of
this paragraph, the term `qualified security or commodity'
means any security (as defined in section 475(c)(2) without
regard to the last sentence thereof), any commodity (as
defined in section 475(e)(2)), or any option or derivative
contract with respect to such a security or commodity.
``(C) Application to tiered partnerships and other pass-
thru entities.--Rules similar to the rules of subparagraph
(A) shall apply in the case of tiered partnerships and other
pass-thru entities.
``(D) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this paragraph, including regulations to
prevent the abuse of this paragraph.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 613. APPLICATION TO PARTNERSHIP INTERESTS AND TAX
SHARING AGREEMENTS OF RULE TREATING CERTAIN
GAIN ON SALES BETWEEN RELATED PERSONS AS
ORDINARY INCOME.

(a) Partnership Interests.--Subsection (a) of section 1239
is amended to read as follows:
``(a) Treatment of Gain as Ordinary Income.--In the case of
a sale or exchange of property, directly or indirectly,
between related persons, any gain recognized to the
transferor shall be treated as ordinary income if--
``(1) such property is, in the hands of the transferee, of
a character which is subject to the allowance for
depreciation provided in section 167, or
``(2) such property is an interest in a partnership, but
only to the extent of gain attributable to unrealized
appreciation in property which is of a character subject to
the allowance for depreciation provided in section 167.''.
(b) Tax Sharing Agreements.--Section 1239 (relating to gain
from sale of depreciable property between certain related
taxpayers) is amended by adding at the end the following new
subsection:
``(f) Application to Tax Sharing Agreements.--
``(1) In general.--If there is a tax sharing agreement with
respect to any sale or exchange, the transferee and the
transferor shall be treated as related persons for purposes
of this section.
``(2) Tax sharing agreement.--For purposes of this
subsection, the term `tax sharing agreement' means any
agreement which provides for the payment to the transferor of
any amount which is determined by reference to any portion of
the tax benefit realized by the transferee with respect to
the depreciation (or amortization) of the property
transferred.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to sales and
exchanges after the date of the enactment of this Act.
(2) Exception for binding contracts.--The amendment made by
subsection (b) shall not apply to any sale or exchange
pursuant to a written binding contract which includes a tax
sharing agreement and which is in effect on November 1, 2007,
and not modified thereafter in any material respect.

Subtitle C--Other Provisions

SEC. 621. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF
INTEREST.

(a) In General.--Paragraphs (5)(D) and (6) of section
864(f) are each amended by striking ``December 31, 2008'' and
inserting ``December 31, 2017''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2008.

SEC. 622. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES
TRANSACTIONS.

(a) In General.--
(1) Broker reporting for securities transactions.--Section
6045 (relating to returns of brokers) is amended by adding at
the end the following new subsection:
``(g) Additional Information Required in the Case of
Securities Transactions.--
``(1) In general.--If a broker is otherwise required to
make a return under subsection (a) with respect to the gross
proceeds of the sale of a covered security, the broker shall
include in such return the information described in paragraph
(2).
``(2) Additional information required.--
``(A) In general.--The information required under paragraph
(1) to be shown on a return with respect to a covered
security of a customer shall include the customer's adjusted
basis in such security and whether any gain or loss with
respect to such security is long-term or short-term (within
the meaning of section 1222).
``(B) Determination of adjusted basis.--For purposes of
subparagraph (A)--
``(i) In general.--The customer's adjusted basis shall be
determined--

``(I) in the case of any stock (other than any stock in an
open-end fund), in accordance with the first-in first-out
method unless the customer

[[Page H13444]]

notifies the broker by means of making an adequate
identification of the stock sold or transferred,
``(II) in the case of any stock in an open-end fund
acquired before January 1, 2011, in accordance with any
acceptable method under section 1012 with respect to the
account in which such interest is held,
``(III) in the case of any stock in an open-end fund
acquired after December 31, 2010, in accordance with the
broker's default method unless the customer notifies the
broker that he elects another acceptable method under section
1012 with respect to the account in which such interest is
held, and
``(IV) in any other case, under the method for making such
determination under section 1012.

``(ii) Exception for wash sales.--Except as otherwise
provided by the Secretary, the customer's adjusted basis
shall be determined without regard to section 1091 (relating
to loss from wash sales of stock or securities) unless the
transactions occur in the same account with respect to
identical securities.
``(3) Covered security.--For purposes of this subsection--
``(A) In general.--The term `covered security' means any
specified security acquired on or after the applicable date
if such security--
``(i) was acquired through a transaction in the account in
which such security is held, or
``(ii) was transferred to such account from an account in
which such security was a covered security, but only if the
broker received a statement under section 6045A with respect
to the transfer.
``(B) Specified security.--The term `specified security'
means--
``(i) any share of stock in a corporation,
``(ii) any note, bond, debenture, or other evidence of
indebtedness,
``(iii) any commodity, or contract or derivative with
respect to such commodity, if the Secretary determines that
adjusted basis reporting is appropriate for purposes of this
subsection, and
``(iv) any other financial instrument with respect to which
the Secretary determines that adjusted basis reporting is
appropriate for purposes of this subsection.
``(C) Applicable date.--The term `applicable date' means--
``(i) January 1, 2009, in the case of any specified
security which is stock in a corporation, and
``(ii) January 1, 2011, or such later date determined by
the Secretary in the case of any other specified security.
``(4) Open-end fund.--For purposes of this subsection, the
term `open-end fund' means a regulated investment company (as
defined in section 851) which is offering for sale or has
outstanding any redeemable security of which it is the issuer
and the shares of which are not traded on an established
securities exchange.''.
(2) Broker information required with respect to options.--
Section 6045, as amended by subsection (a), is amended by
adding at the end the following new subsection:
``(h) Application to Options on Covered Securities.--
``(1) Exercise of option.--For purposes of this section, in
the case of any exercise of an option on a covered security
where the taxpayer is the grantor of the option and the
option was acquired in the same account as the covered
security, the amount received for the grant of an option on a
covered security shall be treated as an adjustment to gross
proceeds or as an adjustment to basis, as the case may be. A
similar rule shall apply in the case of the exercise of an
option where the taxpayer is not the grantor of the option.
``(2) Lapse or closing transaction.--For purposes of this
section, in the case of the lapse (or closing transaction (as
defined in section 1234(b)(2)(A))) of an option on a covered
security where the taxpayer is the grantor of the option,
this section shall apply as if the premium received for such
option were gross proceeds received on the date of the lapse
or closing transaction, and the cost (if any) of the closing
transaction shall be taken into account as adjusted basis. A
similar rule shall apply in the case of a lapse or closing
transaction where the taxpayer is not the grantor of the
option.
``(3) Prospective application.--Paragraphs (1) and (2)
shall not apply to any option which is granted or acquired
before January 1, 2011.
``(4) Covered security.--For purposes of this subsection,
the term `covered security' shall have the meaning given such
term in subsection (g)(3).''.
(3) Extension of period for statements sent to customers.--
(A) In general.--Subsection (b) of section 6045 is amended
by striking ``January 31'' and inserting ``February 15''.
(B) Statements related to substitute payments.--Subsection
(d) of section 6045 is amended--
(i) by striking ``at such time and'', and
(ii) by inserting after ``other item.'' the following new
sentence: ``The written statement required under the
preceding sentence shall be furnished on or before February
15 of the year following the calendar year during which such
payment was made.''.
(C) Other statements.--Subsection (b) of section 6045 is
amended by adding at the end the following: ``In the case of
a consolidated reporting statement (as defined in
regulations) with respect to any account which includes the
statement required by this subsection, any statement which
would otherwise be required to be furnished on or before
January 31 under section 6042(c), 6049(c)(2)(A), or 6050N(b)
with respect to any item in such account shall instead be
required to be furnished on or before February 15 if
furnished as part of such consolidated reporting
statement.''.
(b) Determination of Basis of Certain Securities on Account
by Account Method.--Section 1012 (relating to basis of
property-cost) is amended--
(1) by striking ``The basis of property'' and inserting the
following:
``(a) In General.--The basis of property'',
(2) by striking ``The cost of real property'' and inserting
the following:
``(b) Special Rule for Apportioned Real Estate Taxes.--The
cost of real property'', and
(3) by adding at the end the following new subsection:
``(c) Determinations by Account.--
``(1) In general.--In the case of the sale, exchange, or
other disposition of a specified security on or after the
applicable date, the conventions prescribed by regulations
under this section shall be applied on an account by account
basis.
``(2) Application to open-end funds.--
``(A) In general.--Except as provided in subparagraph (B),
any stock in an open-end fund acquired before January 1,
2009, shall be treated as a separate account from any such
stock acquired on or after such date.
``(B) Election by open-end fund for treatment as single
account.--If an open-end fund elects (at such time and in
such form and manner as the Secretary may prescribe) to have
this subparagraph apply with respect to one or more of its
stockholders--
``(i) subparagraph (A) shall not apply with respect to any
stock in such fund held by such stockholders, and
``(ii) all stock in such fund which is held by such
stockholders shall be treated as covered securities described
in section 6045(g)(3) without regard to the date of the
acquisition of such stock.
``(3) Definitions.--For purposes of this section, the terms
`specified security', `applicable date', and `open-end fund'
shall have the meaning given such terms in section
6045(g).''.
(c) Information by Transferors To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6045 the
following new section:

``SEC. 6045A. INFORMATION REQUIRED IN CONNECTION WITH
TRANSFERS OF COVERED SECURITIES TO BROKERS.

``(a) Furnishing of Information.--Every applicable person
which transfers to a broker (as defined in section
6045(c)(1)) a security which is a covered security (as
defined in section 6045(g)(3)) in the hands of such
applicable person shall furnish to such broker a written
statement in such manner and setting forth such information
as the Secretary may by regulations prescribe for purposes of
enabling such broker to meet the requirements of section
6045(g).
``(b) Applicable Person.--For purposes of subsection (a),
the term `applicable person' means--
``(1) any broker (as defined in section 6045(c)(1)), and
``(2) any other person as provided by the Secretary in
regulations.
``(c) Time for Furnishing Statement.--Any statement
required by subsection (a) shall be furnished not later than
the earlier of--
``(1) 45 days after the date of the transfer described in
subsection (a), or
``(2) January 15 of the year following the calendar year
during which such transfer occurred.''.
(2) Assessable penalties.--Paragraph (2) of section 6724(d)
(defining payee statement) is amended by redesignating
subparagraphs (I) through (CC) as subparagraphs (J) through
(DD), respectively, and by inserting after subparagraph (H)
the following new subparagraph:
``(I) section 6045A (relating to information required in
connection with transfers of covered securities to
brokers).''.
(3) Clerical 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 6045 the
following new item:

``Sec. 6045A. Information required in connection with transfers of
covered securities to brokers.''.
(d) Additional Issuer Information To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986, as amended
by subsection (b), is amended by inserting after section
6045A the following new section:

``SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF
SPECIFIED SECURITIES.

``(a) In General.--According to the forms or regulations
prescribed by the Secretary, any issuer of a specified
security shall make a return setting forth--
``(1) a description of any organizational action which
affects the basis of such specified security of such issuer,
``(2) the quantitative effect on the basis of such
specified security resulting from such action, and
``(3) such other information as the Secretary may
prescribe.
``(b) Time for Filing Return.--Any return required by
subsection (a) shall be filed not later than the earlier of--
``(1) 45 days after the date of the action described in
subsection (a), or
``(2) January 31 of the year following the calendar year
during which such action occurred.
``(c) Statements To Be Furnished to Holders of Specified
Securities or Their Nominees.--According to the forms or
regulations prescribed by the Secretary, every person
required to make a return under subsection (a) with respect
to a specified security shall furnish to the nominee with
respect to the specified security (or certificate holder if
there is no nominee) a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such
return,

[[Page H13445]]

``(2) the information required to be shown on such return
with respect to such security, and
``(3) such other information as the Secretary may
prescribe.
The written statement required under the preceding sentence
shall be furnished to the holder on or before January 31 of
the year following the calendar year during which the action
described in subsection (a) occurred.
``(d) Specified Security.--For purposes of this section,
the term `specified security' has the meaning given such term
by section 6045(g)(3)(B). No return shall be required under
this section with respect to actions described in subsection
(a) with respect to a specified security which occur before
the applicable date (as defined in section 6045(g)(3)(C) with
respect to such security.
``(e) Public Reporting in Lieu of Return.--The Secretary
may waive the requirements under subsections (a) and (c) with
respect to a specified security, if the person required to
make the return under subsection (a) makes publicly
available, in such form and manner as the Secretary
determines necessary to carry out the purposes of this
section--
``(1) the name, address, phone number, and email address of
the information contact of such person, and
``(2) the information described in paragraphs (1), (2), and
(3) of subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such Code
(defining information return) is amended by redesignating
clauses (iv) through (xix) as clauses (v) through (xx),
respectively, and by inserting after clause (iii) the
following new clause:
``(iv) section 6045B(a) (relating to returns relating to
actions affecting basis of specified securities),''.
(B) Paragraph (2) of section 6724(d) of such Code (defining
payee statement), as amended by subsection (c)(2), is amended
by redesignating subparagraphs (J) through (DD) as
subparagraphs (K) through (EE), respectively, and by
inserting after subparagraph (I) the following new
subparagraph:
``(J) subsections (c) and (e) of section 6045B (relating to
returns relating to actions affecting basis of specified
securities).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 of such Code, as
amended by subsection (b)(3), is amended by inserting after
the item relating to section 6045A the following new item:

``Sec. 6045B. Returns relating to actions affecting basis of specified
securities.''.
(e) Effective Date.--The amendments made by this section
shall take effect on January 1, 2009.

SEC. 623. MODIFICATION OF PENALTY FOR FAILURE TO FILE
PARTNERSHIP RETURNS.

Section 6698 is amended by adding at the end the following
new subsection:
``(e) Modifications.--In the case of any return required to
be filed after the date of the enactment of this subsection--
``(1) the dollar amount in effect under subsection (b)(1)
shall be increased by $25, and
``(2) the limitation on the number of months taken into
account under subsection (a) shall not be less than 12
months.''.

SEC. 624. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by adding at
the end the following new section:

``SEC. 6699A. FAILURE TO FILE S CORPORATION RETURN.

``(a) General Rule.--In addition to the penalty imposed by
section 7203 (relating to willful failure to file return,
supply information, or pay tax), if any S corporation
required to file a return under section 6037 for any taxable
year--
``(1) fails to file such return at the time prescribed
therefor (determined with regard to any extension of time for
filing), or
``(2) files a return which fails to show the information
required under section 6037,

such S corporation shall be liable for a penalty determined
under subsection (b) for each month (or fraction thereof)
during which such failure continues (but not to exceed 12
months), unless it is shown that such failure is due to
reasonable cause.
``(b) Amount Per Month.--For purposes of subsection (a),
the amount determined under this subsection for any month is
the product of--
``(1) $25, multiplied by
``(2) the number of persons who were shareholders in the S
corporation during any part of the taxable year.
``(c) Assessment of Penalty.--The penalty imposed by
subsection (a) shall be assessed against the S corporation.
``(d) Deficiency Procedures Not to Apply.--Subchapter B of
chapter 63 (relating to deficiency procedures for income,
estate, gift, and certain excise taxes) shall not apply in
respect of the assessment or collection of any penalty
imposed by subsection (a).''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by adding at the end
the following new item:

``Sec. 6699A. Failure to file S corporation return.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed after the date of
the enactment of this Act.

SEC. 625. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

Subparagraph (B) of section 401(1) of the Tax Increase
Prevention and Reconciliation Act of 2005 is amended by
striking ``115 percent'' and inserting ``181 percent''.

The SPEAKER pro tempore. After 1 hour of debate on the bill, as
amended, it shall be in order to consider an amendment in the nature of
a substitute if offered by the gentleman from Louisiana (Mr. McCrery)
or his designee, which shall be considered read, and shall be debatable
for 1 hour, equally divided by the proponent and an opponent.
The gentleman from New York (Mr. Rangel) and the gentleman from
Louisiana (Mr. McCrery) each will control 30 minutes.
The Chair recognizes the gentleman from New York.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker and my colleagues, I hope that this could be considered
the National Lobbyist Day for the middle class, because, certainly,
this is what we are trying to do.
Let's talk about the issues that we agree on. The alternative minimum
tax was a bad idea when it got started in 1969; it's a worse idea now.
If the House and Senate and President fail these taxpayers that are
being held hostage for a tax that everyone knows is unfair and
inequitable and should never have existed, then it would not be a
Republican or Democratic issue; it would be that this country let them
down. In doing so, we would have violated the trust that we hope that
people would have in the tax system. At the end of the day we are
committed to eliminate this tax.
My good friend Mr. McCrery and I had agreed early on that the only
way you can tackle such a big fiscal problem is through tax reform. So
it's clear that we can't do that this year; and so if we do nothing, 23
million hardworking people would be hit with this unfair tax, and we
are committed that it's not going to happen. We can talk about that,
but I don't think it's necessary.
As far as the extenders are concerned, I really think they speak for
themselves. Mr. McCrery and I wish we had enough time to really study
each and every one of them as well as other parts of the Code to see
whether or not it serves any economic function, but time is not our
friend, and so we agreed that we would extend these expiring provisions
and review them when we have more time next year. So that's not an
issue.
The issue has to be how do you pay for it. This is where we are going
to have some major fiscal and political problems. Why? Because the
Congressional Budget Office would say that if we did nothing and this
unfair tax was not changed, that we would raise $50 billion. That means
that even though they may think and hope that we don't do this, they
haven't scored that we have to recognize that $50 billion is not going
to be there and we, abiding by what we think is fiscally sound
provisions in PAYGO, have to recognize that if we do the right thing,
we'll be $50 billion short.
What are our options? One, to cut spending by $50 billion. Well,
theoretically it may be an option, but politically it's not.
The second thing we could do is raise the revenue. Very interesting,
because the major part of the debate if we had time would be if you saw
the most outrageous abuse of the tax system where someone was getting
preferential treatment and that the only reaction would be how could
that happen, and you wanted to close it, take my word for it, to the
person that you are closing, what they call an incentive will be
considered by them as a tax increase.
Even Secretary Paulson, who wants us to dramatically reduce the
corporate rate of taxes, I can't wait to hear how he intends to pay for
it, because I know he is going to be talking about unfair advantages
that's in the Code, and some Democrat is going to call it a tax
increase if he closes the loopholes.
It's really a semantic thing; it's a political thing. But I suggest
to you that even if we were not looking at this as a revenue raiser,
and you take a look at what we are using, how could you possibly call
it a tax increase when we are trying to bring some degree of equity to
the system?
It's simple: when people are doing their job, and, I might add, a
very good job, in managing other people's money, in creating jobs, in
making the economy more prosperous, and making hundreds of millions and
billions of dollars

[[Page H13446]]

because they have earned it the hard way, creative fiscal management.

{time} 1145

And they pay 35 percent in taxes because it's their income, the same
way you sell a house, it's your income. You have a law case and they
give it to you, it's your income and you pay 35 percent income.
Now, we would like to believe that capital gains taxes means that
you're special people, you actually are investing capital. My God,
you're taking risks, and so we're going to give you a lower tax rate of
15 percent. But if you find someone who would say that, well, I'm not
taking risk but I'm a partnership, and I really think that the way
they're paying me, even though it's the same as the competitors are
being paid, I have decided that this has been a return on a capital
investment. Why shouldn't all of the debate today be on the turning
point? When two people are doing the same thing equally as well, and
really, being rewarded in a very generous way, why should one group be
treated differently than the other group? And if you want to call it a
tax increase and bringing equity and fairness to the system and making
the field even as it relates to the Tax Code, let's talk about this,
because I'll bring some arguments and statements for the people doing
the same job and paying 35 percent interest, and they're just as
creative, just as good, and they ain't thinking about leaving the
business. And so that ends the argument, except for the ones that I'm
anxious to hear from my dear friends on the other side of the aisle,
because they're not just saying that they're going to stick with their
buddies with carried interest. They're saying that we really don't have
to deal with this at all. And once I'm convinced that they're right,
I'm going to try to do this at home, and that is, we expected $50
billion. You're going to have to live without the $50 billion, but you
don't have to cut your expenses by $50 billion, nor do you have to
raise the revenue for $50 billion. As a matter of fact, you don't have
to do anything. Act like it never happened.
This is not a tax cut. This is preventing a tax increase, so
therefore, the money that you expected, the $50 billion, you shouldn't
have.
Now, on our side of the aisle, we spell that B-O-R-R-O-W-I-N-G,
``borrowing.'' I know that word is so distasteful to you, but where I
got it from was Chairman Greenspan. He said, I supported the Bush tax
cuts, but I wanted them to really cut spending. And what did they do?
B-O-R-R-O-W-I-N-G.
Well, you may not like the word, but at the end of the day, every
Congressman's going to tell you, if you expected $50 billion, you
thought it was unfair to tax people that, you removed the burden,
you've got to do one of three things: pay for it, cut spending, or
borrow the money. You've decided to find words to make it more
comfortable to borrow the money. And I'm anxious to hear that, because
if it works for you, I'm going to try to convince my leadership to have
it work for us, because pay-as-you-go may be fiscally sound, but I have
so many problems with infrastructure, so many problems with health, so
many problems with education, that if I can find a way as great as you
have, it may work for all of us. But I really don't think that that is
going to fly. The American people deserve help.
I reserve the balance of the time as I anxiously await to hear the
minority explain why this is not borrowing.

Announcement By the Speaker Pro Tempore

The SPEAKER pro tempore. The Chair will remind all Members to direct
their remarks to the Chair.
Mr. McCRERY. Mr. Speaker, I yield myself so much time as I may
consume.
Mr. Speaker, my good friend, the distinguished chairman of the Ways
and Means Committee, Mr. Rangel, makes a number of points in support of
the PAYGO rule, which forms the basis of the requirement in this bill
to raise taxes on one set of taxpayers in order to prevent a tax
increase on another set of taxpayers. I just want to talk about why
this rule, I believe, has been treated in a way that nobody who ever
came up with the idea of PAYGO meant for it to be treated.
If we were to go out on the street, Mr. Speaker, and pull aside an
average person on the street and say, we're thinking about instituting
in Congress a PAYGO rule. And what that means is, if we cut taxes
somewhere, we have to pay for that by increasing taxes somewhere else
or decreasing spending somewhere else.
Okay. That sounds reasonable.
Well, it also means that if we increase spending in some program, or
if we create a new spending program, we either have to decrease
spending somewhere else or raise taxes to pay for that increased
spending.
Oh, well, yeah, that sounds reasonable.
But, then if you tell that person, and, oh, by the way, we're going
to assume that we have more revenue next year, and that revenue is
going to be produced by this set of taxpayers. They're not paying it
now, but we're going to assume that next year they will pay it. And in
order to relieve them of that assumption that they're going to pay for
in taxes, we're going to increase taxes on this group of taxpayers over
here. How's that sound?
The average person, Mr. Speaker, I would submit, would say that
doesn't make much sense. And it doesn't make much sense. In fact, Mr.
Speaker, it puts this House and this Congress in a fiscal straitjacket
with respect to tax policy and fiscal policy.
Now, the chairman has said himself, this AMT thing is crazy. It was
never meant to apply to middle-class taxpayers. It was a mistake. Well,
why don't we just admit the mistake and get rid of it? If it was our
mistake, let's correct the mistake by getting rid of it. We never meant
to collect this level of revenues that are anticipated in the CBO
baseline.
I don't want to talk about the CBO baseline because folks in America
don't understand the CBO baseline. But that's the genesis of all this
tax raising that the majority is about to undertake here. And we ought
to stop it today. This is the first step.
I feel like the little boy in Holland sticking his thumb in the dike.
If I'm not here today to stick my thumb in the dike and stop this bill
from passing and expose the flaws of this PAYGO system, we're going to
have a torrent, a flood of tax increases over the next 10 years.
In fact, the CBO, with the assistance of the Joint Tax Committee, has
determined that if this PAYGO rule that governs this bill today stays
in place, we're going to increase taxes on the American people over the
next 10 years $3.5 trillion.
Mr. Speaker, that is the largest tax increase in either nominal terms
or real terms in the history of this country. Now, is that what the
Democratic majority wants for this country?
Do they want to take a chance on increasing taxes to that extent on
the American people at a time when we have a housing crisis, when the
dollar's value is dropping? I hope not.
Today is the day we expose this very flawed and dangerous PAYGO
policy by defeating this bill today, Mr. Speaker.
Mr. Speaker, although I cannot support this bill, I strongly support
extension of the AMT patch and most of the provisions of current law
extended in this bill. Congress should protect the 19 million Americans
who are at risk of paying the AMT this year. Congress should also
extend individual and business tax incentives important to the Nation's
economy.
Unfortunately, at its core, this bill is not about the AMT or
extenders. It is about the elevation of form over substance and the
decision of the Congress to bind itself to the mast of Paygo, wherever
it may lead.
While there may be valid reasons to apply the principles of Paygo to
spending changes, we think the calculus is far different in the case of
tax policy.
As we amply documented during the Ways and Means mark-up of this
bill, the majority's budget assumes that the Federal Government will
generate revenue from allowing the AMT to continue to plague taxpayers
and from allowing the 2001 and 2003 tax cuts to sunset. These budget
assumptions will have the effect of raising taxes on the Americans
people by $3.5 trillion over the next decade. Paygo forces Congress to
decide whether to let those tax increases take place or replace them
with other tax hikes.
It is true that under the current iteration of Paygo, tax cuts could
be ``paid for'' by spending cuts, but we have seen no appetite of the
current majority for such as sensible approach. For bills both small
and large, the Ways and Means Committee has become an ATM for other
committees, spitting out tax increases of whatever shape or size is
deemed necessary to meet the new majority's appetite for additional
spending. Indeed, this House

[[Page H13447]]

has already passed over $100 billion in tax increases this year alone.
What Paygo has become, as embodied in this bill, is far more
breathtaking. Here, it is being invoked as a reason for Congress to
raise taxes in order to prevent a tax increase.
Let me say that again, the majority has created a rule under which
Congress must raise taxes in order to prevent a tax increase. Let me
give an example utilizing the context of this bill.
If Congress does not enact this legislation, Americans will pay about
$70 billion more in taxes next year. If we pass this bill, Americans
will pay about $70 billion more in taxes next year. What's wrong with
this picture? Either way it's a tax increase.
And let us keep in mind that this bill imposes mostly permanent tax
increases to pay for temporary tax cuts. Even if this bill passes, we
will be back here again next year struggling to find another $70-plus
billion in tax increases to ``rent'' one more year of expiring
provisions.
Unfortunately, this is just a baby step. Under the next President, we
seem likely to face large tax increases in order to ``prevent'' a tax
increase on families with children, tax increases on marriage, marginal
tax rate increases, or tax increases on estates. And that's before we
are asked to enact other tax increases to pay for new tax incentives or
new spending programs.
Raising taxes to prevent a tax increase shows the danger of turning a
bumper sticker into a budget rule.
According to estimates the Congressional Budget Office and the Joint
Tax Committee, Federal revenues in fiscal year 2007 totaled about 18.6
percent of our economy, well above the historical average of 18.2
percent.
The Joint Tax Committee estimates that over the next decade if we
continue to operate in this Paygo straitjacket, revenues will reach
20.1 percent of GDP in 2017, a level seen only once since 1962. Think
about it--this bill is the first step in endorsing what will be, in
both nominal and real terms, the largest tax increase in the history of
the United States.
We may well pass this bill today, but what happens next is anyone's
guess. The Senate has given us strong and repeated signals that they
intend to reject offsets to pay for an AMT patch and the administration
has issued a veto threat. This all suggests we will spend more days
debating this issue, even as the continued delay threatens to make the
coming tax filing season chaotic.
As the Secretary of the Treasury warned us last month, ``enactment of
a patch in mid-to-late December could delay issuance of approximately
$75 billion in refunds to some 50 million taxpayers who are likely to
file their returns before March 31, 2008.'' That would be on top of the
confusion it will cause taxpayers and the added costs the Federal
Government will pay to print new forms and provide assistance to
perplexed taxpayers.
Simply put, we should stop this charade and recognize that we need to
promptly pass a patch and extenders package that the Senate can pass
and that the President can sign. If we fail to do so today, the cost of
delay and inaction on the AMT patch will continue to mount.
I urge defeat of the bill so that the Ways and Means Committee can
promptly put together a package that has a chance of making it to the
President.
I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, at this time I ask unanimous consent that I
be allowed to yield the balance of my time to the chairman of the
committee that has really drafted most of this legislation, Congressman
Neal of Massachusetts.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
The SPEAKER pro tempore. The gentleman from Massachusetts will
control the remainder of the time.
Mr. NEAL of Massachusetts. Mr. Speaker, one of the things I'm going
to do today after listening to my friend, Mr. McCrery, is to go back to
my office and call Citigroup, that holds my mortgage, and I'm going to
apply that logic when I tell them that I'm no longer going to bother
paying the principal, because I just want to forget about the bill;
that the bill is just gone. And I expect them to say to me, we're going
to use the logic that Congress uses when it comes to paying the
Nation's bills.
I'm in full support of this legislation, and I think we need to stand
up to theology today and address it with fact. Without the extension of
these important tax provisions, there's going to be a real impact back
home. Ninety-four thousand Massachusetts teachers who took the
deduction for out-of-pocket classroom supplies totaling $23 million in
expenditures, they're going to lose that deduction.
Without this bill, 121,000 Massachusetts families who took the
tuition deduction for higher education costs, totaling $317 million in
expenditures, they're going to lose their incentive for higher
learning.
If we don't pass this bill, 1,000 businesses in Massachusetts that
took the research and development tax credit totaling $10 million,
they're going to lose this credit.
We have to pass that bill so that 192 low-income military families in
Massachusetts who claimed the earned income tax credit while in the
combat zone, totaling $2 million in earnings, are going to keep that
credit.
And further, Massachusetts school districts which receive $6.5
million in bond authority for school construction, they're going to
lose their assistance without this bill.
And let me speak briefly to the issue of AMT. For a decade and more,
I've been at this issue. The Republicans have said to me time and
again, you're absolutely right in what you're trying to do. We're
quibbling over the solution today. But there's a reality, and the
reality is that if we don't do this, 125,684 taxpayers subject to AMT
in Massachusetts will increase to, listen to this number, 770,336
people for the 2007 tax year. This means in my district alone 7,000
families to 67,612 will begin to pay AMT if we don't undertake this
action today. And half of those 60,000 paying AMT this year will earn
between 100 and $200,000. And another third will earn between 75 and
$100,000.
This legislation is middle-class tax relief. These are the people
that need our help.
I reserve the balance of my time.
Mr. McCRERY. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
minority whip, Mr. Blunt of Missouri.
Mr. BLUNT. I thank the gentleman for yielding, I thank you, Mr.
Speaker, for the time, and I thank the gentleman for the comments that
he's already made.
I certainly agree with the chairman of the committee that in 1969,
certainly a long time before I came to Congress, and there are a few
Members here who were here then. I think the chairman was here. He said
this was a bad idea. It was a bad idea in 1969. It was a bad idea in
1993 when the alternative minimum tax was made worse. It was a really
bad decision in 1999 when the Congress voted to eliminate the
alternative minimum tax and a Presidential veto prevented that from
happening. This is an unfair tax. Everything that's been said about
this tax today by both sides I believe is accurate.

{time} 1200

Now 23 million more taxpayers are on the edge of this unfair tax and
we are figuring out how to tax more people to somehow equal out this
unfairness. I think it's clear that a significant majority of this
Congress knew last year that we wouldn't have wanted this to happen.
But for some reason we still apparently wanted to commit to spend the
money that would occur if it did happen.
So we are taking money we don't have today, this $50 billion or $70
billion, I think I am hearing two different numbers here, money we
don't have today and assuming that we have got to replace it tomorrow
to have not stepped backwards. This is money we did not collect this
year. But we are saying we have to have this. This is what I see as a
real twisted application of the PAYGO rule.
We are now spending also time we don't have on this issue because our
friends on the other side of the building have said they're not going
to let the major tax increase here be part of a final solution. So once
again we are spending a day we don't have when we could be spending a
day doing things like passing the military construction, military
families, veterans bill that somehow got lost this week. It got pulled
out of a bill by the Senate. We went ahead and passed the Labor-Health
and Human Services bill and went to conference on two other
appropriations bills, but we chose not to go to conference on the one
that would help veterans and help military families and pass that bill
today. Instead, we're passing a bill today and I guarantee you we will
be back on this floor with a different solution that the Senate and the
President will accept and doing this work at a time when this work
matters.

[[Page H13448]]

I urge my colleagues to vote against this bill. Let's get on with the
work of not letting these 23 million new taxpayers be affected, but
let's get this done rather than make another effort to just give a
speech about how we can raise more taxes.
Mr. NEAL of Massachusetts. Mr. Speaker, I yield 15 seconds to the
chairman of the Ways and Means Committee, Mr. Rangel.
Mr. RANGEL. Mr. Speaker, I just hope that the minority leader
recognizes that we in the House have a constitutional responsibility to
either raise the revenue, notwithstanding what the other body may or
may not do, and that should never inhibit us from doing what we
consider is the right thing to do, because constitutionally we are
right.
Mr. NEAL of Massachusetts. Mr. Speaker, at this time I would like to
yield 1\1/2\ minutes to the gentleman from California (Mr. Stark).
(Mr. STARK asked and was given permission to revise and extend his
remarks.)
Mr. STARK. I thank the distinguished chairman of the Revenue
Subcommittee for yielding.
Mr. Speaker, I would like to speak just to a couple of things, a
couple of errors. First of all, I heard from the other side that today
was a getaway day. Now, I think of a getaway day as a day to get home
to see our constituents. Not, when you say ``getaway,'' how much
unfairness in the Tax Code can you get away with? That's not what
today's about.
I commend the chairman for putting forth legislation that will
prevent millions of Americans from paying higher taxes. I want to talk
specifically about one small part and that's carried interest. Half of
the $50 billion that we are raising is coming from people who should
not be getting away with a tax loophole. That's not raising taxes.
That's just taking these people who are collecting carried interest
deductions or switching to capital gains. It's a scam. They should be
paying their fair share of taxes like all Americans.
If you look at all of these ``left-wing loonies,'' George Mankiw at
Harvard, who was President Bush's chairman of Council of Economic
Advisers; Mr. Buffett, the Blackstone Group; Michael Graetz, all of
them say it's wrong to let carried interest be taxed at the capital
gains rate so that the capital gains of $650 million is the average
annual income of the top 20. That's 5.5 million bucks a month. Why
should they only pay 15 percent? And the answer is they shouldn't. They
should pay 35 percent, and this bill will get us a long way towards
fairness.
Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Herger), member of the Ways and Means Committee.
Mr. HERGER. Mr. Speaker, Congress needs to keep the alternative
minimum tax from reaching out and ensnaring an additional 19 million
new taxpayers, saddling them with an additional $2,000 tax bill.
I have long voted to limit the reach of the AMT. In my Northern
California congressional district, 54,000 people will pay the AMT in
2007 if Congress fails to act. But today's bill is in the wrong
direction. Tragically, this legislation institutes permanent tax
increases to pay for extending temporary tax relief.
The AMT was originally intended to reach 155 of our country's
wealthiest Americans who were not paying taxes and compel them to pay
at least some level of taxes, but that original intent never included
dipping down into the middle class. The AMT now collects taxes it was
never intended to collect. It would be absurd to ``pay for'' extending
this temporary fix for another year.
Even worse, today's bill sends a clear signal to American families
and individuals that the Democrats plan to allow the tax relief of the
last 6 years disappear, raising taxes by trillions of dollars on
millions of taxpayers. This includes marriage penalty relief, the
higher child tax credit, and lower rates on investment income.
The House should reject this Democrat pro-tax increase approach to
patching the alternative minimum tax.
Mr. NEAL of Massachusetts. Mr. Speaker, at this time I would like to
yield 1 minute to the gentleman from Massachusetts, the chairman of the
Financial Services Committee, who has done a terrific job in that short
tenure (Mr. Frank).
Mr. FRANK of Massachusetts. Mr. Speaker, everybody wants to deal with
the problem of the AMT, but only some of us are prepared to deal with
it responsibly and realistically, namely, by an alternative revenue
source.
You look at the taxes that are being reduced here and the offsetting
taxes that are being raised, and it is the most extraordinary piece of
tax fairness I have ever seen.
The one argument is that we can't afford that fairness because if we
raise taxes to the normal level that people pay on income on the
wealthiest people in the history of the world that they will stop doing
what they do. Now, I do not criticize these people. I think they
perform a useful economic function. But they are the wealthiest people
in the country and in the history of the world on the whole. The notion
that they have to pay somewhat more tax up to the level that most of us
pay on income, they will somehow go on an economic strike and stop
doing these things is badly flawed.
They are not engaging in this activity as a favor to us so that they
can quit if we offend them. They are doing it because it's a way for
them to make money, as they have a right to do. They'll still be making
enough money to keep doing it.
Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished
ranking member on the Health Subcommittee of the Ways and Means
Committee, Mr. Camp.
Mr. CAMP of Michigan. I thank the distinguished ranking member for
yielding.
Mr. Speaker, the so-called Tax Relief Act before us today gives us
little to celebrate. In addition to the normal extension of Republican
tax cuts, this bill includes an unprecedented amount of Democrat tax
increases on the American public. Worse yet, this bill permanently
raises taxes to the tune of $70 billion, all to collect taxes the
Federal Government was never intended to get.
Let me repeat that point: this bill raises taxes to generate revenues
the Federal Government was never intended to get.
The differences between our parties couldn't be clearer than on this
bill. Republicans cut taxes while Democrats raise taxes. Facts are
facts; and with this bill, the majority is permanently increasing taxes
on Americans and setting the stage for the largest tax increase in
history.
I support extending tax provisions like the R & D tax credit, the
teacher tax deduction for classroom supplies, and incentives for
conservation easements. After all, those are bills I have long
supported. I also support shielding over 20 million middle-income
Americans from the alternative minimum tax, better described as the
mandatory minimum tax. But this is simply the wrong way to do it.
Fortunately, the Senate knows and the President knows that. This bill
will not pass the Senate and the President will not sign it. I hope my
friends on both sides of the aisle will realize this bill is a flawed
bill and should be rejected.
This is not the time to be raising taxes. Reject this legislation,
and let us vote on a bill that really protects taxpayers from higher
taxes.
Mr. NEAL of Massachusetts. Mr. Speaker, the Bush administration has
been there for 7 years, and they have not proposed once the elimination
of the alternative minimum tax. In including next year's budget
projections, they include the numbers from the alternative minimum tax
for revenue.
Mr. Speaker, at this time I would like to yield 1 minute to the
gentleman from North Dakota (Mr. Pomeroy).
Mr. POMEROY. I thank the gentleman for yielding.
Mr. Speaker, I find this debate absolutely incredible. If you pull it
up on the Treasury Department's own Web site, the national debt of our
Nation this past week went over $9 trillion.
And the bright dividing line between the parties in the debate today
is that our friends on the minority side want to drive that debt even
deeper and that our friends on the majority side say enough additional
debt for our children.
We either find a way to pay for this AMT fix or 23 million people get
a tax increase or we pass the debt on to the children. Now, I am glad
about the bipartisan agreement that we should do

[[Page H13449]]

something to stop the 23 million from getting the AMT tax hit. But we
cannot just run that credit card balance even higher, just lay this
debt onto our kids.
It's time we face the music and we begin paying for the costs that we
are incurring. We have got to put this budget in order, and we need to
start with this bill.
Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from
Texas, the distinguished ranking member of the Social Security
Subcommittee (Mr. Sam Johnson).
(Mr. SAM JOHNSON of Texas asked and was given permission to revise
and extend his remarks.)
Mr. SAM JOHNSON of Texas. Mr. Speaker, I rise today to oppose the
permanent tax hike to pay for a 1-year extension of current law.
The alternative minimum tax is a taxing machine, put into law 40
years ago by a Democrat Congress to tax 155 of the wealthiest families
in America.
The AMT patch before the House today will prevent a tax increase on
families who make just over $66,000 a year. These aren't the
superwealthy. In fact, in my congressional district, a family of four
making $66,000 a year is considered a moderate income. Apparently, the
Democrats in the House consider the rest of my constituents
superwealthy.
Even this paltry relief will be offset with permanent tax increases.
The tax increase on real estate partnerships is among the most
destructive taxes that could be devised. At a time when most of us in
the Congress are concerned about the real estate market, our colleagues
who vote for this bill today are waging an attack on free enterprise.
We must vote ``no'' on this huge tax increase.
Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent to
enter into the Record a colloquy between myself and Mr. Watt.
The SPEAKER pro tempore. Colloquys may not be entered into the Record
by unanimous consent; they must be spoken.
Mr. NEAL of Massachusetts. Then I will ask the gentleman from North
Carolina to remain here and perhaps we can do it face to face.
Mr. Speaker, at this time I would like to yield 1 minute to the
gentleman from Connecticut (Mr. Larson).
Mr. LARSON of Connecticut. Mr. Speaker, I rise in strong support of
this legislation.
Our colleague Artur Davis on the committee, in direct inquiry, in
talking and eliciting a response, said the following: 138 million
Americans will be filing taxes. Under 50,000, under 50,000 of them,
will be filing with carried interest. And you know what? They are going
to make, I believe, $936 billion. With this act that we are passing
today, we are going to impact 23 million people, many of whom are going
to be earning as little as $40,000.

{time} 1215

Now, here's the deal, the people who earned $936 billion, next year,
God forbid, they are going to be making $934 billion. Makes you
tremble.
Your party has become part of the Save the Schwarzman Seven instead
of looking out for the interests of our people.
Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished
ranking member of the Select Revenue Measures Subcommittee, in which
some of this bill was developed, Mr. English.
Mr. ENGLISH of Pennsylvania. I thank the gentleman.
As chairman of the Zero AMT Caucus, I rise to strongly oppose this
wrongheaded measure, which instead of offering a prescription for tax
relief or tax reform, which they promised at the beginning of the year,
it is a placebo that imposes a permanent tax increase in exchange for
the false promise of temporary tax relief.
This legislation, as the other side has said, is all about hostages
and brinkmanship. Their budget was built on the quicksand of AMT
revenues that assumed the revenue from taxing 23 million people under
the AMT. Now we have to raise taxes to protect them. They are using
this crisis as a locomotive to drive higher taxes.
But those aren't the only hostages, Mr. Speaker. Other taxpayers are
being held hostage to delay. Already, this is the longest Congress has
gone into the year without dealing with the AMT's reach ever. The IRS
and Treasury have indicated that this delay will, at best, cause
massive chaos and confusion in the upcoming filing season, but at
worst, it is the likely scenario, since this bill was put forward dead
on arrival with the Senate and the House, 50 million taxpayers could
find their refunds delayed by many weeks.
But that isn't the only hostage. The extenders are being held
hostage. Everyone who utilizes the extender deductions on State and
local taxes, the tuition deduction, expenses for school teachers,
combat pay under the EITC, mortgage bonds for veterans, companies that
use the R&D tax credit or certain charitable contributions, these
extenders are going to be delayed if it is tied to this dead-on-arrival
bill.
Mr. Speaker, this bill does nothing to deal with what they said was
their top priority, which is reforming or getting rid of the AMT. It's
bad tax policy. It's a large tax increase no matter how they dress it
up. And it's a tax increase coming at a time of economic slowdown. Just
say ``no.''
Mr. NEAL of Massachusetts. Mr. Speaker, I was with the ranking member
of the Rules Committee yesterday, and he said that everything was fine,
the economy was doing great.

General Leave

Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent that
all Members may have 5 legislative days in which to revise and extend
their remarks and include extraneous material on H.R. 3996.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
Mr. NEAL of Massachusetts. Mr. Speaker, at this time, I would like to
recognize the gentleman from Illinois (Mr. Emanuel) for 1 minute.
Mr. EMANUEL. Mr. Speaker, President Kennedy once said, ``to govern is
to choose.'' Both parties are presenting different choices:
Republicans, another decade of debt and tax breaks for the well off;
Democrats, an end to the red ink and middle-class tax cuts.
The Republican Congress and President Bush ran up $4 trillion of new
debt in the shortest period of time in American history. All the while,
economic insecurity is at an all-time high for the middle class,
incomes are stagnating, and homes are losing their value. Since 2000,
the cost of health insurance has risen 80 percent, college costs up 44
percent, prices at the pump up 89 percent.
Democrats promised to bring tax fairness to the Tax Code, and we
promised to help every American secure the pillars of a middle-class
life, raising a family, buying a home, paying for college, and saving
for retirement. Today we have a chance to make good on our promises.
This bill protects 23 million families from the AMT, gives 30 million
homeowners the ability to deduct property taxes, helps 12 million
children with a larger tax credit, and provides 4.5 million families
help to pay for rising college costs, all without adding a penny to
President Bush's $9 trillion debt.
The choice is clear and the choice is simple.
Mr. McCRERY. Mr. Speaker, at this time, I yield 2\1/2\ minutes to a
distinguished member of the Ways and Means Committee, the gentleman
from New York (Mr. Reynolds).
(Mr. REYNOLDS asked and was given permission to revise and extend his
remarks.)
Mr. REYNOLDS. I thank the gentleman from Louisiana.
Mr. Speaker, I listened very carefully to the chairman of the Ways
and Means Committee, as he opened up, on what we agreed on and maybe
what we disagreed on, and I have listened to a number of speakers.
First of all, on the Ways and Means Committee members before me, I want
to be associated with the observations and comments that they've
brought to the floor today.
We opened this year, as the ranking member of the subcommittee, Mr.
English, mentioned, with hope and optimism that we were going to repeal
AMT; not reform it, not push it around, not raise taxes on it, but
repeal it. As time ticked on, we had hearings, and hope faded. Hope
then got cloudy, then hope wasn't real.
As we're sitting here in November, the Secretary of Treasury has
responded to my letter and letters written by Mr. McCrery and Mr.
Grassley, and in that, answering the fact

[[Page H13450]]

that we have missed some dates, missing one right now on November 6,
that the IRS is going to print the 1040 forms, and next week, on
November 16, they're going to print all the other forms. Now, I take
that a little personal because last year, the 1-year patch, without a
tax increase, was passed on an initiative that I introduced and was put
into a bill in May, May of last year, without a tax increase. And you
know what? This body passed it 414-4; didn't have tax increases, didn't
have a lot of gimmicks, just got the job done.
I want to remind my colleagues on the other side of the aisle, you're
not just touching 23 million Americans by this delay in the failure and
the shortcoming of getting an agreement between the two bodies and the
White House; you're making it about 49 million, because the letter also
said, from the Secretary, that others are impacted by this needless
delay.
Now, I don't mind having a constitutional message about our
prerogative in the House to initiate anything we want in Ways and Means
relative to taxes, but there comes a time, even for a new majority of
the other side, to understand when pragmatism sets in, that we didn't
get a permanent fix, we didn't even get a repeal, we didn't even get a
1-year patch, however you wanted it. What we got is, today, a failed
approach.
And to the new Members who have never served in this body before on
either side of the aisle, you're going to hear ``tax gap,'' ``tax
fairness,'' ``tax equity.'' I promise you that results right here in
this bill as a tax increase.
Vote ``no'' on this bill, and let's get the work done before we go
home for Thanksgiving.
Mr. NEAL of Massachusetts. Let me quickly decipher what my friend the
gentleman from New York said. He said, ``Let's borrow the money.''
I yield 1 minute to Mrs. Tubbs Jones, the gentlewoman from Ohio,
former District Attorney.
Mrs. JONES of Ohio. I thank my chairman for giving me this
opportunity to be heard.
You know, my friend from New York, I tried to feel what he was saying
to me. And it was emotional and everything, but it did not speak to the
issue that we're talking about.
I went to law school, and I wanted to be a civil rights lawyer. I
thought that if I was a great civil rights lawyer, I could really help
the people of America, the people that live in my community. But I
should have been a tax lawyer, because had I been a tax lawyer, then I
would have better understood how I could help middle-class families by
fixing the AMT. If I had been a tax lawyer, I would have understood how
I could help people purchase homes and get a benefit from it. Had I
been a tax lawyer, I would have understood how fairness operates in the
United States of America through the Tax Code, because by the Tax Code,
poor people might have a chance, working people might have a chance.
I say to my colleagues today, vote for this, vote for this bill. It
may not be all that we wanted. And if you think about it, if we hadn't
spent so many trillions of dollars in Iraq, maybe there would be a pay-
for in this legislation.
Mr. Speaker, I am pleased to see that today, the House is taking up
tax relief for the 23 million Americans who otherwise would be saddled
with the onerous alternative minimum tax. In addition, we are also
providing relief for 7.4 million low-income workers by increasing the
Earned Income Tax Credit.
Families across America will this weekend sit down at the dinner
table take an accounting of their personal finances and balance their
checkbook. The Government is charged with balancing the checkbook of
the United States. While I enthusiastically support the efforts of
private equity and hedge fund managers, I am very aware that service
income is just that and should be taxed that way--at ordinary income
rates. It is the responsible thing to do because we must not mortgage
our future by continuing to borrow from foreign countries such as
China.
We are also, Mr. Speaker, enabling more than 6.5 million working
families to use the refundable Child Tax Credit. This is allowing more
families to remove themselves from the depths of poverty. This
legislation is helping Americans help themselves. It is okay to ask
people to pull themselves up by their bootstraps, but if they don't
have boots, we are asking too much. H.R. 3996, the Temporary Tax Relief
Act is sound legislation, progressive tax policy and the right
direction for America.
When a member of Congress hails from one of the poorest congressional
districts in America as I do, there is a special responsibility to
ensure that the interests of constituents are being addressed. That is
why I am pleased to see that while we are pursuing a patch for the AMT,
we are also increasing the Earned Income Tax Credit for an additional
7.4 million low-income workers.
The alternative minimum tax is an important issue for the American
middle class taxpayer who does not get to take advantage of
sophisticated tax planning and legal loopholes in the tax code. It is
time that we addressed this issue once and for all to relieve the
American taxpayer from the agony and pain that arise from having to
figure out their taxes twice in order to come up with their tax
liability.
It is particularly ironic that a tax that was meant for a few wealthy
individuals has become the bane of existence for millions of American
taxpayers, who could be affected. Indeed the AMT has become a menace.
Over 7,000 hardworking Ohioans in my district had the grim task of
filing a return with AMT implications in the 2005 tax year. Those are
families with children, healthcare costs, unemployment issues, housing
costs and the other money matters with which American taxpayers must
cope. Relief is due.
We should consider alternatives to this alternative that might
include a complete repeal. Relief is due. ``Taxes are what we pay to
live in civilized society,'' but dealing with the AMT has become a bit
uncivil.
On the one hand we have people that have to live paycheck-to-paycheck
and on the other hand we have partners in partnerships, whether they be
real estate or private equity who sippeth from the public trough. I am
cognizant that many of these partners work diligently to bring
companies to market and to grease the wheels of capitalism from which
we all benefit, from East Cleveland to East L.A. to East Harlem. As I
mentioned after the introduction of Representative Levin's H.R. 2834,
we must applaud the efforts of American capitalists and the strides
that they make in fostering growth in our economy and, the global
economy to wit. Yet we must also tax compensation income as
compensation income and capital gains thusly.
We must also be mindful of the effect that our tax policy has on
potential reinvestment in low-income and minority communities. It is
important to note that women and minorities are often the last to the
table and just when they are getting ready to participate in the large-
scale ``financial festival'' that is private equity and hedge funds,
etc, the rules appear to be changing. It is incumbent upon members of
the aforementioned parties that fair and equitable tax policy should
not be confused with the opening up of capital markets and the
extension of new opportunity.
The tenets of sound tax policy begin with the notions of equity,
efficiency and simplicity. Relying on that traditional framework I am
sure that we have come to a rational consensus.
Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished
member of the Ways and Means Committee, Mr. Brady from Texas.
Mr. BRADY of Texas. Mr. Speaker, make no mistake, there are good
things in this bill.
I think it's important that we address the AMT. It was created in
1969 by a Democrat Congress for the wealthy. Now it's affecting our
teachers and our firefighters and just average families.
There is a State and local sales tax deduction in this bill, very
important for families because sales taxes really add up fast. But
these tax increases are troubling and risky. Like AMT, there are
unintended consequences that will damage our economy.
We are launching an assault on the real estate and housing industry,
increasing taxes on second homes and leveling a potentially devastating
tax increase on real estate partnerships.
Now, these real estate partnerships, there are a lot of them. People
say, oh, it's just corporations. There are 1.1 million partnerships who
have done nothing wrong in America but build apartments in our
communities, shopping centers, office buildings and industrial parks.
This tax is seen as the most potentially devastating tax on them since
1986, which launched massive loan defaults and foreclosures. These are
traditional real estate partnerships.
And people say, well, we are aiming at Wall Street. Well, they are
aiming at Wall Street, but they're going to hit Main Street America,
and the result is lower property values, fewer construction jobs, and
risky lending in real estate partnerships who have done nothing wrong.
And finally, this bill levies a $2 billion tax increase on families
who have

[[Page H13451]]

scrimped their whole lives to get a second home. These are not wealthy
people. The average income is about $82,000 for those who buy a second
time. And 40 percent, four out of 10 sales last year were second home
buyers, people who scrimped on their first home so they might have a
cabin or a place by a lake or something for their family to retire to.
These higher taxes are going to damage their investments. They're going
to lower property values. It's going to hurt every community across
this country that relies upon these second homes. Whether you're at the
lakes, the river, or out in the parks, these tax increases are
dangerous.
Mr. NEAL of Massachusetts. There shouldn't be any confusion, Mr.
Speaker, this bill cuts taxes for tens of millions of people.
At this time, I yield 1 minute to the gentleman from Washington State
(Mr. McDermott).
(Mr. McDERMOTT asked and was given permission to revise and extend
his remarks.)
Mr. McDERMOTT. Mr. Speaker, I just want to say what the real issue
here is. The Republicans are willing to say that 50,000 rich fat cats
are more important than 21 million middle-class folks in this country.
Now, the people they're defending are people who have an adjusted
gross income of $1 million, or more, who knows, and those folks are
paying a 15 percent tax rate. That means they have to pay $150,000 in
taxes. Oh, my God, they have to get by on $850,000. What we're saying
is, let's tax them like the fireman who pays 30 percent. Thirty percent
of $1 million is $300,000. Those poor people, they'll only have
$700,000 to get by on. That's what it's about, folks.
Congress has an opportunity to demonstrate real leadership today by
supporting a visionary proposal put forward by Ways and Means Chairman
Charles Rangel of New York.
First, we're going to help millions of middle class Americans by
passing the tax extenders that are included in this legislation;
without them, 23 million Americans would be harmed by a tax provision
called AMT that was never intended to affect and hurt the middle class.
As part of the extensions in the bill, I included a provision that
will extend the deduction for payment of local sales tax. Yes, people
in my State of Washington will benefit, but so will taxpayers in the
eight other States where there is no State income tax.
I am pleased that Mr. Brady joined me in this important matter. It is
another sign that we have produced legislation that is bi-partisan.
This is only a 1-year extension, but I think we will have an
opportunity to make it permanent when the House begins considering tax
reform, and the visionary proposal put forward by Chairman Rangel.
Fact is, we are restoring fiscal discipline and so even good
proposals that rightly benefit people cannot be fully implemented all
at once because of the need to find ways to actually pay for what we
propose to spend or return. And that may be the most important point of
all.
Chairman Rangel has produced an honest proposal based on dollars and
sense.
What's different today, Mr. Speaker, is that this House has decided
to pay for this tax relief.
We are going to save middle America from the alternative minimum tax,
and do so by closing the big tax loopholes that billionaires have been
driving their Hummers through.
On Wednesday, the Department of the Treasury informed the Nation that
we are 9 trillion dollars in debt. Last month President Bush signed the
fifth debt-limit increase since the beginning of his term.
He talks about being a fiscal conservative but his Republican
Congress emptied your wallets and borrowed astronomical sums of money
on credit.
As a result of this fiscal mismanagement, the dollar is on the brink
of collapse and the Chinese are suggesting they'd prefer to hold debt
in Euros instead of the greenback. It's not just the credit markets on
Wall Street that are in trouble. Our public credit market is in
jeopardy, too.
So what does the Bush Administration and his rubber-stampers in the
minority suggest? They want to extend these tax cuts, but borrow the
money to pay for them.
That's not the kind of leadership America needs. I urge support of
this bill.
Mr. McCRERY. Mr. Speaker, may I inquire as to the time remaining for
each side.
The SPEAKER pro tempore. The gentleman from Louisiana has 11 minutes
remaining. The gentleman from Massachusetts has 9\1/2\ minutes
remaining.
Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished
ranking member of the Budget Committee and a member of the Ways and
Means Committee, Mr. Ryan from Wisconsin.
Mr. RYAN of Wisconsin. I thank the gentleman for yielding.
You know, I want to clear up a couple of facts. The other side has
been saying this provides tax relief, reducing taxes for 10 million,
millions of people. No, it's not. People's taxes are not going to go
down. If this bill passes, 23 million people will not see lower taxes
next year. They may not see a tax increase.
This is not about cutting people's taxes. This does not provide tax
relief. This prevents tax increases on some and raises taxes on others.
So let's be very clear here; what the majority is trying to do and what
their new rules do is they say, if you want to bring a bill to the
floor to address the alternative minimum tax, you better raise taxes,
because that's the only legislation we'll accept.
What the majority is doing is they're saying, by not raising taxes on
people, we're giving them a tax cut. Holy cow. That is new logic. We
are simply saying, let's not raise taxes. That's it. Period. End of
story.
This tax law was never meant to be. It was never designed to tax all
of these people. We all agree on this. And so I find it kind of
puzzling that we're bringing this bill to the floor, which we know will
not pass law. The other body won't even bring it up for a vote, so it
just shows how bound and determined the majority is to raise taxes, how
bound and determined they are to put on this new glide path of going to
taxing our economy, our society, our workers, our families more than we
have in the history of our country.

{time} 1230

They are saying, we don't like the alternative minimum tax, but we
want those tax revenues. So instead of taxing people this way, we are
going to tax people that way and get all this new money into the
Federal Government.
Mr. Speaker, the problem in Washington is not revenues; the problem
is spending. Both sides could do a better job on spending. I freely
admit that. Let's focus on controlling spending and not raise taxes.
Mr. NEAL of Massachusetts. Mr. Speaker, we appreciate that epiphany,
that after 6 years of a Republican Congress and a Republican President,
they are blaming spending on the Democratic Party.
Mr. Speaker, I yield 1 minute to the gentleman from Oregon (Mr.
Blumenauer), a thoughtful member of the Ways and Means Committee.
Mr. BLUMENAUER. Mr. Speaker, my Republican friends are shocked,
shocked that a tax that they have ignored for 7 years is suddenly going
to come into effect. Mr. Neal, Mr. Rangel, and others on our side of
the aisle have been claiming this for years. Instead of specious tax
cuts for a few, let's deal with the real meaningful problem: they
ignored it. The red line that my friend Mr. Ryan had on his chart is
the red line that is assumed by the Republican administration to
justify their budget.
This proposal is not a tax increase. Over the next 10 years there
will be exactly the same amount of money collected by the Federal
Government. What is different is that there are three provisions that
most Americans would say are modest technical provisions, including
adjustments to carried interest rates. In exchange for that we will
protect 23 million middle-class families from paying the AMT; provide
30 million homeowners with property tax relief; help 12 million
children, by expanding the child tax credit; benefit 11 million
families through the State and local tax deduction. That is the
difference and that is why you should vote for it.
Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the gentleman's enthusiasm for his point of view doesn't
make his point of view correct. In fact, Republicans time and time
again protected taxpayers, middle-class taxpayers, from the application
of the AMT. That is why there's a patch in place today; that is why
last year those 21 million taxpayers didn't pay the AMT. In 1999, I
would tell the Speaker to inform the gentleman, the Republican Congress
repealed the AMT and, unfortunately, President Clinton vetoed that
repeal. So I would take issue

[[Page H13452]]

with the gentleman's characterization of the Republican Congress's
actions with respect to this issue.
At this time, Mr. Speaker, I yield 2 minutes to the distinguished
member of the Ways and Means Committee, the gentleman from Virginia
(Mr. Cantor).
(Mr. CANTOR asked and was given permission to revise and extend his
remarks.)
Mr. CANTOR. Mr. Speaker, I rise in opposition to the Democrats'
approach to try and patch the AMT, on several grounds. First of all, I
want to associate myself with the remarks of the gentleman from
Wisconsin to the application of the Democrats' PAYGO rule because it
has turned into ``we cannot do anything in this body without raising
taxes.'' Someone has likened this approach to tax hikes on speed dial,
and I heartily agree.
But I also rise in opposition because I believe that this particular
bill in the context of the larger bill being proposed by the chairman
of the Ways and Means Committee is nothing but a job-killer. One of the
statements made by my colleague on the other side of the aisle was that
somehow this tax hike targets only some of the wealthiest individuals
in the world. You know, that is probably what the Congress said back in
1969 when they were passing the AMT: we only want to tax the wealthy.
But when you look at it, this provision, the provision of carried
interest impacts not just those famed partnerships in the money centers
of this country but it impacts the real estate partnerships, the ``mom
and pop'' investment partnerships across this country that, frankly,
fuel seven out of ten jobs across America. Where in the world do we
think these small businesses are going to come up with the money to pay
these taxes? They are going to come up with the money by not creating
new jobs; they are going to come up with the money by not offering
health benefits to their employees. Let's face it, money does not come
out of thin air.
The next allegation is no one is going to stop investing in this
economy, no one is going on economic strike if we raise the price of
investment in this country. Well, have you looked at what is going on
in our financial markets today? Look at the announcement from China,
shifting $1.4 trillion of their reserves out of the U.S. dollar. Have
you looked at the fact that people are not investing in housing any
more, the subprime mortgage crunch?
Mr. Speaker, I would say it is an understatement to say that this is
a job-killer.
Mr. NEAL of Massachusetts. Mr. Speaker, 94,000 teachers in Virginia
are going to benefit from this proposal today and 133,000 families are
going to take advantage of the college tuition deduction in the State
of Virginia.
Mr. Speaker, I yield 1 minute to the distinguished gentleman from New
Jersey (Mr. Pascrell), a member of the Ways and Means Committee.
(Mr. PASCRELL asked and was given permission to revise and extend his
remarks.)
Mr. PASCRELL. Mr. Speaker, I want to associate my words with the
gentleman, my good friend from Wisconsin, also. You say ``tomato,'' he
says ``tomato.'' You call it tax relief; you call it tax cut. You make
the choice. You think that the Bush administration and their
congressional allies would be in support of this measure. Instead,
Republicans are hysterically crying because this bill asks private
equity managers to pay the same rate in taxes as most folks in this
room. Why should the richest of all Americans pay only 15 percent in
taxes when a doctor or lawyer pays 35 percent? Why should the kings of
Wall Street only pay 15 percent on their contingency fees when most
teachers and police officers pay 25 and 30 percent?
I have heard repeatedly in this debate that private equity managers
are involved in a risky business so they should be rewarded with the
lowest tax rates around. But the risk they carry is on other peoples'
money, not their own. When you want to talk about risk, how about the
firefighter that rushes into a burning building? Are Republican
priorities so skewed that they will spend all their time and effort
ensuring that financiers pay less in taxes than first responders? No
way.
It is another day, and another example of prudent, sound, fiscally
responsible legislation from the Democratic majority. Unfortunately,
it's also another day of cheap rhetoric and skewed facts from the
Republican side of the aisle. Indeed, the debate today says a great
deal about the misplaced priorities and values of the other side.
Democrats are bringing to the floor a bill that will prevent the
Alternative Minimum Tax from hitting 23 million taxpayers this year
while also upholding our commitment to fiscal responsibility by
complying with Pay-Go rules. You'd think that the Bush Administration
and their congressional allies would be in support of such a measure.
But no. Instead, Republicans are hysterically crying because this bill
asks private equity managers to pay the same rate in taxes as everyone
else.
Why should the richest of all Americans pay only 15 percent in taxes
when a doctor or lawyer pays 35 percent? Why should the Kings of Wall
Street only pay 15 percent on their contingency fees when most teachers
and police officers pay 25 to 30 percent?
I've heard repeatedly in this debate that private equity managers are
involved in a risky business, so they should be rewarded with the
lowest tax rates around. But the risk they carry is on other people's
money--not their own.
And you want to talk about risk? How about the firefighter that
rushes into a burning building? Are Republican priorities so skewed
that they'll spend all their time and effort ensuring that financiers
pay less in taxes than first responders?
This legislation is wise and it is fair. It will give tax relief to
23 million hard working Americans while ensuring fairness in the tax
code. And if it wasn't for the campaign contributions from Wall Street
this bill would pass unanimously.
Mr. McCRERY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Texas (Mr. Hensarling).
Mr. HENSARLING. Mr. Speaker, this bill is very cleverly entitled the
Temporary Tax Relief Act of 2007. But there's no tax relief here; no
tax relief at all. All they do is for one year postpone a huge
automatic tax increase on some people and they combine that with a $76
billion tax increase on others. So maybe the ``temporary'' is accurate,
the ``tax relief'' is not. All they are doing is rearranging the deck
chairs on the Titanic tax ship. That is what this bill is all about.
AMT ought to stand for ``automatic major taxation.''
When I hear my Democratic friends decry it, they have had opportunity
to get rid of this bill in the past, and perhaps there are some
freshmen here, if they haven't had an opportunity, I would invite them
to cosponsor the Taxpayer Choice Act, which would permanently repeal
this huge automatic tax increase.
But, wait, our Democrat friends say, well, you have got to have
something that is revenue-neutral. Well, guess what? Fully repealing
the AMT is revenue-neutral. It is revenue-neutral to the taxpayer, the
one who counts; not revenue-neutral to the Federal Government, but
revenue-neutral to the hardworking taxpayer, the teacher, the fireman,
the person who's trying to send their kid to college, pay for their
mortgage payment. And you take that away. That is wrong. Vote this bill
down.
Mr. NEAL of Massachusetts. Mr. Speaker, 284,000 teachers in the State
of Texas will benefit from the proposal that is before us today.
Mr. Speaker, I yield 1 minute to the gentlewoman from Nevada (Ms.
Berkley), another member of the Ways and Means Committee.
Ms. BERKLEY. Mr. Speaker, I rise today in support of this bill that
provides tax relief to parents and teachers, college students,
homeowners and to millions of other middle-income Americans. If this
legislation is not passed, more than 128,000 Nevada taxpayers will be
slammed by the alternative minimum tax. This includes more than 30,000
people in my district alone.
I believe the alternative minimum tax should be eliminated, but this
bill provides a necessary temporary solution to protect over 20 million
Americans who will be hit by the AMT in 2007. Nevada residents will
benefit from the extension of the deduction for State and local sales
taxes contained in this bill. For homeowners, this bill extends the tax
deduction for private mortgage insurance, and it provides relief to
those who lose the roof over their heads by eliminating the foreclosure
tax.
This bill ensures that more hardworking parents will be able to
benefit from the child tax credit. But, most important, the tax relief
in this bill is fully offset and will not add a single dollar to the
national debt.

[[Page H13453]]

Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from New
Jersey (Mr. Garrett).
Mr. GARRETT of New Jersey. Mr. Speaker, earlier we heard from the
other side of the aisle that President Kennedy once said: ``To govern
is to choose.'' Well, so it is, and we have seen how the Democrat
majority of this House has decided to choose when it comes to the issue
of tax and spend. They always choose tax.
In the very opening comments from the Democrat chairman of the Ways
and Means Committee, he said that one of the options they could have
considered was cutting spending in the United States Government for
once, but they immediately dismissed that, saying that that was simply
politically undoable for the Democrat Caucus.
So instead what they do they do? They raise taxes. Their proposal,
they say, is to tax the rich. But really what they are saying is try to
rob Peter to pay Paul and then go and try to convince Paul that Peter
is paying and convince Peter that Paul is paying. But the American
taxpayer knows that all of middle-class America will be paying for this
tax increase.
This tax increase, a $76 billion tax increase over 10 years, follows
a litany of other tax increases. I was on the floor last night and I
went through about a dozen Democrat bills which, combined, totaled
about $110 billion in tax increases on top of the largest tax increase
in their budget. Vote ``no'' on this.
Mr. NEAL of Massachusetts. Mr. Speaker, 619 businesses in the State
of New Jersey will take advantage of the research and development tax
credit.
Mr. Speaker, I yield 1 minute to the distinguished gentleman from
Maryland (Mr. Van Hollen), a member of the Ways and Means Committee.
Mr. VAN HOLLEN. Mr. Speaker, this bill provides tax relief to more
than 24 million American families and corrects a huge inequity where
many people have been forced to pay taxes on phantom income, income
they never earned. Today, we gather to fix two big problems left behind
by the Republican Congress under President Bush. One is a huge middle-
class tax increase that they left hanging over the heads of the
American people, a tsunami, that if we don't act today, will crash down
on 124 million American taxpayers.
The Republican Congress under President Bush could have addressed
this problem. They chose not to. It just was not a priority for them.
They instead spent their time providing tax increases that went to the
very wealthiest Americans and left the rest of the country holding the
bag of $9 trillion debt, a debt that costs the American taxpayer $3,300
each year to pay the service on that debt, the debt that they ran up.
Mr. Speaker, today we can pass tax relief in a fiscally responsible
manner. Let's get it done.
Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from
California (Mr. Campbell).
Mr. CAMPBELL of California. Mr. Speaker, let's look at what this bill
does. It basically leaves the alternative minimum tax the same as it is
now. That is not a tax cut. But to ``pay'' for leaving some taxpayers'
taxes alone, they are going to raise other people's taxes. Now, I'm
sure that in a moment the gentleman from Massachusetts will give some
number of taxpayers in California he says will benefit from this. Those
taxpayers will benefit from having their taxes the same as they are
now. What the gentleman will not say is the number of taxpayers in
California whose taxes will be increased by this bill, and there will
be many. So some people's taxes stay the same and others go up.
Mr. Speaker, this bill is a straight-up, direct, unadulterated tax
increase. It will not be the last straight-up tax increase brought to
you by this Congress.
Mr. NEAL of Massachusetts. Once again, what the gentleman said is we
should borrow the money.
Mr. Speaker, I yield 1 minute to the gentleman from Alabama (Mr.
Davis), a distinguished member of the Ways and Means Committee.
Mr. DAVIS of Alabama. Mr. Speaker, my colleague from California and
my friend from Texas are right, this bill is not burden-free. This is
who bears the burden: 36,000 to 50,000 individuals who took a deduction
for carried interest, less than two-hundredths of a percent of the
taxpaying population, and what was their combined income in the last
year? Mr. Speaker, it was $935 billion. That is who will bear the
burden.
When Mr. Van Hollen and I came to the Congress, here's who bore the
burden every time they brought tax bills to the floor: college students
who were pushed into paying higher loans, families on Medicaid who were
pushed into paying higher premiums, people who were pushed into having
their benefits taken away when they need them, and soldiers who lost
the earned income tax credit for some of their families.

{time} 1245

Under this majority, the people who bear the burden when we have to
make difficult choices will not be the people who are working and
sustaining this country day in and day out. Yes, someone will bear the
burden; a very, small narrow category of the super-rich.
Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from New
York (Mr. Fossella).
Mr. FOSSELLA. I thank the gentleman for yielding. It is great,
because in other countries, sometimes opposition candidates get put
under house arrest. Here in this great institution we have the debate
in plain view. And as has been mentioned repeatedly, there is just a
clear distinction on how to solve this problem.
Personally, I think I speak for many, the AMT is a problem, and it is
a problem for 52,000 people living in Staten Island and Brooklyn, many
of whom, by the way, are small business owners, are those firemen and
police officers and teachers who are working sometimes two, three and
four jobs to put food on the table. We should abolish it. Abolish it
once and for all, as has been suggested.
Put simply, this is a wolf in sheep's clothing. We know what it will
do. This is the first installment on what will be the largest tax
increase in American history. My concern is more than just being an
American citizen here. My equal concern is what will it do to New
York's economy.
People talk about how we are going to pay for firefighters and police
officers. We know that this bill will punish investment, punish
capital, kill jobs that in large part go to fund the salaries of those
firefighters and police officers and teachers who do a great job every
day. It is a clear distinction, a clear disagreement on where we are
going. Kill this bill.
Mr. NEAL of Massachusetts. Mr. Speaker, there are 1,462 businesses in
the State of New York who will take advantage of the research and
development tax credit that we extend today.
Mr. Speaker, with that, I yield 1 minute to the gentleman from
Maryland (Mr. Hoyer), the distinguished majority leader.
Mr. HOYER. I thank the gentleman for yielding.
Mr. Speaker, this debate must be somewhat confusing for the American
public. First of all, almost every one of us stands and says that we
want the alternative minimum tax fixed. We want it fixed because of the
presumption of the alternative minimum tax, which I support and which I
will not vote to repeal unless we pay for it. I want you to know that I
speak as the father of three daughters, as the grandfather of three
grandchildren, and as the great-grandfather of one great-granddaughter.
I have listened to this debate. I am going to speak about this debate,
and I am going to refer to history. My friend Mr. Ryan knows what I am
going to say because I have said it before, but I believe the American
people need to know this.
Let me place it in context. I have served in this body for 26 years.
During that time, Republican Presidents have served for 18 of those
years. A Democratic President, President Clinton, served for 8 of those
years. During the Presidencies of President Reagan, President George
Bush and the present President Bush, we have accumulated deficits in
America of $4.1 trillion of deficit spending.
Now, there is only one person in America who can stop spending in its
tracks. Just one. Not me, not anybody on this floor. We need 217 other
people to do that with us. But one person can stop spending in its
tracks. And in the 26 years that I have been in the Congress of the
United States, no President has had a veto of a spending bill

[[Page H13454]]

that spent too much overridden. Not one.
This President has vetoed no spending bills under Republican
Congresses. Not one. No matter how much they spent. And, by the way,
ladies and gentlemen of this House, they spent at twice the rate of
growth that the Democrats under President Clinton spent.
Now, Republicans were in charge of Congress, but they were in charge
of everything during the first 6 years of this century. Everything.
House, Senate, Presidency.
My friend made the observation that neither side had done too well. I
would suggest my side has done a lot better. Because under my side in
those 8 years of the Clinton administration, we had a $62.9 billion net
surplus after 8 years, and we didn't have to raise the national debt
one time in the last 4 years after we got the deficits created under
the Reagan administration and the first Bush administration down, from
a $292 billion operating deficit when we took over to surpluses during
the last 4 years, and a straight line of reduction every one of the
first 4 years of the Clinton administration.
Why? Because we Democrats believe in spend and pay. You simply
believe in spend and borrow. You believe that it is a politically wise
policy to pursue that ``don't tax the voters, tax the children.'' Tax
the children. Delay the ramifications of spending until tomorrow and
tomorrow and tomorrow, when the children will have to pay the bill,
because, after all, they are not voting.
I have heard a lot of wringing of hands about PAYGO. I know you are
all waiting to hear me read a quote, so I will read it to you. ``With
the other body unable to pass even a budget this year,'' that was
referring to a Republican Senate, by the way, ``we were obviously
unable to reach an agreement on legislation to extend PAYGO and other
budget rules. It is my hope that this can be done next year as part of
a normal budget process. I would close by reminding our colleagues and
Members that the PAYGO rule contributed to taming of deficits over the
past seven years, and it is my hope that a successor to PAYGO can be
developed and coupled with caps on discretionary appropriations.'' That
quote, of course, comes from Jim Nussle.
As a matter of fact, President Bush's administration also said that
they were for PAYGO, until they found out that PAYGO applied to cutting
revenues. And because they didn't want to stop buying, I say to my
friends on the Republican side of the aisle, and you knew that you
would be constrained in buying if PAYGO applied to your tax cuts, which
I supported for the middle-class but not for the skewing of taxes that
I saw in your proposals, that you would have to stop spending, because
you couldn't pay for it. So you jettisoned PAYGO, a premise that was
overwhelmingly adopted by Republicans and I voted for in the 1997
Budget Act, because I believe in balancing our budget.
I have served in legislative bodies for almost 40 years, and I have
found people who like to vote for spending but don't like to vote for
paying. It takes no courage whatsoever, I tell my friends, to take my
credit card out of my pocket and put it in there, sign the little slip
and think I will never have to pay for it, because, by the way, I will
be dead and gone by then and my children will have to pay the debt.
That has been referred to by Mr. Portman as an immoral policy, Rob
Portman, the former Director of the OMB, a former member of the Ways
and Means Committee.
Mr. Speaker, I rise in very, very strong support in favor of this tax
cut for millions of Americans. Will there be an offset? There will be.
And, as I said, I will not vote to fix the AMT unless we pay for it.
Because if we fix the AMT without paying for it, what we will say to
people like Steny Hoyer and every Member of this House, maybe we have a
conflict of interest, because every Member of this House is going to be
affected by this if we don't repeal the AMT, for those of us at this
income level.
So maybe we have a conflict of interest. Maybe we want to save
ourselves a little money, but we don't want to pay for it, because
raising revenues takes political courage. There is no courage
whatsoever in plunging our country into debt, spending and not paying.
It is, as Rob Portman said, an immoral policy, lacking in courage and
lacking in fiscal responsibility.
My friends, we need to pass this bill and give millions of Americans
a tax cut and ensure that millions of Americans will not get a tax
increase. PAYGO is a policy that demands responsibility.
Many of you voted for the bankruptcy bill, as I did. I was criticized
by some because we thought that individuals ought to exercise fiscal
responsibility in the managing of their finances. I think corporately
as a government we ought to do the same.
Mr. Speaker, let no one be mistaken. This is precisely what this
legislation offered by Chairman Rangel was designed to do, give a tax
cut to millions of Americans and preclude millions of Americans from
paying more, and asking other Americans to pay their fair share so
those at the bottom of the rung don't have to pay more to defend our
country, to educate our children, to keep our families healthy.
Mr. Speaker, this tax cut will provide 30 million homeowners with
property tax relief. It will help 12 million children by expanding the
child tax credit. It will help 4.5 million families better afford
college with tuition deductions. It will save 3.4 million teachers
money with deductions for classroom expenses.
My wife was a teacher. She died 10\1/2\ years ago. She was one of the
best people that I have ever met in my life, if not the best. Every
year, we would spend a couple of hundred dollars, and we could afford
it, maybe even a little more than that, to make sure that her kids in
her classroom had things that they needed but were not provided. We are
going to give teachers a tax cut to do that. Our children will be
served and our teachers will be served.
In short, this bill will extend tax credits and deductions that will
benefit a wide array of Americans and the American economy. And, yes,
this legislation helps to restore tax fairness and once again
demonstrates that this Democratic majority is committed to fiscal
responsibility.
Let me restate that figure: 18 years of Republican Presidents, $4.1
trillion of deficit spending. Under Bill Clinton, 8 years, $62.9
billion net surplus. No indebtedness. No indebtedness in the last 4
years.
We are now over $9 trillion in debt. This administration has gone
from $5.7 trillion to over $9 trillion. Republicans were in control of
everything, and spending escalated at twice the rate it did when Bill
Clinton was President.
My friends, this bill is a fair bill. This bill is responsible. This
bill gives tax cuts to millions of Americans and asks some few
Americans to pay their fair share. Vote for this bill. It is good for
America, it is good for our people, it is the right, and as Rob Portman
said, the moral thing to do.

{time} 1300

Mr. McCRERY. Mr. Speaker, I yield myself 1 minute.
There has been a lot said here on the floor today and a lot of it is
one person or one party's spin on the facts or on history. The
distinguished majority leader put his spin on history. I would just
like to point out to the House that for the last 6 years of the Clinton
administration, which was bragged about so by the majority leader,
there was a Republican-controlled Congress. Under the Constitution, the
Congress controls the purse strings of the country and develops fiscal
policy. And under our fiscal policy, we balanced the budget and created
a surplus.
Then when President Bush came into office, he inherited a recession,
a short-lived recession, admittedly, but still a recession. And then we
had 9/11 which was a shock to the economy and then we had war. Every
time in this Nation's history that we have had either a recession or a
war, we have had a deficit. This time is no different. But, under our
policies, we are producing this year 18.6 percent of GDP for Federal
revenues and that is above the historic average. Why do we need more,
Mr. Speaker? This bill would add to that. We don't need to.
Mr. NEAL of Massachusetts. Mr. Speaker, we are not surprised that the
Wall Street Journal reported 3 weeks ago that the American people, with
a two-thirds majority, give Bill Clinton high marks for his Presidency.
With that, I yield 1 minute to the gentleman from Georgia (Mr.
Scott).

[[Page H13455]]

Mr. SCOTT of Georgia. Mr. Speaker, I stand in strong support of this
most important piece of legislation. This is the most important piece
of legislation to stimulate our economy in this entire session.
What we have before us in this House today is a choice: Will you
stand with the few, as my friends on the right are doing? Will you
stand with the few multibillionaires who are not paying their fair
share while the rest of America is paying a 35 percent rate on their
income? Will you stand over there on that side with multibillionaires
who are paying just 15 percent? Will you stand with 30 million American
families who will get property tax relief? Or will you stand with those
who have not, who are hiding behind capital gains, when they know very
well that they are not putting capital in. That's why we have capital
gains at 15 percent. But these fund managers are not. They are being
compensated for ordinary income. Why should they be different than the
housewife and the fireman?
Make the right choice today. Stand with America and let's vote for
this bill.
Mr. McCRERY. Mr. Speaker, to close the debate for our side, I
recognize for the remaining time the gentleman from Ohio (Mr. Boehner),
the distinguished minority leader.
Mr. BOEHNER. Let me thank my colleague from Louisiana for yielding.
Let me say with all the gratitude I have, I love the chairman of the
Ways and Means Committee. He knows I do. I think he and the gentleman
from Louisiana, the ranking Republican on the committee, do a marvelous
job together. But as much as I love our chairman, there is one thing
about his chairmanship that we have a big disagreement over, and that
is the issue of raising taxes.
So far this year we have had $100 billion of new tax increases that
have been passed by this House. Thankfully, none of them have become
law. And, hopefully, none of them will become law. This is $81 billion
in another tax increase. This is a warmup for the $3.5 trillion tax
increase that is coming that was introduced this last week. And so, Mr.
Rangel, as much as I love you and think the world of you, when it comes
to the issue of taxes, I am opposed.
I came to Washington because I thought government was too big, it
spent too much, and took too much out of the pockets of the American
people. So I don't vote for tax increases. I think it is wrong. If you
look at what has happened in our economy over the last 4 years, think
about this: we cut tax rates in 2001, we cut tax rates in 2003. And
what has happened in the last 4 years, Federal revenues, total revenues
to the Federal Government have increased at over 10 percent per year in
each of the last 4 years. As a matter of fact, it is over 11 percent in
each of the last 4 years. This year we expect Federal revenues to rise
another 7 or 8 percent.
So anybody who believes that we have a revenue problem I think is
mistaken. We have a spending problem, and we will not stand up and take
on the spending challenges that we have. We all know we have to step up
and do it, we just can't quite find the courage to get it done.
What is even more irritating about the bill that is on the floor
today is that it is a temporary tax patch to prevent a tax increase
from going into effect for 1 year, paid for by a permanent tax
increase. I am sure that the chairman of the committee would rather not
do it this way, but that's what this bill does. All we are doing again
is putting a permanent tax increase into law.
Now this law and this bill that we are debating is never going to
become law. It is never going to become law because the Senate has made
it pretty clear they are not going to do this bill this way. They are
not going to have this tax increase in this bill. The White House has
made it clear that they are not going to sign a bill that raises taxes.
So here we are playing political games once again and running out the
clock. Running out the clock on whom? Running out the clock on the IRS
and running out the clock on those 50 million Americans who are going
to get a refund next year because, as we all know, this bill will
probably not be done until Christmas. And the confusion that is going
to reign next January, February, and March as people are trying to fill
out their taxes, not knowing whether the alternative minimum tax is
going to apply to them, is going to be confusion enough.
And it gets worse because what is going to happen is that the refunds
that Americans, 50 million of them, are going to expect, are going to
show up 2 or 3 months later than what they expect. And at a time when
our economy is slowing and people are trying to hold onto their homes,
a delay in their refund is going to put a real crimp on American
families.
Now why are we having this big disagreement? This whole issue of
PAYGO, how is it that we are going to extend the current tax rates, the
current tax system for another year, and yet we have to have an $81
billion tax increase to pay for it?
The tax system we have today is going to be the same tax system we
have next year, and yet we have to find some way under these crazy
rules to pay for it.
Now, this is nothing more than a tax increase. For those who believe
bigger government and higher taxes and believe government is the answer
to virtually everything, I can understand why you want to raise taxes.
But I don't believe the American people want their taxes increased.
At the end of the day what I am really confused about is if the
Senate is not going to have this tax increase, and the White House is
not going to sign it and it is not going to become law, why do you want
to take your Members and walk them out on this plank only so it can be
sawed off behind them? I wouldn't do that to my Members; I would hope
you wouldn't do it to your Members.
American middle-class families are already under the gun. They are
paying higher energy costs and higher health care costs, higher
gasoline prices at a time when their incomes are not rising. The last
thing they need is another tax increase from Washington, DC.
I would hope my colleagues would join me in voting ``no'' on this
bill, making it clear to the American people that we understand the
pain that they are dealing with and we should be here to help them, not
to hurt them with higher taxes.
Mr. NEAL of Massachusetts. Mr. Speaker, we hold the same regard for
the distinguished minority leader on this side that they hold for
Chairman Rangel, as well. But the difference is essentially this: the
Republican Party once again proposes to borrow the money to pay for tax
relief. We intend to pay for tax relief.
With that, it is an honor for me to recognize the gentlewoman from
California, the distinguished Speaker of the House, Ms. Pelosi, for the
balance of my time.
Ms. PELOSI. I thank the gentleman for his leadership on the Ways and
Means Committee. I commend the distinguished chairman of the Ways and
Means Committee, and respect the leadership also of the distinguished
ranking member of that committee.
Thank you, Mr. Rangel, for your leadership in bringing this important
legislation to the floor. It enables us as Members of Congress to plant
a flag for fiscal responsibility, to plant a flag for the middle class
in our country, and to plant a flag for competitiveness, to keep
America number one.
Mr. Speaker, this legislation is important because it provides long
overdue middle-class tax relief, preventing a tax increase that will
fall upon the middle class come this next year. The bill is about tax
fairness; it is about fiscal responsibility; and, again, it is about
keeping America competitive.
When we talk about fiscal responsibility, unfortunately, it always
seems necessary, after listening to my Republican colleagues, to set
the record straight.
The Democratic Party is the party of fiscal responsibility. When
President Clinton was President, his four final budgets were in
surplus. He left office with our budget on a trajectory of $5.6
trillion in surplus. Sadly, the Bush administration reversed that
taking us to over $3 trillion in deficit, a swing. Now we are at a
swing of about $10 trillion, a swing that is greater than anyone has
ever seen in history in terms of fiscal irresponsibility.
And what did the Congressional Budget Office under the Republican

[[Page H13456]]

leadership say was the leading cause for that? Tax cuts for the
wealthy. Don't blame it on the war; don't blame it on anything other
than what it really was: tax cuts for the wealthy.
And so today we see a change. Tax cuts for the wealthy under the Bush
administration and a Republican Congress paid for by the middle class.
Today we reverse that: tax cuts for the middle class, paid for by the
wealthiest people in our country.
And as we give this tax break, who is getting it? Think of it, 23
million middle-class families are protected from higher taxes due to
the alternative minimum tax. Thirty million homeowners will receive
property tax relief. Twelve million children will benefit from the
expanded child tax credit, and 4.5 million families will get help
affording college education. This is in addition to our earlier
investment of the largest expansion of college affordability since the
GI Bill in 1944. Thousands of our men and women in uniform will receive
tax relief under the earned income tax credit. They were prohibited
from qualifying for that because our Republican colleagues would not
disregard combat pay in that consideration.
So fiscal responsibility, tax cuts for the middle class, and
competitiveness for our country. This weekend as we go into observing
Veterans Day, we all know the great debt of gratitude we owe our
veterans for their service to our country, their sacrifice, their
patriotism and the sacrifices they and their families are willing to
make.
What veterans have done over the generations is to protect our
democracy. Essential to the success of a democracy, though, is a
thriving middle class, in our country and in countries throughout the
world, a thriving middle class. And this legislation is in furtherance
of supporting that middle class and therefore supporting our democracy.
In keeping with our pay-as-you-go rules with no new deficit spending,
this legislation will ensure that our children will not inherit a
legacy of debt. In terms of competitiveness, this legislation extends
the R&D tax credit and new markets tax credits, among other things; but
I mention those two because they are directly related to our Innovation
Agenda, our commitment to competitiveness to keep America number one.
So, again: fiscal responsibility, favoring the middle class, keeping
America competitive and number one. Democrats are committed to putting
middle-class families first. The choice is simple: tax relief for
millions of middle-class families or protecting tax loopholes, the Wall
Street loophole, that allows a privileged few to pay a lower rate than
America's teachers, firefighters, nurses, doctors, police, and our men
and women in uniform fighting in Iraq and Afghanistan. It is about the
people who are the backbone of America.
The choice is a simple one. Today we Democrats say join us in voting
in favor of America's middle class.
I urge the passage of this legislation and again commend the
distinguished chairman and distinguished Chair of the subcommittee, Mr.
Neal, for their leadership.
I am proud of the courage that my colleagues have shown to protect
our middle class and to do so in a fiscally sound way and in a way
that, again, keeps America competitive, honoring the service of our men
and women in uniform, to build a future worthy of their sacrifice.
Mr. LANGEVIN. Mr. Speaker, I rise today to voice my strong support
for the Temporary Tax Relief Act, H.R. 3996. This comprehensive
legislation will provide fiscally responsible tax relief for hard-
working, middle-class Americans, help stimulate our Nation's small
businesses and provide financial support to public servants nationwide.
The Temporary Tax Relief Act represents a new direction in tax policy
that will offer assistance to thousands of Rhode Island middle-class
families. I am particularly pleased that this legislation includes a 1-
year patch to keep millions of hard-working, middle-class Americans
outside the ever-widening net of the alternative minimum tax, AMT.
Congress first enacted the AMT in 1969 to ensure that 155 wealthy
taxpayers paid their fair share of the Federal income tax, but because
they neglected to index the tax for inflation, it has since become
outdated and unfair. If left unfixed, this year over 23 million
Americans--and 75,000 Rhode Islanders--will be forced to pay nearly
$2,000 in additional taxes.
The bill before us will also expand the refundable child tax credit
by reducing the minimum income eligibility level from $11,000 to
$8,500, thereby allowing more Rhode Island families to take advantage
of this important credit. In addition, this legislation will help stem
the rising cost of higher education by extending the above-the-line tax
deduction for qualified education expenses up to $4,000. H.R. 3996 also
provides much-needed tax relief to homeowners who do not itemize their
deductions by permitting married couples to deduct up to $500, and
single taxpayers to deduct up to $250, in property taxes, in addition
to their standard deductions.
It's not just middle-class taxpayers who will reap the benefits of
this bill. The Temporary Tax Relief Act contains a number of provisions
that will help stimulate our Nation's small businesses, including a 1-
year extension of the Research and Development, R&D, tax credit, which
will keep American companies competitive and spur businesses to invest
in the future and create jobs. Also included is a provision that will
grant small businesses a tax incentive for committing to invest in
local community development.
Finally, H.R. 3996 directs well-deserved financial assistance to our
Nation's public servants. Under this legislation, more than 3 million
teachers will be able to deduct out-of-pocket expenses, including books
and other school supplies, for their classrooms.
I am also proud to support a provision to provide tax relief for
thousands of American troops in combat under the Earned Income Tax
Credit.
Perhaps most importantly, this measure is fully paid for and will not
add a penny to our national debt. We made a commitment to the American
people to abide by pay-as-you-go rules so that our children and
grandchildren will not bear the cost of the decisions we make. Today we
reaffirm our commitment to fiscal responsibility, while maintaining our
promise to helping middle-class families and small businesses
nationwide. I would like to thank Chairman Rangel for his leadership in
crafting a balanced, responsible and urgently needed bill, and I urge
my colleagues to join me in supporting this important legislation.
Mr. CONYERS. Mr. Speaker, the middle class is the economic backbone
of America. But they are increasingly under pressure due to rising
costs in housing, healthcare, and education. To make matters worse, the
Alternative Minimum Tax, AMT, will reach a significant percentage of
them this coming fiscal year. The Congress needs to act. Today, we will
vote on H.R. 3996, the Temporary Tax Relief Act of 2007, which would
ensure that no additional taxpayers pay the AMT this year while also
extending popular tax credits and deductions that expire at the end of
the year.
The Congress created the AMT in 1969 to ensure that the wealthiest
were not finding loopholes in the tax code and thus avoiding paying any
taxes at all. However, because the AMT was not adjusted for inflation
and the tax itself has significantly grown in recent years, it will
affect a large percentage of the middle class. Unless the bill is
enacted, 23 million middle income Americans, who were never intended to
be subjected to this tax, will be taxed at a higher rate than before.
I am pleased to support my friend, Representative Charles Rangel, who
wrote this revenue neutral bill. H.R. 3996 will extend and expand many
popular tax credits and deductions such as the mortgage insurance
deduction, the child tax credit, small business investment write-offs,
a deduction for teachers who use their own money to buy classroom
materials, and the additional property tax deduction, which will
benefit at least 30 million Americans. Furthermore, it will exclude
phantom income deduction from discharged home mortgages, and will also
prevent the Internal Revenue Service from entering into private debt
collection contracts.
Of course, any large tax reform necessarily entails some hard
choices. Recent economic growth has been enjoyed disproportionately by
the top one percent of Americans, who also continue to benefit from
loopholes in the tax code. This bill will take a step towards ensuring
that the wealthy pay their fair share by increasing taxes on private
equity managers, who actually pay lower taxes on carried interest, and
on multinational corporations who offshore their businesses for the
express purpose of tax avoidance.
It is simply unfair for 23 million hard-working middle income
Americans to pay additional taxes while many wealthy private equity and
hedge fund managers enjoy a much lower rate of taxation. H.R. 3996,
restores America's tradition of progressive taxation. What we are doing
here today is a fair and reasonable tax increase on the highest income
earners in the country, who can easily afford it, to benefit millions
of working families.
Ms. HIRONO. Mr. Speaker, I rise in strong support of H.R. 3996, the
Temporary Tax Relief Act.
This bill will provide 23 million American middle-class families--
including more than

[[Page H13457]]

90,000 families in Hawai`i--with tax relief totaling $50 billion.
Without this legislation, these families will end up paying higher
taxes under the alternative minimum tax, AMT.
Our middle-class families are struggling with higher health care
costs, higher college costs, higher energy costs and higher housing
costs and, basically, have not been helped by the 7 years of the Bush
administration. Passing this bill will provide some welcome relief for
our middle class.
This legislation is important in promoting fairness and justice in
the tax system. Why should the richest of the rich avoid among us
paying their fair share in taxes? Today with this bill we are saying
that individuals who earn millions of dollars on Wall Street should pay
their fair share in taxes so that hard-working middle-class Americans
including teachers, police officers and firefighters, won't have to pay
more than their fair share.
The bottom line is, without this bill, 23 million families will have
a tax increase. With this bill, they will be spared from paying more
under the AMT.
I am proud that the Democratic majority is supporting our middle-
class families with this tax relief, and I urge my colleagues to
support this legislation.
Mr. FALEOMAVAEGA. Mr. Speaker, given that American Samoa's private-
sector economy is more than 80 percent open dependent either directly
or indirectly on the U.S. tuna processing and fishing industries, I
rise in support of H.R. 3996 which includes a provision to extend IRS
30A tax credits to American Samoa.
While I asked for a 10-year extension of our tax credits, I
understand that all tax extenders included in this bill received the
same extension of 1-year only. Chairman Rangel has also promised to
continuing to work with me on a more permanent solution for American
Samoa once our local canneries agree on what incentives work best for
them.
It is unfortunate that StarKist and Chicken of the Sea could not
reach agreement in a timely manner regarding whether or not 30A is the
best option for them to remain and invest in American Samoa. Earlier
this year, both canneries agreed that 30A was the way forward. By mid-
year, our canneries were at odds.
Our canneries have also been unable to provide Chairman Rangel with a
clear indication of whether or not they will stay in American Samoa if
they are provided with tax credits. During last Congress, our canneries
also failed to provide Chairman Thomas of the Ways and Means Committee
with assurances of their commitment to American Samoa.
Regardless, I still support 30A tax credits for American Samoa, and
especially for our tuna fishing and processing industries. I also
support opening up 30A for new investors, too, and I will continue to
work with Chairman Rangel to make this, or a similar initiative happen.
In the interim, I appreciate Chairman Rangel's support in extending
tax credits for American Samoa for an additional year while our
canneries go back to the drawing board in an effort to reach agreement.
Mr. MORAN of Virginia. Mr. Speaker, I rise today in strong support of
H.R. 3996, the Temporary Tax Relief Act of 2007. This bill will bring
relief to tens of millions of hardworking American families, including
nearly 100,000 in my district alone.
It makes responsible, sensible changes to the tax code to make it
more efficient and more equitable, changes that are sound both morally
and economically. Most importantly, H.R. 3996 will be the first tax
relief bill of this millennium that did not increase the deficit.
This bill would lower the tax burden on 95 percent of the people
affected by it--which is about as close to perfect as we're able to get
with the tax code. I'd like to commend Chairman Rangel and his staff
for their work on this excellent bill, which I am proud to support
today.
Mr. Speaker, we are at something of an impasse. The President's
budget assumes the revenue next year from a vast expansion of the AMT,
and the President has offered no alternative to either eliminate the
AMT or patch it, likely in recognition of the immense cost to the
treasury. Yet nearly everyone agrees that we must pass some form of AMT
relief this year and that we must do it soon. The Congressional Budget
Office and Joint Committee on Taxation have spelled out specifically
what the cost of a one-year AMT patch would be. It cannot, whatever
tooth fairies we might wish to believe in, be accomplished for free.
What we seem to disagree on is how to reconcile these two truths. We
don't have many choices, Mr. Speaker, and other Members are correct in
pointing out that many of them are difficult. The consequences of
choosing wrong, however, are far too drastic for us to avoid
confronting the problem head on.
If we are to pass an AMT ``patch,'' we can do one of three things: we
can cut benefits in Social Security and Medicare to comply with Pay-Go,
we can raise additional revenue to comply with Pay-Go, or we can waive
Pay-Go and continue financing tax cuts by increasing the federal
deficit and the national debt. That is, we can just irresponsibly pass
the buck to our children and grandchildren.
Mr. Speaker, I do not think it would be possible for me to oppose
waiving Pay-Go in sufficiently strong terms. As the gentleman from
Massachusetts, Mr. Capuano, told us yesterday, this Administration has
increased U.S. government debt by an average of $15,644.93 per second
since they took office.
Pretending that sexual activity among teenagers does not exist will
not reduce the number of new sexually transmitted infections; it will
not reduce the number of teenage girls who become pregnant; and it will
not reduce the number of abortions performed every year.
I want to thank Chairman Obey for including language in this
Conference Report to ensure that programs will not be funded that are
medically inaccurate. I hope that in the future, we can continue to
work together to ensure that our children receive high quality,
science-based, age-appropriate sex education that is medically sound
and free from ideological or religious bias. Despite my concerns about
this program, Mr. Speaker, I am proud to support this important bill
and urge my colleagues to do the same, so that we can get needed funds
to these critical programs as soon as possible.
Mr. SPRATT. Mr. Speaker, three times in recent months, officials of
the Bush administration have come before our committee, and when asked
about the AMT and its impact on middle-income Americans, for whom it
was never intended, they have insisted that they could fix the AMT with
changes in the tax code, such that there would be no change in
revenues.
In February 2006, Josh Bolten was the Director of OMB. He told the
Budget Committee that the AMT could be ``corrected in the context of
overall revenue-neutral tax reform.''
In February 2007, Rob Portman was the Director of OMB. He told the
Budget Committee that ``our budget assumes that we will have a revenue-
neutral correction to the AMT.''
Rob Portman was followed by Hank Paulson, Secretary of the Treasury,
and he said essentially the same thing.
The difference between these officials and Chairman Rangel is that
Charlie Rangel has delivered. Mr. Rangel has put a revenue-neutral bill
on the table, and to boot, extended a few popular tax concessions about
to expire, such as the R & E tax credit, while adding few new ones,
such as the exclusion of gains on the foreclosure of taxpayers' homes.
Mr. Rangel and his committee deserve credit for bringing this bill to
the floor, and for preventing the AMT from coming down on 23 million
taxpayers, mostly middle-income; and they deserve credit also for
sticking to the pay-go principles that we have steadfastly applied for
the last 9 to 10 months.

Our Republican colleagues ask why we have to fix the AMT in way that
is compliant with our pay-go rule. If you really need an answer to that
question, consider these facts: The Bush administration inherited a
$236 billion surplus and by the year 2004, turned it into a $413
billion deficit. As a result, the national debt of the United States
reached $9 trillion last week. $3.2 trillion of that debt has been
incurred on the watch of this administration, and by the time it leaves
office, the total debt accumulated will hit $4 trillion.
That's why we apply pay-go and require offsets: it's one way to slow
down the build-up of debt while working off enormous deficits.
So, this bill is fiscally responsible, and fair for two reasons: it
brings tax relief to middle-income Americans, and it does not pass the
tab on to our children and grandchildren as a mountain of debt.
So, vote responsibly. Vote Rangel.
Mr. POMEROY. Mr. Speaker, I rise today to support this responsible
tax relief package.
The bill before us today:
protects 23 million middle-class tax payers from the Alternative
Minimum Tax, including nearly 35,000 North Dakotans.
provides tax relief for millions more American families who want a
better life for their families by putting more money in their pockets,
and
protects future generations from tax increases by not adding to our
national debt.
The president and my colleagues across the aisle say we should not
have to pay for this package of tax relief. They are still acting as
though they're living in a mythical Alice in Wonderland--in an America
where borrowing $9 trillion in debt and running record budget deficits
for years doesn't matter.
But deficits and debt do matter because every dollar we borrow places
a ``debt tax'' on future generations who will have to pay for the
decisions we make today. At $9 trillion, each of our children will be
responsible for paying $30,000 of that debt, and that is before
interest gets added on.
We crossed that 9 trillion dollar mark in the amount of outstanding
public debt owed by this Treasury just earlier this week.
We saw that anxiety over that level of debt can have a short-term
impact in the markets on Wednesday when a low level Chinese official
suggested that the government may slow

[[Page H13458]]

purchasing Treasury bonds. In reaction, the dollar fell sharply and the
stock market plummeted by 361 points. That is one day.
A huge persistent debt has greater cost for the economy. So, the
moral issue today is passing a fiscally responsible bill that protects
future generations by not asking them to finance current tax cuts. Each
day the average daily interest payment on the debt adds more than $1
billion to the tab we leave behind.
My colleagues across the aisle would rather we pay for today's tax
relief--tomorrow. Would that leave the cost to our children, who might
just end up having to repay the Chinese holders of U.S. Treasury Notes
with EUROs?
I try to teach my two kids important values. Among those values is
teaching them that things worth doing are worth paying for.
That same core principle is behind PAYGO. Not paying for this
important tax relief signals high disregard for this basic principle
that we teach our kids and that motivated Congress to reinstate PAYGO
rules.
With the massive fiscal challenges the Nation faces in coming
decades, it is irresponsible to foist the cost of tax relief today on
future taxpayers. Today, this Congress again should face up to that
challenge and pay the cost now.
Reverse years of failed Republican policies that have mortgaged our
grandchildren's future with additional foreign-owned debt.
Let's set an example for our kids--we do not let them eat dessert
before they eat all their vegetables. Congress should not rush to
dessert either.
I urge my colleagues to responsibly pay for middle-class tax relief.
I also want to express my appreciation to Chairman Rangel of several
important provisions in H.R. 3996 that provide millions of American
families tax relief and business in our rural communities.
The bill helps 4.5 million taxpayers to meet the cost of paying for
their children to get the ticket to a better future--a college
education. We extend the tax deduction for the cost of college tuition
for another year.
Also this bill extends for one year the current-law provision that
allows taxpayers over age 70 and a half to make tax-free distributions
from their individual retirement accounts (IRAs) for gifts to
charities. In the few short months when senior citizens could use these
Charitable IRA rollovers to donate nearly $112 million to help the work
of worthy charities it is important that this tool for giving, mostly
in small amounts of a few thousand dollars or less, remains available
to taxpayers.
The bill extends for one year an important tax credit that allows:
short line railroads that serve many of our rural communities to
upgrade the track on these important links that get our products to the
marketplace.
Unfortunately, fiscal constraint embodied in H.R. 3996 only allowed
us to consider extending these expiring tax provisions generally in
their current form. We were not able to make these important tax
provisions permanent and make needed improvements.
For example, the Public Good IRA Rollover Act (H.R. 1419), which I
introduced and which has 90 cosponsors, would broaden the charitable
IRA rollover to allow younger retirees to get a lifetime income and
provided for charities and to allow distributions to donor-advised
funds and would strengthen other aspects of the present-law provision.
I remain committed to the enactment of these improvements and would
urge my colleagues to work with me in that regard.
I urge my colleagues to pass this bill.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today in strong support
of H.R. 3996, the Temporary Tax Relief Act of 2007, introduced by my
distinguished colleague from New York, Representative Charles Rangel. I
would like to thank Chairman Rangel for his extraordinary leadership on
the Ways and Means Committee and for introducing this important
legislation that promotes tax fairness and fiscal responsibility, a new
fiscal direction that the American people have demanded and deserve.
Mr. Speaker, the Bush administration has not done an adequate job in
allocating this country's resources. However, this Congress remains
committed to providing a fiscal new direction for the American people.
This important legislation will protect some 23 million Americans from
the Alternative Minimum Tax and will extend tax credits to those who
need it most, our Nation's students, teachers, children and homeowners.
The Alternative Minimum Tax is currently riddled with loopholes, and
this legislation is a fiscally responsible alternative to the practice
of borrowing tens of billions of dollars each year, in which the GOP
has engaged. It closes the legislative loophole that has allowed a
privileged few exceptions at the expense of other Americans.
As Chair of the Congressional Children's Caucus, I particularly
welcome this legislation for the assistance it will provide to our
Nation's children. Today's bill will increase eligibility for the child
tax credit, consequently helping an additional 12 million children in
low-income families. This bill will lower the eligibility threshold in
2008 to $8,500. The National Women's Law Center recently released a
statement detailing the organization's sincere support for this
legislation, commenting that ``For a single mother working fulltime in
a minimum wage job, the bill would mean a difference between a child
tax credit of just $35 and a credit of $568.'' We must work to ensure
that all of our Nation's children are provided for, and I feel this
legislation is an important step toward reaching this crucial goal.

In addition, Mr. Speaker, this legislation will benefit our Nation's
teachers and students. It will help 3.4 million teachers by allowing
them to save money through deductions for classroom expenses. It will
further ensure that the future leaders of America will receive the
education they deserve, by helping 4.5 million families afford college
through tuition deductions. It will help our Nation's families by
providing 30 million homeowners with property tax relief and benefit
approximately 11 million families through State and local sales tax
reduction. Mr. Speaker, these benefits cannot be ignored and this
legislation would help those who truly deserve it.
Furthermore, this fiscally-responsible bill will not cost American
taxpayers any additional money. The Alternate Minimum Tax was
established in 1969, and it has since then been used to exempt an
exceptionally wealthy few from paying their share of this Nation's
taxes. Instead of costing America additional funds to mend this
antiquated tax, or borrowing heavily and exponentially increasing the
national debt as my Republican colleagues have done, this legislation
seeks to restore tax fairness. Instead of merely circumscribing the
problem and providing a ``quick fix,'' this legislation will close tax
loopholes that have persisted in allowing an extremely wealthy
privileged few to pay a lower tax rate on their income than the
billions of hard-working Americans who are just trying to get by. This
legislation protects our future generations by not asking them to pay
for the proposed tax cuts.
This legislation goes beyond simply ensuring that future generations
will not be forced to finance tax reductions today. This legislation
will actually help the American economy grow. It will extend the R&D
tax credit to promote innovation and high-paying jobs that make America
one the world's leaders in innovation and technological progress. It
will also ensure long-term economic growth by adhering to the ``pay-as-
you-go'' budget rules that helped produce the record budget surpluses
and robust economy of the 1990s by mandating no new deficit spending.
Mr. Speaker, the American people elected this Congress because they
wanted to see a new direction and a meaningful change. This legislation
does precisely that and helps the most deserving American people while
causing our economy to grow and breaking our reliance on deficit
spending. It will ease the burden felt by millions of middle-class
families, through tax cuts, while helping our economy grow without
increasing the national debt. The benefits of the Temporary Tax Relief
Act will be felt immediately by the 23 million middle-class families,
who will be saved from paying higher taxes in April. It also closes
unfair tax loopholes, requiring Wall Street millionaires to pay their
share of taxes.
I strongly urge my colleagues to join me in supporting this extremely
important legislation.
Mr. UDALL of Colorado. Mr. Speaker, I will vote for this bill because
of the urgent need to protect middle-income families from a massive tax
increase that will hit them if we do not act to adjust the Alternative
Minimum Tax, or AMT.
In technical terms, the bill would extend for one year AMT relief for
nonrefundable personal credits and increase the AMT exemption amount to
$66,250 for joint filers and $44,350 for individuals.
In real-world terms, that means it will prevent a tax increase for
more than 302,600 Colorado households that otherwise would be required
to pay more in Federal income tax when returns are due next year.
In addition, it will let taxpayers who do not itemize deductions take
advantage of an additional standard deduction of up to $700 (for
couples who file jointly) for State and local real property taxes--
something that will greatly help many thousands of Coloradans affected
by those property taxes. And it also will increase the eligibility for
the refundable child tax credit.
Further, the bill will extend many important tax-law provisions
scheduled to expire this year.
These include an extension of the deductibility of certain tuition
and related expenses, which helps many to gain an education, and an
extension of the ability of teachers to deduct the money they spend
from their own pockets for supplies used in their classrooms.
The bill will help our men and women in uniform and our veterans in
several ways, including extension of the ability of those receiving
combat pay to count it for purposes of the earned income credit;
extension of the special

[[Page H13459]]

rules that help veterans qualify for State-operated, tax-exempt
mortgage revenue bond programs for access to low-interest mortgages;
and the extension of rules that allow reservists called to active duty
to make penalty-free withdrawals from their retirement plans if they
need to do so.
Other important provisions will allow people to continue to make
charitable contributions from their individual retirement accounts,
IRAs, without incurring tax penalties and will allow Colorado ranchers
and other landowners to benefit from favorable tax treatment of their
actions to protect open space through conservation easements.
The bill also will delay implementation of a requirement, passed when
our friends on the other side of the aisle were in the majority, that
requires local governments (and others) to assume the burden of
withholding part of the money going to those under contract to provide
goods and services. This requirement is strongly opposed by county
commissioners and other local officials across Colorado as well as by
many companies that build roads or do other work under contracts with
our State and local governments.
In addition, the bill includes provisions to directly address the
problems facing many people affected by the problems besetting the
housing market. One of these is a permanent repeal of the current law's
requirement that people pay income tax on the phantom ``income'' they
supposedly receive when they are no longer required to pay on a
mortgage because they have lost their homes to foreclosure or they are
able to work out arrangements to avoid that result. Another will extend
through 2014 the current ability of people to deduct the part of their
mortgage payment that pays for mortgage insurance.

The bill also extends provisions that encourage research and
development activities that are crucial to our country's economic
future. It will allow restaurants and other small businesses to
continue to take advantage of a realistic write-off period for
improvements to their facilities. And it will retain the current law
that encourages restaurants and other companies to donate unused food
from their inventories to help feed people who need that assistance.
Mr. Speaker, all these are good provisions, and the bill overall is
properly focused on tax relief for middle class families--a goal I
strongly support.
But I do have some reservations about how the bill seeks to provide
that relief without making our Federal deficit worse.
The bill's authors propose to pay for these provisions with a change
in the current law that gives a substantial tax break to some
investment fund managers by letting them treat part of their overall
compensation as if were a capital gain on an investment. Another is a
change to delay further a provision currently scheduled to take in
effect next year regarding the rules for allocating certain expenses of
companies that operate overseas. And a third is a change in the rules
about taxation of deferred compensation.
Since this bill was introduced, there has been considerable debate
about these provisions. I am not convinced that these provisions are
the best or only way to offset the revenue costs of providing a
temporary fix to the AMT--but the bill's opponents have suggested no
alternative except to cut unspecified amounts of spending in
unspecified parts of the budget or to further add to the ``debt tax''
that has already been imposed on our children (and their children) by
the irresponsible policies of the last seven years.
The Senate will have to consider the legislation further, and if it
makes changes a conference will have to resolve differences between
their version and the bill now before us. So, it is possible that these
provisions will be revised.
Mr. Speaker, I must note that I do not believe that it is wise to
include in this bill, designed to address the AMT problem and to extend
expiring tax-law provisions, such an unrelated matter as a restriction
on Internal Revenue Service (IRS) audits of individuals living in the
Virgin Islands. I think that if that issue is to be addressed, it
should be done separately, perhaps in connection with a review of how
IRS audits are conducted in Colorado and other locations as well. I
will not oppose the legislation before us on that ground alone, but I
think we do a disservice to the public debate on AMT reform by
attempting to attach such a provision, and in any event I am not
convinced it is wise to interfere with the IRS auditing process.
But, finally, the bottom line is that today we have the opportunity
to provide tax relief to hundreds of thousands of middle-class families
in Colorado. I think that is something I think the House can and should
do without delay, and that is why I am voting for this bill.
Mr. BACA. Mr. Speaker, I ask for unanimous consent to revise and
extend my remarks.
I rise today to voice my strong support for H.R. 3996, the Temporary
Tax Relief Act.
This bill provides much needed tax relief to 23 million middle class
families across the Nation, including over 20,000 families in my own
Congressional district.
Families in California and throughout the United States have seen the
cost of health care, gasoline and a college education soar--while at
the same time their homes have lost value.
They deserve a helping hand. This legislation protects them from
being hit by the Alternative Minimum Tax.
The bill also gives tax relief to working families by providing 30
million homeowners with property tax relief, and expanding the child
tax credit for 12 million children.
Instead of tax breaks for the wealthiest few, Democrats are restoring
fiscal sanity and giving the hard-working men and women of America the
relief they deserve.
I urge my colleagues to cast a vote for economic fairness and
equality, and to support H.R. 3996.
Mr. VAN HOLLEN. Mr. Speaker, this bill provides tax relief for more
than 24 million middle-income families. It also corrects a huge
inequity where many people were forced to pay taxes on phantom income--
income they never had.
Today, we must fix two big messes the Republican leadership left
behind when they were voted out last November. One is the huge middle
class tax increase the Republicans left hanging over millions of
unsuspecting Americans. This Republican tax tsunami will crash down on
top of 24 million Americans if we don't take action today.
The Republicans could have stopped this middle class tax hit on their
watch. Instead, for 6 years with President Bush, they spent their time
and energy giving tax cuts to the very wealthiest Americans. On their
watch, the wealthiest 1 percent of Americans got more than half the
Bush tax cuts. That was their priority, and they left the rest of the
American taxpayers holding the bag of a mushrooming national debt--a $9
trillion debt that costs every taxpayer $3,300 per year. That is the
debt tax American taxpayers are paying to service the debt President
Bush and the Republicans have run up on our national credit card.
Today, Republicans are proposing to increase the debt tax--to make
Americans pay more in the end. Once again, they are willing to require
our children to pay more debt tax in order to protect special shelters
for about 50,000 of the wealthiest Americans.
Let's provide middle class Americans with tax relief in a fiscally
responsible way. Let's pass this bill.
Mr. GOODLATTE. Mr. Speaker, our current tax system has spiraled out
of control. Today's tax code is unfair, discourages savings and
investment, and is impossibly complex. There is no part of the tax code
that demonstrates this more than the Alternative Minimum Tax (AMT). The
AMT is a nefarious policy enacted to prevent a small number of wealthy
taxpayers from using legitimate deductions to reduce their taxes, and
thus taxing them at a higher rate. However, the AMT was never indexed
to inflation, and without reform, it threatens to ensnarl middle class
taxpayers.
When the AMT was first created, it affected fewer than 20,000
taxpayers. Today it affects 4.2 million, and this number could rise.
Without action by Congress, 20 million more taxpayers would be forced
to pay on average $3,000 more in taxes, this year alone. In my district
this egregious tax would engulf more than 55,000 taxpayers.
Congress must find a permanent solution to this offensive tax; in
fact, a solution is long overdue. However, what we are presented with
today is not a permanent solution or even a solution. This ill-
conceived legislation puts in place permanent tax increases, on some of
the driving forces of our economy, to pay for a temporary patch to the
AMT.
It is wrong for AMT relief to be subject to Pay-Go rules. The AMT was
never intended to affect this many people and is working as a massive
tax increase each year. The $50.6 billion that could be paid, without
relief, because of the ever encroaching AMT was never intended to be
collected. Yet, this bill seeks to collect this $50.6 billion in new
taxes, and it collects it by raising taxes on investors in our economy.
For Democrats the AMT simply serves their purpose of bait and switch on
the American taxpayer.
The permanent tax increases in this bill include job-killing tax
hikes on entrepreneurs and risk-takers who invest and create jobs for
working families. While these tax increases were written in a way to
seemingly affect only wealthy hedge fund executives, much like the ill-
conceived AMT, these tax increases would reach much further. The taxes
would affect real estate, venture capital, private equity, and retail.
Penalizing these industries with higher taxes will dampen investment,
constrict money needed for small-business ventures, and cost American
jobs. While these taxes are egregious on their own, they are even more
egregious in that they would be permanent while the relief they provide
is temporary.

[[Page H13460]]

It was a mistake on the part of Congress to not index the original
AMT to inflation. It is a mistake that Congress must fix in order to
prevent the AMT from engulfing millions of more taxpayers. We must work
to find a permanent solution to this nefarious tax. I urge my
colleagues to reject this ill-conceived plan, and let's work together
to find a real solution for the American people.
Mr. KAGEN. Mr. Speaker, whose side are we on? The Hard Working people
in northeast Wisconsin want to know.
This measure is not difficult to understand--someone has to pay the
bills, and democrats believe in paying-as-we-go, and we do want to pass
off our bills to the next generation.
The democratic leadership of the house has promised to keep their
word to the American people by remaining fiscally responsible and
socially progressive.
All of us should play by the same rules, and that means everyone
should pay their fair share, including hedge fund managers--who have
managed to pass the buck to the middle class time and time again.
Enough is enough. Let's just tell it like it is.
This bill cuts taxes for the middle class: property tax relief for
Wisconsin homeowners; tax deductions of $4,000 for college tuition;
helps small businesses by continuing the tax credits for research and
development.
People in northeast Wisconsin need to hear that this bill will
benefit 62,000 households who would otherwise if fall into the AMT tax
trap.
This bill delivers. It finally gives the American middle class a tax
cut.
My friends, whose side are you on?
I urge you to join me by standing up for taxpayers in the middle
class, not only in Wisconsin, but across America.
It is time we deliver tax cuts to the little guys.
Ms. WOOLSEY. Mr. Speaker, it's clear that the Alternative Minimum
Tax, AMT, needs to be fixed. Year after year, we play this game of
``chicken'' with the end of the year, leaving millions of hard working
American families fearful that they will be captured in a tax that was
never meant to touch them. The good news is that the difference between
this year's AMT patch and the ones that we did under the previous
majority is that this time we are actually going to pay for it.
In my district alone, H.R. 3996 will save over 59,000 taxpayers from
being subject to the AMT and it's my hope that this will be a first
step to a responsible solution to permanently fixing this tax policy.
Also included in this bill is an extension and expansion of the Child
Tax Credit, CTC, refund-ability. With economic disparity at its highest
level since the Great Depression, expansion of this tax credit will
help low-income families raise their children and help them get ahead.
Finally, we are addressing the growing problem of the increasing gap
between the wealthiest and the rest of America through a more equitable
tax code. Thank you to Chairman Rangel and Chairman Neal for all of
their hard work on this bill, closing loopholes, extending essential
tax credits, and balancing the tax code.
Ms. SCHWARTZ. Mr. Speaker, I want to thank Chairman Rangel for his
leadership on this bill, and I rise today in support of tax relief for
hard-working American families.
This Congress is committed to moving our country in a new direction.
We recognize that families across this country are struggling with
everyday living expenses, and with this bill we are going to help
millions of Americans get tax relief.
Our work will protect 23 million Americans--including over 60,000 of
my constituents--from the unexpected and difficult cost of the
Alternative Minimum Tax.
The Alternative Minimum Tax, the AMT, was originally intended to
ensure that the very wealthiest taxpayers pay their fair share of
taxes. But the AMT is increasingly being paid by middle-income
families, and in fact, next year tens of millions of these hard-working
taxpayers will be engulfed by the AMT if this Congress does not act.
This bill provides tens of millions of middle-income homeowners with
immediate property tax relief.
It expands the child tax deduction, helping millions of families.
And it ensures that parents, who often work tirelessly to send their
children to college, will get tax deductions for college tuition.
This middle-class tax relief is based on the principle of tax
fairness. And it is paid for. Unlike tax efforts under the Republican
Congress, our bill will not add to the national debt. It will not leave
debt to be paid for by our children and grandchildren. It will not add
to the debt that weakens the dollar and undermines our economy.
The Democratic majority is unambiguous. We are committed to fiscal
responsibility, to paying as we go, to making the tough decisions
required to refocus national priorities, and to giving middle-income
families the break they deserve.
A vote for this bill is a vote for tax relief and tax fairness. It is
a vote for economic growth. And it is a vote for honest budgeting.
Mr. Speaker--our constituents didn't send us here to make easy
decisions--they sent us here to make responsible ones.
And today, the Democratic majority will make the responsible decision
of providing tax relief to millions of working families.
Mr. LEVIN. Mr. Speaker, this legislation reflects the priorities of
the new majority in Congress: middle-class tax relief, fiscal
discipline, and tax equity.
Income inequality is dramatically increasing in our country. Between
2004 and 2005, the average annual income of the top 1 percent increased
by $120,000, while the average income for all the other 90 percent of
households increased by just $550.
In the face of this, we need to be able to look our constituents in
the eye and tell them we are working to make the Tax Code fair and
equitable.
The principle in taxing private investment fund managers or ``carried
interest'' is basic.
If you are investing your own money, you should receive the capital
gains tax rate; if you are providing the service of managing other
people's money, you should pay the ordinary income tax rate.
Some argue that fund managers deserve capital gains treatment to
align their interests with investors or because ``carried interest'' is
risky. Many other forms of compensation are risky, and they are taxed
at the ordinary income tax rate. When a company gives its CEO stock
options, he or she pays ordinary income tax rates when they exercise
those options. Real estate agents only make money if they actually sell
a house. Authors receive a portion of their book's profits. Waiters get
tips based on the quality of the service they provide. All of these
people pay ordinary income tax rates on their compensation.
Estimates are that there is currently around $130 billion in carried
interest at stake. Investment managers currently take home $110 billion
and when we close the tax advantage, they will take home $85 billion--a
pretty significant reward for their services.
A fund manager's paying a more appropriate tax rate will not curtail
economic activity, innovation, or real estate development. Since
investors are not affected, there is no reason to believe that the
amount of capital available for investments in real estate development
or start-up companies would be reduced.
This bill has the right priorities: It brings tax relief to tens of
millions of middle-class families, it's paid for, and it makes our Tax
Code more equitable. I urge my colleagues to support it.
Mr. KIND. Mr. Speaker, I rise today in support of H.R. 3996, the
Temporary Tax Relief Act of 2007. As a member of the Ways and Means
Committee, I am proud to have helped craft this very important tax bill
that will give much needed relief to millions of American taxpayers.
Unfortunately, over the last several years we have seen tax bills
pushed through Congress and signed by the President under the guise of
``relief' for the middle class and the poorest in the country. I think
many in this chamber have now come to recognize that many of these
measures presented as tax relief for the middle class were in fact more
tax breaks for the richest in society. Today we finally have before us
a bill that will give real relief to millions of taxpayers, many of
whom are hard-working middle-class families.
Specifically, H.R. 3996 provides for a 1-year patch for the
Alternative Minimum Tax, AMT. The AMT was developed in the 1970s to
ensure that America's wealthiest could not take advantage of the tax
code in a way that would allow them to avoid paying taxes altogether.
The AMT was not indexed for inflation, however, and without this
legislation it will reach into the pocketbooks of middle-class families
it was never intended to hit. In my district alone, the AMT could
affect 50,000 additional western Wisconsin families this year, many of
whom have no idea they face a tax increase. Without this legislation,
it is estimated that the AMT will hit an additional 437,000 taxpayers
in Wisconsin and 23 million nationally. It is hard for me to think of
something more important than protecting 23 million Americans from a
tax that was never intended for them.
Additionally, this bill extends several popular expiring tax
provisions. In particular, the bill will provide property tax relief
for 30 million Americans, help for more than 12 million children
through an expanded child tax credit, tax relief for more than 11
million families through state and local sales tax deduction, help for
more than 4.5 million families to cover the cost of education through
the tuition deduction, and relief for more than 3.5 million teachers
who will be reimbursed for out-of-pocket expenses for their classrooms.
Finally, and most importantly, this bill is fully offset and complies
with pay-go rules that the Democratic majority restored at the
beginning of this Congress. The tax benefits provided are fully paid
for by closing loopholes and eliminating narrowly-targeted tax breaks
for

[[Page H13461]]

corporations. These changes establish fairness in the tax code and show
that we can provide tax relief without sending the debt on to our
children. After 6 years of fiscal recklessness--deficit-financed tax
cuts for the wealthy and out-of-control government spending--this bill
sets a precedent of fiscally responsible tax reform.
Again, Mr. Speaker, I am happy to support this sensible and fair tax
bill before us today. Protecting millions of taxpayers from being
caught by the AMT is of the utmost importance. I urge my colleagues to
support H.R. 3996.
Mr. MORAN of Virginia. Mr. Speaker, this bill will bring relief to
tens of millions of hard-working American families, including nearly
100,000 in my district alone.
It makes the tax code more efficient and more equitable, changes that
are sound both morally and economically. Most importantly, H.R. 3996
will be the first tax relief bill of this millennium that did not
increase the deficit.
This will would lower the tax burden on 95 percent of the people
affected by it--which is about as close to perfect as we're able to get
with the tax code. I'd like to commend Chairman Rangel and Mr. Neal and
their staff for their work on this excellent bill, which I am proud to
support today.
Mr. Speaker, the President's budget assumes the revenue next year
from a vast expansion of the AMT, and the President has offered no
alternative to either eliminate the AMT or patch it, likely in
recognition of the immense cost to the Treasury. Yet nearly everyone
agrees that we must pass some form of AMT relief this year, and that we
must do it soon. The Congressional Budget Office and Joint Committee on
Taxation have spelled out specifically what the cost of a 1-year AMT
patch would be. It cannot be accomplished for free.

If we are to pass an AMT ``patch,'' we can do one of three things: we
can cut benefits in Social Security and Medicare to comply with PAYGO,
we can raise additional revenue to comply with PAYGO, or we can waive
PAYGO as the Republican party has done for the last 7 years and
continue financing tax cuts by increasing the Federal deficit and the
national debt. That is, we can continue to irresponsibly pass the buck
to our children and grandchildren.

Mr. Speaker, as the gentleman from Massachusetts, Mr. Capuano, told
us yesterday, this administration has increased U.S. Government debt by
an average of $15,644.93 per second since they took office.
This money does not exist merely on paper; it is real money, which we
are borrowing from countries whose interests are contrary to our own,
countries like China that have accumulated sovereign wealth funds at
alarming rates over the past 6 years. And we are leaving this legacy of
fiscal wreckage to our children, and our children's children,
mortgaging away their future at a rate of more than $15,000 per second.
Since 2001, China's accumulation of foreign reserves, mostly U.S.
dollars, have increased from $46.6 billion to $1.066 trillion--that is,
every new dollar we borrow makes us ever more dependent on China--which
has profoundly different strategic aims than we do.
The idea that we should not pay for this AMT fix is unconscionable.
The idea that we should sacrifice the futures of our children and our
grandchildren in order to have our cake and eat it too, to continue
giving enormous tax preferences to the richest of the rich in this
country is morally bankrupt and fiscally unsound.
Mr. Speaker, even if we accept that there should be a distinction
between the taxation of labor and capital income, income received as
payment for the service of investing other people's money is not
capital income under even the loosest of possible understandings. The
idea that a hedge fund manager earning $500 million a year should be
taxed at a lower rate than his secretary, who earns $40,000 a year is
preposterous in both moral and economic terms and should embarrass us
all.

This bill is about making a choice between what is right and what is
easy. I applaud Chairman Rangel for standing firm in the face of
overwhelming pressure to do the easy thing, for demanding that we pass
a bill which is true to our principles. We were not elected to make
easy choices--we were elected to do right by our constituents, their
children, and their children's children. I am proud to support this
bill today, and I urge my colleagues to do the same.

{time} 1315

The SPEAKER pro tempore. All time for debate on the bill has expired.
Pursuant to House Resolution 809, the previous question is ordered on
the bill, as amended.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. McCRERY. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 216,
nays 193, not voting 24, as follows:

[Roll No. 1081]

YEAS--216

Abercrombie
Ackerman
Allen
Altmire
Andrews
Arcuri
Baca
Baird
Baldwin
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd (FL)
Boyda (KS)
Brady (PA)
Braley (IA)
Brown, Corrine
Butterfield
Capps
Capuano
Cardoza
Carnahan
Carney
Castor
Chandler
Clarke
Clay
Cleaver
Clyburn
Cohen
Conyers
Costa
Costello
Courtney
Cramer
Crowley
Cuellar
Cummings
Davis (AL)
Davis (CA)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Donnelly
Doyle
Edwards
Ellison
Ellsworth
Emanuel
Engel
Eshoo
Etheridge
Farr
Fattah
Filner
Frank (MA)
Gillibrand
Gonzalez
Gordon
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall (NY)
Hare
Harman
Hastings (FL)
Herseth Sandlin
Higgins
Hill
Hinchey
Hinojosa
Hirono
Hodes
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (GA)
Johnson, E. B.
Jones (OH)
Kagen
Kanjorski
Kaptur
Kennedy
Kildee
Kilpatrick
Kind
Klein (FL)
Kucinich
Langevin
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Loebsack
Lofgren, Zoe
Lowey
Lynch
Maloney (NY)
Markey
Marshall
Matsui
McDermott
McGovern
McIntyre
McNerney
McNulty
Meek (FL)
Meeks (NY)
Melancon
Michaud
Miller (NC)
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Murtha
Nadler
Napolitano
Neal (MA)
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Pelosi
Perlmutter
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Richardson
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sarbanes
Schakowsky
Schiff
Schwartz
Scott (GA)
Scott (VA)
Serrano
Sestak
Shea-Porter
Sherman
Shuler
Sires
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Space
Spratt
Stark
Stupak
Sutton
Tanner
Tauscher
Thompson (CA)
Thompson (MS)
Tierney
Towns
Tsongas
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Walz (MN)
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch (VT)
Wexler
Wilson (OH)
Woolsey
Wu
Wynn
Yarmuth

NAYS--193

Aderholt
Akin
Alexander
Bachmann
Bachus
Baker
Barrett (SC)
Barrow
Bartlett (MD)
Barton (TX)
Bean
Biggert
Bilbray
Bilirakis
Blackburn
Blunt
Boehner
Bonner
Bono
Boozman
Boustany
Brady (TX)
Broun (GA)
Brown (SC)
Brown-Waite, Ginny
Buchanan
Burgess
Burton (IN)
Calvert
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capito
Carter
Castle
Chabot
Coble
Cole (OK)
Conaway
Cooper
Culberson
Davis (KY)
Davis, David
Davis, Tom
Deal (GA)
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Drake
Dreier
Duncan
Ehlers
Emerson
English (PA)
Fallin
Feeney
Ferguson
Flake
Forbes
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gilchrest
Gingrey
Gohmert
Goode
Goodlatte
Granger
Graves
Hall (TX)
Hastings (WA)
Hayes
Heller
Hensarling
Herger
Hoekstra
Hulshof
Hunter
Inglis (SC)
Issa
Johnson (IL)
Johnson, Sam
Jordan
Keller
King (IA)
King (NY)
Kingston
Kirk
Kline (MN)
Knollenberg
Kuhl (NY)
Lamborn
Lampson
Latham
LaTourette
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas
Mack
Mahoney (FL)
Manzullo
Matheson
McCarthy (CA)
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris Rodgers
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Mitchell
Moran (KS)
Murphy, Tim
Musgrave
Myrick
Neugebauer
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Poe
Porter
Price (GA)
Pryce (OH)
Putnam
Radanovich

[[Page H13462]]

Ramstad
Regula
Rehberg
Reichert
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roskam
Royce
Ryan (WI)
Sali
Saxton
Schmidt
Sensenbrenner
Sessions
Shadegg
Shays
Shimkus
Shuster
Simpson
Smith (NE)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Tancredo
Taylor
Terry
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walberg
Walden (OR)
Walsh (NY)
Wamp
Weldon (FL)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)

NOT VOTING--24

Bishop (UT)
Boren
Buyer
Carson
Crenshaw
Cubin
Davis, Lincoln
Everett
Giffords
Hastert
Hobson
Israel
Jindal
Jones (NC)
LaHood
Lantos
Lungren, Daniel E.
Marchant
McCarthy (NY)
McCollum (MN)
Nunes
Oberstar
Paul
Westmoreland

{time} 1344

Mr. BUCHANAN changed his vote from ``yea'' to ``nay.''
Ms. WATERS changed her vote from ``nay'' to ``yea.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________