[Congressional Record Volume 161, Number 183 (Wednesday, December 16, 2015)]
[Senate]
[Pages S8691-S8693]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                PROTECTING AMERICANS FROM TAX HIKES ACT

  Mr. HATCH. Mr. President, last night after months of discussion and 
several weeks of intense negotiations, bipartisan leaders from both the 
House and the Senate reached an agreement on both the substance and a 
procedural path forward for legislation that will provide millions of 
American families and businesses with much needed tax relief and set 
the stage for comprehensive tax reform in the future.
  The bill, which we are calling the Protecting Americans from Tax 
Hikes Act--or PATH Act--of 2015, would make a number of temporary tax 
provisions permanent, putting an end to the repeated tax extenders 
exercise that has plagued Congress for decades and giving greater 
certainty to U.S. taxpayers across the board.
  There are no two ways about it; this is a historic bill. It is 
actually the latest in a long line of historic bills we have considered 
in the Senate this year, and it has quite a bit in common with some of 
the other efforts we have tackled in 2015.
  For example, for many years now, much of what we have done in 
Congress has been dictated by the next deadline, cliff or crisis around 
the corner. More often than not, the tendency has been to simply kick 
every can down the road and then give speeches about why we shouldn't 
do that anymore. This year the Senate has worked to end the practice of 
governing by crisis.
  Among other things, we have passed bipartisan legislation to repeal 
and replace the Medicare sustainable growth rate, or SGR, formula and 
to provide long-term funding for highway and infrastructure projects. 
Both of these issues had plagued Congress for decades, with permanent 
or long-term fixes seemingly always out of reach, regularly 
demonstrating that Congress was too divided and too ineffective to 
reach any meaningful solutions.
  The same could be said for tax extenders, which has been an almost 
yearly exercise in relative futility, characterized by partisan 
bickering as the deadlines approach, with short-term extensions enacted 
at the last minute, leaving no one--certainly not American taxpayers--
feeling better in the end. Yet, with the PATH Act, as with the SGR and 
highway funding bills, we have been able to reach a bipartisan 
agreement that would effectively end this cycle.
  We have to pass it. According to the Joint Committee on Taxation, 52 
separate tax provisions--what we typically refer to as extenders--
expired at the end of 2014. That is 52 separate provisions that, on a 
relatively frequent basis, face expiration and require us to reach 
agreements on further extensions. Our bill would reduce that number 
down to 33 provisions--still far too many--but a significant relief in 
terms of ongoing extenders pressure.
  Most importantly, the bill makes permanent many of the most 
consequential extenders provisions, the ones that tend to drive the 
crisis-and-cliff mentality when it comes to tax extenders, further 
relieving the pressure and allowing Congress to function more 
effectively.
  By adding more permanence to the Tax Code, we will allow families and 
businesses to better plan for the future. In addition, we will adjust 
the tax and revenue baseline to make conditions vastly more favorable 
for comprehensive tax reform in the future, a major priority for 
members of both parties.
  Most importantly, passing this legislation and making more tax 
policies permanent will provide significant tax relief for hardworking 
taxpayers in every walk of American life, from the middle class to 
military families to the working poor. It will do the same for 
businesses and job creators throughout our country, resulting in a 
healthier U.S. economy, increased growth, and more American jobs.
  Put simply, more permanence in the Tax Code will be a good thing for 
our

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country, and the PATH Act will provide just the kind of permanence we 
need.
  Let's take a few minutes to look at some of the key provisions of 
this legislation. I will start by talking about some of the biggest 
priorities that my friends on the other side of the aisle brought into 
the recent negotiations.
  As we all remember, President Obama's so-called stimulus included 
provisions that made some of the biggest refundable tax credits in the 
Tax Code even more refundable, including the earned-income tax credit, 
or EITC, and the child tax credit, or CTC. These increased credits--
which, when boiled down, are essentially additional cash payments made 
directly from the government to an individual filing a tax return--were 
originally designed to be temporary and have had to be extended a 
number of times over the years.
  Going into these negotiations, Democrats essentially demanded that 
the enhancements for the EITC and CTC, along with a partially 
refundable college tax credit that was also created in the stimulus, be 
made permanent.
  As you might expect, Republicans were reluctant to go down that road, 
not because we don't want to help families who benefit from these 
credits but because we know refundable credits are particularly 
susceptible to error, fraud, and overpayment. These types of improper 
payments are well documented, particularly with regard to the EITC, 
where every year we lose tens of billions of dollars to either 
deception or bureaucratic mistakes. However, we opted to accept making 
these credits permanent because doing so allowed the negotiations to 
move forward. But we did demand--and the Democrats agreed--to include 
significant provisions to improve the program's integrity with regard 
to these credits in order to reduce improper payments going forward. In 
fact, if enacted, the program integrity provisions in this bill will be 
the most robust improvements to address waste, fraud, and abuse of the 
Tax Code in nearly 20 years. Essentially, this compromise of refundable 
credits was the very definition of a win-win situation, particularly 
when you consider the other provisions that have been included in this 
legislation as a result, and we really never did this before. We all 
knew there was fraud.

  With this bill, we will be able to secure key incentives for economic 
growth. For example, the bill makes permanent section 179, small 
business expensing, which allows small businesses--the drivers of 
American job creation--to grow and invest with more immediate tax 
benefits. This has been a top priority for many Members of Congress, 
not to mention virtually everyone in the business community.
  The PATH Act will also improve and make permanent the research and 
development tax credit, the vital tax provision for companies and 
industries that thrive on innovation and research--areas where the 
United States continues to lead the world. This has been something I 
have fought for every year--year after year after year. We have always 
gotten it, but it has never really worked as well as it should because 
there was no permanence to it. Now it will be permanent, and that is a 
great step forward.
  Our bill also extends the term for bonus depreciation, giving more 
companies greater incentives to invest in assets that will help their 
businesses grow and expand. This, too, has been a longtime priority for 
the business community and many Members of Congress. While we were not 
able to make it permanent, we did improve and extend this important tax 
incentive.
  The bill will also make key improvements to make America more 
competitive on the world stage. For example, it permanently extends the 
active financing exception, or AFE, from subpart F income, and it 
provides a 5-year extension for the controlled foreign corporation, or 
CFC, look-through provision. Both of these tax provisions give American 
companies owned by American stockholders and employing American workers 
a greater ability to compete internationally. This is important if, 
like me, you want to see U.S. companies remain U.S. companies.
  In addition to these top priorities for businesses and job creators 
in the United States, the PATH Act would provide significant tax relief 
for families. The bill makes permanent the deduction for State and 
local sales taxes. It makes permanent the low-income military housing 
credit and the employer wage credit for Active-Duty military employees. 
It provides a long-term extension and an expansion of eligibility for 
work opportunity tax credits. All of these provisions benefit American 
families in various regions under a number of different circumstances. 
Our legislation will ensure that millions of Americans who benefit from 
these tax provisions will be able to rely on and plan around them well 
into the future--not a bad result, if you can ask me.
  I am not done yet. In addition to the many benefits we will provide 
to families and businesses, the PATH Act will also give significant tax 
relief to charities. It would, for example, make sure that charitable 
distributions from IRAs remain tax-free on a permanent basis, and the 
charitable deduction for contributions of food inventory would also be 
made permanent under the bill, as would the provision that incentivizes 
S corporations to make charitable contributions of property.
  I have covered quite a bit of ground here, and I am really only going 
through the highlights. I haven't even gotten to the ObamaCare 
provisions yet.
  As we negotiated this legislation, the most difficult part was 
probably dealing with the rumor mill, which I suppose was not 
unexpected. Most of the really outrageous rumors we heard during this 
process dealt with provisions of the so-called Affordable Care Act. 
People were claiming that Senate Republicans had agreed to bail out the 
ObamaCare Risk Corridor Program in order to get a deal. We heard that 
there was an agreement to provide tax relief to prop up the failing 
ObamaCare exchanges. But, of course, none of these rumors were true. 
This exercise in tax permanence was never going to be used to solidify 
ObamaCare, and Republicans never for a second considered allowing that 
to happen.
  However, because many Democrats have begun to recognize some of the 
more problematic elements of the President's health law, we agreed on 
the need to suspend one of the more harmful taxes imposed under 
ObamaCare. The bill includes a 2-year moratorium on the medical device 
tax--one of the more unpopular and poorly drafted taxes included in the 
health law that has in recent years drawn the ire of Republicans and 
Democrats alike. This moratorium is important not only because it 
demonstrates the bipartisan opposition to the tax, but because it will 
help patients and consumers throughout the country who have seen their 
health care costs go up because of the medical device tax. I have been 
a particular advocate to get rid of that lousy tax, and we are 
ultimately going to get rid of it, but at least we are rid of it for 
the next 2 years. We will see what happens in those 2 years.
  When all is said and done, this legislation provides roughly $650 
billion in tax relief over the next 10 years for families, job 
creators, and others. That is real money that will help millions of 
people and provide real growth for our economy. That is the real value 
of greater permanence in our Tax Code and is the biggest reason we need 
to pass this legislation.
  Don't get me wrong: I don't believe this is a perfect bill by any 
means. It is not even close to perfect. As I have grown fond of saying, 
if we were living in the United States of Orrin Hatch, this legislation 
would look a lot different. Although it pains me to admit sometimes, 
that is not where we live. Here in the real world, any undertaking 
worth the effort is going to require compromise. I know I say that a 
lot. In fact, I probably said something about the importance of 
compromise and learning the art of the doable every time we have 
considered a high-profile piece of legislation this year, but that does 
not make my arguments any less true.
  This is a good bill, period. Anyone, if they are so inclined, could 
cling to the parts they don't like and make excuses to vote no. Taken 
as a whole, both parties should be able to support the overall package 
we put together, and without question, every one of us should welcome 
the positive impact this bill will have on our economy and our future 
legislative efforts here in the Congress.

[[Page S8693]]

  I urge all of my colleagues to support the PATH Act and provide real 
tax relief at this critical time.
  Before I close, I just have to note that a lot of work has gone into 
this legislation. Every provision of this bill has had a number of 
champions in the Congress who have worked for years to preserve and 
enhance these provisions in the hopes of eventually making them 
permanent. I want to acknowledge some of those efforts here today, 
particularly those of my colleagues on the Senate Finance Committee. 
For example, the deduction for State and local sales taxes, which this 
bill makes permanent, has had a number of champions on both sides of 
the aisle. In our committee, Senators Enzi, Cornyn, Thune, and Heller 
have all made this issue a priority, and our legislation will ensure 
that their work pays off.

  Another one of the more significant tax provisions this bill would 
make permanent is the research and development tax credit. This has 
been a top priority of mine for many years, and Senators Cornyn, Crapo, 
and Roberts have also played leading rolls in this effort over the 
years.
  Section 179, small business expensing, will also be made permanent 
under this bill, and Senators Toomey, Roberts, Thune, Portman, and 
Isakson have all been leaders on this issue for many years.
  The bill would also make permanent the accelerated 15-year 
depreciation for restaurants and retail, a provision that Senators 
Burr, Cornyn, Crapo, Heller, Isakson, Roberts, and Portman have all 
worked long and hard to keep in place. Of course, I could always add my 
own name to every one of these.
  In addition, Senator Enzi has been a big supporter of making the 
active financing exception, or AFE, permanent. Our bill, once again, 
accomplishes this goal.
  On the charitable side, Senator Roberts has been a strong supporter 
of the S corporation basis adjustment for charitable contributions and 
the charitable deduction for food inventory contributions, both of 
which will be made permanent by passing this bill.
  Senator Thune has also been a leader with regard to the food 
inventory deduction, and he has also worked to ensure that charitable 
distributions from IRAs remain tax-free--another permanent provision in 
the PATH Act and something all Republicans support.
  Senator Heller has championed the special rules for real property 
contributions made for conservation purposes--yet another item our bill 
makes permanent.
  The deduction for teacher classroom expenses is also made permanent 
in this bill. Senator Burr has been a strong supporter of that 
provision and deserves a lot of credit for it.
  In addition, the PATH Act will make the low-income housing tax credit 
permanent--something both Senator Roberts and Senator Crapo have worked 
on for some time.
  All of the people I have mentioned have been very active Members on 
the Republican side.
  Senator Portman has pushed to extend the work opportunity tax credit 
and to expand it to include the long-term unemployed. His proposed 
modification is included in our bill, as is an unprecedented 5-year 
extension for this credit.
  Thanks, Senator Portman. We appreciate your work on this.
  We have seen him work so hard on so many of these issues. We are 
grateful for him, and I am really grateful to have all of these people 
on my committee helping out.
  Of course, this is not an exhaustive list. Right now I am focusing 
mainly on temporary provisions that we will make permanent by passing 
the PATH Act. If I start talking about my various colleagues' efforts 
on shorter term extensions in the bill, we would be here all day.
  I do, however, also want to give credit where it is due on the 
ObamaCare provisions. For years now, opposition to the misguided 
medical device tax--that is the most charitable description of that tax 
you will ever hear from me--has been gaining momentum. Throughout that 
time, Senators Toomey, Burr, and Coats have worked very hard on the 
Finance Committee to push for a repeal. As I noted earlier, our bill 
would take a significant step forward in this effort by imposing a 2-
year moratorium on this job-killing tax.
  I might add that I haven't mentioned my colleagues on the other side, 
but certainly Amy Klobuchar has stood right with me, as have so many on 
the other side of the aisle as well, in getting rid of that tax. It is 
only for 2 years, but ultimately we are going to get rid of it 
completely, and we have to do that.
  Let me just say that it is a pleasure for me to work with Senator 
Wyden, the ranking member. He has worked with us on many of these 
issues, and so have others on the Democratic side of the aisle, but the 
leadership on many of these issues has come from these people I have 
mentioned, and I want to make sure the people who are listening will 
understand this.
  As one can see, the PATH Act reflects the efforts and priorities of 
many Members of the Senate--not just members of the Finance Committee 
but Members on both sides on some of these very important issues, as 
they would have to be. I thank my Democratic friends for helping.
  As the debate on this important bill begins in earnest, I am 
particularly grateful for the work my colleagues on the Finance 
Committee have put in to advance the interests of their constituents. 
Each of our Members has put a huge stamp on this legislation, and with 
a little luck and a handful more votes, their work will be permanently 
enshrined in the Tax Code, and that is no small achievement after all 
of these years of trying to make some of these provisions permanent.
  There are, of course, others who have also worked hard on various 
parts of this bill. Virtually every Senator--or at the very least every 
Senator's constituents--has high-priority items included in this bill. 
That is a big reason why it is important that we get this done for the 
American people.
  Again, I am happy to bring together both Democrats and Republicans on 
this important set of tax changes that is long overdue. I am very 
pleased to work with my Democratic colleagues as well, many of whom 
deserve credit. Being in the majority, we had to have the efforts of 
these Republican people whom I have been praising here today.

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