[Congressional Record (Bound Edition), Volume 145 (1999), Part 17]
[House]
[Page 23802]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 23802]]

CLOSING BOGUS CORPORATE LOOPHOLES BEST WAY TO PAY FOR PATIENTS' BILL OF 
                                 RIGHTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Texas (Mr. Doggett) is recognized 
during morning hour debates for 5 minutes.
  Mr. DOGGETT. Madam Speaker, in June, I spoke to the House in 
connection with the introduction of the Abusive Tax Shelter Shutdown 
Act. This cover of Forbes magazine pretty much tells the entire story. 
Forbes magazine bills itself as ``The Capitalist Tool,'' yet its cover 
story is ``Tax Shelter Hustlers: Respectable accountants are peddling 
dicey corporate tax loopholes.'' And when you open the magazine and 
begin the article, they continue: ``Respectable tax professionals and 
respectable corporate clients are exploiting the exotica of modern 
corporate finance to indulge in extravagant tax dodging schemes.''
  During recent months, a number of individuals and groups have 
recognized the need to address these abusive and bogus loopholes. ``The 
Joint Committee on Taxation staff is convinced that the present law 
does not sufficiently deter corporations from entering into 
arrangements with a significant purpose of avoiding or evading Federal 
income tax. The corporate tax shelter phenomenon poses a serious 
challenge to the efficacy of the tax system. The proliferation of 
corporate tax shelters causes taxpayers to question the fairness of the 
tax system.'' And the Treasury Department has emphasized that, ``the 
proliferation of corporate tax shelters presents an unacceptable and 
growing level of tax avoidance behavior.''
  Within the last several weeks, the American Bar Association tax 
section has again declared, ``growing alarm with the aggressive 
marketing of tax products that have little or no purpose other than the 
reduction of Federal income taxes.''
  The New York State Bar Association expressed concern as to ``the 
negative and corrosive effect that corporate tax shelters have on our 
system of taxation and again called for congressional action.'' And 
even the Republican chair of the Committee on Ways and Means proclaimed 
much earlier this year that ``the area of corporate tax shelters is one 
field which merits review. . . . We are going to try to eliminate every 
abuse that circumvents the legitimate needs of the Tax Code.''
  Unfortunately, neither that committee nor any of this House has 
addressed specific legislation to even slow down these guys, the 
corporate tax hustlers, with or without a fedora like this follow on 
the cover of Forbes. And no other Member of the House, except those of 
us who joined behind the Abusive Tax Shelter Shutdown Act, has offered 
a specific legislative answer.
  Madam Speaker, tomorrow the House will hopefully have an opportunity 
to cast a vote for tax fairness and tax equity. The supporters of the 
bipartisan Consensus Managed Care Improvements Act, the gentleman from 
Michigan (Mr. Dingell), the gentleman from Georgia (Mr. Norwood), the 
gentleman from Iowa (Mr. Ganske), and the gentleman from Arkansas (Mr. 
Berry), Republicans and Democrats, are supporting this Tax Shelter 
Shutdown legislation both to deal with this problem and in order to pay 
for the costs of the bill.
  I want to commend their efforts. While I think that the costs of 
managed care reform have been greatly overstated, all of us who are 
committed to the Patients' Bill of Rights are taking the fiscally 
prudent approach and recognizing that this must be a pay-as-you-go 
Congress even on a measure as important as protecting the rights of 
those in managed care.
  And I am particularly pleased that it is the tax dodgers that will be 
financing this important measure to improve the health care of the 
millions of Americans who must rely on managed care.
  My legislation which should be considered as an amendment to the 
Patients' Bill of Rights, will curtail egregious behavior without 
impacting legitimate business transactions. It will eliminate the well-
justified feeling of many people that high rollers are cheating and 
gaming the system, a feeling which leads to distrust on behalf of our 
taxpaying public.
  My bill seeks to shut down abusive tax shelters by prohibiting loss 
generators, transactions which lack any legitimate purpose and are 
ginned up to obtain lower taxes. Second, a company that thinks it has a 
proper shelter is required to provide complete, clear, and concise 
disclosure. And third, the penalty for tax dodging is increased and 
tightened. Getting some downtown lawyer to bless what some high-priced 
accountant has cooked up will not save the corporation from penalties 
anymore, if it has clearly overstepped the line.
  Some of the worst tax inequities arrive from those who use abusive 
tax shelters to exploit loopholes. The Abusive Tax Shelter Shutdown Act 
is not a panacea, but offered as an amendment to the Patients' Bill of 
Rights. It will not only advance the cause of quality health care, but 
it will help law enforcement to close the loopholes, eliminate sham 
transactions, and stop hustlers like this.
  Madam Speaker, as we say in Texas: shut them down and move them out.

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