[Congressional Record (Bound Edition), Volume 150 (2004), Part 12]
[House]
[Pages 16863-16870]
[From the U.S. Government Publishing Office, www.gpo.gov]




              TAX SIMPLIFICATION FOR AMERICANS ACT OF 2004

  Mr. PORTMAN. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4841) to amend the Internal Revenue Code of 1986 to simplify 
certain tax rules for individuals, as amended.

[[Page 16864]]

  The Clerk read as follows:

                               H.R. 4841

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tax Simplification for 
     Americans Act of 2004''.

     SEC. 2. HEAD OF HOUSEHOLD FILING STATUS CHANGED TO SINGLE 
                   HEAD OF HOUSEHOLD.

       (a) In General.--The following provisions of the Internal 
     Revenue Code of 1986 are each amended by striking ``head of a 
     household'' each place it appears and inserting ``single head 
     of household'':
       (1) Subsection (b) of section 1.
       (2) Paragraphs (1) and (3) of section 2(b).
       (3) The table in section 25B(b).
       (4) Clause (iii) of section 151(c)(6)(B).
       (5) Clauses (ii) and (iii) of section 151(d)(3)(C).
       (6) Subparagraph (A) of section 6012(a)(1).
       (b) Other Conforming Amendments.--
       (1) Subparagraph (B) of section 63(c)(2) of such Code is 
     amended by striking ``head of household'' and inserting 
     ``single head of household''.
       (2) Section 1 of such Code is amended--
       (A) in the heading for subsection (b) by inserting 
     ``Single'' before ``Heads'' ,
       (B) in subsection (c) by inserting ``single'' before 
     ``head'', and
       (C) in the heading of subsection (c) by inserting 
     ``single'' before ``heads''.
       (3) The heading for section 2(b) of such Code is amended to 
     read as follows: ``Definition of Single Head of Household''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 3. EXPANDED AVAILABILITY OF 1040EZ AND 1040A.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

     ``SEC. 7529. DOLLAR THRESHOLD FOR THE USE OF FORMS 1040EZ AND 
                   1040A.

       ``(a) In General.--An individual shall not be ineligible to 
     use Form 1040EZ and Form 1040A for filing individual income 
     tax returns on the basis of--
       ``(1) the amount of the taxpayer's taxable interest income, 
     or
       ``(2) the amount of the taxpayer's taxable income,
     so long as the taxpayer's taxable income does not exceed 
     $100,000.
       ``(b) Inflation Adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2004, the $100,000 
     dollar amount in subsection (a) shall be increased by an 
     amount equal to--
       ``(1) such dollar amount, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2003' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:

``Sec. 7529. Dollar threshold for the use of forms 1040EZ and 1040A.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 4. SIMPLIFICATION THROUGH ELIMINATION OF INOPERATIVE 
                   PROVISIONS.

       (a) In General.--
       (1) Adjustments in tax tables so that inflation will not 
     result in tax increases.--Paragraph (7) of section 1(f) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(7) Special rule for certain brackets.--In prescribing 
     tables under paragraph (1) which apply to taxable years 
     beginning in a calendar year after 1994, the cost-of-living 
     adjustment used in making adjustments to the dollar amounts 
     at which the 36 percent rate bracket begins or at which the 
     39.6 percent rate bracket begins shall be determined under 
     paragraph (3) by substituting `1993' for `1992'.''.
       (2) Earned income credit.--Paragraph (1) of section 32(b) 
     of such Code is amended--
       (A) by striking subparagraphs (B) and (C), and
       (B) in subparagraph (A) by striking ``(A) In general.--In 
     the case of taxable years beginning after 1995'' and moving 
     the table 2 ems to the left.
       (3) Annuities; certain proceeds of endowment and life 
     insurance contracts.--Section 72 of such Code is amended--
       (A) in subsection (c)(4) by striking ``; except that if 
     such date was before January 1, 1954, then the annuity 
     starting date is January 1, 1954'', and
       (B) in subsection (g)(3) by striking ``January 1, 1954, 
     or'' and ``, whichever is later''.
       (4) Accident and health plans.--Section 105(f) of such Code 
     is amended by striking ``or (d)''.
       (5) Flexible spending arrangements.--Section 106(c)(1) of 
     such Code is amended by striking ``Effective on and after 
     January 1, 1997, gross'' and inserting ``Gross''.
       (6) Certain combat zone compensation of members of the 
     armed forces.--Subsection (c) of section 112 of such Code is 
     amended--
       (A) by striking ``(after June 24, 1950)'' in paragraph (2), 
     and
       (B) striking ``such zone;'' and all that follows in 
     paragraph (3) and inserting ``such zone.''.
       (7) Principal residence.--Section 121(b)(3) of such Code is 
     amended--
       (A) by striking subparagraph (B), and
       (B) in subparagraph (A) by striking ``(A) In general.--'' 
     and moving the text 2 ems to the left.
       (8) Certain reduced uniformed services retirement pay.--
     Section 122(b)(1) of such Code is amended by striking ``after 
     December 31, 1965,''.
       (9) Mortgage revenue bonds for residences in federal 
     disaster areas.--Section 143(k) of such Code is amended by 
     striking paragraph (11).
       (10) State legislators' travel expenses away from home.--
     Paragraph (4) of section 162(h) of such Code is amended by 
     striking ``For taxable years beginning after December 31, 
     1980, this'' and inserting ``This''.
       (11) Health insurance costs of self-employed individuals.--
     Paragraph (1) of section 162(l) of such Code is amended to 
     read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer and the taxpayer's spouse and dependents.''.
       (12) Interest.--
       (A) Section 163 of such Code is amended--
       (i) by striking paragraph (6) of subsection (d), and
       (ii) by striking paragraph (5) of subsection (h).
       (B) Section 56(b)(1)(C) of such Code is amended by striking 
     clause (ii) and by redesignating clauses (iii), (iv), and (v) 
     as clauses (ii), (iii), and (iv), respectively.
       (13) Amounts received by surviving annuitant under joint 
     and survivor annuity contract.--Subparagraph (A) of section 
     691(d)(1) of such Code is amended by striking ``after 
     December 31, 1953, and''.
       (14) Income taxes of members of armed forces on death.--
     Section 692(a)(1) of such Code is amended by striking ``after 
     June 24, 1950''.
       (15) Tax on nonresident alien individuals.--Subparagraph 
     (B) of section 871(a)(1) of such Code is amended to read as 
     follows:
       ``(B) gains described in subsection (b) or (c) of section 
     631,''.
       (16) Old-age, survivors, and disability insurance.--
     Subsection (a) of section 1401 of such Code is amended by 
     striking ``the following percent'' and all that follows and 
     inserting ``12.4 percent of the amount of the self-employment 
     income for such taxable year.''.
       (17) Hospital insurance.--Subsection (b) of section 1401 of 
     such Code is amended by striking ``the following percent'' 
     and all that follows and inserting ``2.9 percent of the 
     amount of the self-employment income for such taxable 
     year.''.
       (18) Ministers, members of religious orders, and christian 
     science practitioners.--Paragraph (3) of section 1402(e) of 
     such Code is amended by striking ``whichever of the following 
     dates is later: (A)'' and by striking ``; or (B)'' and all 
     that follows and inserting a period.
       (19) Withholding of tax on nonresident aliens.--The first 
     sentence of subsection (b) of section 1441 of such Code and 
     the first sentence of paragraph (5) of section 1441(c) of 
     such Code are each amended by striking ``gains subject to 
     tax'' and all that follows through ``October 4, 1966'' and 
     inserting ``and gains subject to tax under section 
     871(a)(1)(D)''.
       (20) Retirement.--Section 7447(i)(3)(B)(ii) of such Code is 
     amended by striking ``at 4 percent per annum to December 31, 
     1947, and at 3 percent per annum thereafter'', and inserting 
     ``at 3 percent per annum''.
       (21) Annuities to surviving spouses and dependent children 
     of judges.--
       (A) Paragraph (2) of section 7448(a) of such Code is 
     amended by striking ``or under section 1106 of the Internal 
     Revenue Code of 1939'' and by striking ``or pursuant to 
     section 1106(d) of the Internal Revenue Code of 1939''.
       (B) Subsection (g) of section 7448 of such Code is amended 
     by striking ``or other than pursuant to section 1106 of the 
     Internal Revenue Code of 1939''.
       (C) Subsections (g), (j)(1), and (j)(2) of section 7448 of 
     such Code are each amended by striking ``at 4 percent per 
     annum to December 31, 1947, and at 3 percent per annum 
     thereafter'' and inserting ``at 3 percent per annum''.
       (b) Effective Date.--
       (1) General rule.--Except as otherwise provided in 
     paragraph (2), the amendments made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Savings provision.--If--
       (A) any provision amended or repealed by subsection (a) 
     applied to--
       (i) any transaction occurring before the date of the 
     enactment of this Act,
       (ii) any property acquired before such date of enactment, 
     or

[[Page 16865]]

       (iii) any item of income, loss, deduction, or credit taken 
     into account before such date of enactment, and
       (B) the treatment of such transaction, property, or item 
     under such provision would (without regard to the amendments 
     made by subsection (a)) affect the liability for tax for 
     periods ending after such date of enactment,

     nothing in the amendments made by subsection (a) shall be 
     construed to affect the treatment of such transaction, 
     property, or item for purposes of determining liability for 
     tax for periods ending after such date of enactment.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Ohio (Mr. Portman) and the gentleman from Texas (Mr. Sandlin) each will 
control 20 minutes.
  The Chair recognizes the gentleman from Ohio (Mr. Portman).
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of the legislation. This is 
introduced by my friend and our colleague, the gentleman from Georgia 
(Mr. Burns). This legislation clears up a number of issues that affect 
the Tax Code and its complexity as it relates to individuals as 
compared to small businesses. So it is a natural companion piece of 
legislation to the legislation that we had before us a moment ago on 
this floor.
  Studies have shown that individual taxpayers now spend over 3 billion 
hours per year complying with our Tax Code, filling out tax returns, 
keeping records and so on, and that cost of compliance, as we talked 
about in the earlier debate, is now exceeding $85 billion a year.

                              {time}  1530

  This bill is not the sales tax bill. It is not the flat tax bill. It 
is not the panacea. It is not the silver bullet, but it is an important 
and very valuable contribution to the effort of simplifying the Tax 
Code for individuals.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Georgia (Mr. Burns).
  Mr. BURNS. Mr. Speaker, I thank the gentleman from Ohio (Mr. Portman) 
for yielding me time. I thank the committee for allowing me to bring 
this legislation to the floor today.
  This is common-sense legislation. It does something positive for 
America's working families. H.R. 4841, the Tax Simplification for 
Americans Act will clear up a number of confusing issues that ordinary 
people, people like you and people like me, struggle with as they 
prepare their tax forms and begin to pay their taxes.
  H.R. 4841 does several things for the taxpayer. It widens access to 
the time-saving forms of 1040A and 1040EZ. It clarifies confusing 
issues in the Tax Code, and it eliminates a number of outdated and 
unnecessary provisions.
  My bill will benefit working families. It will save them both time 
and money.
  Mr. Speaker, the Joint Committee on Taxation concluded that this bill 
will have only negligible effects on revenues. H.R. 4841 permits more 
taxpayers the opportunity to use the simpler 1040A and 1040EZ for their 
filing. Taxpayers with up to $100,000 of taxable income will be able to 
use these time-saving forms. The previous cap, Mr. Speaker, was $50,000 
set in 1982, 2 decades ago, over 2 decades ago with no adjustments for 
inflation.
  Over time the old Tax Code has forced nearly 2 million taxpayers, 2 
million taxpayers out of being able to use this simplified, time-saving 
short form. The new limit that this bill provides is for $100,000 and 
will be indexed for inflation so this body will not have to again 
address the issue of a 1040EZ or a 1040A. We are going to allow more 
taxpayers to use these time-saving forms.
  Another provision of the bill will allow the taxpayer who has 
interest income of more than $1,500 to also use the 1040EZ subject to 
certain IRS requirements to report the services on those interest 
incomes.
  The IRS has concluded that it takes 28 hours of taxpayer time to 
prepare a 1040, 28 hours, as compared to 4 hours for a 1040EZ. So the 
challenge we face is, let us simplify the Tax Code; let us allow more 
Americans to use the 1040A and the 1040EZ. The changes will allow over 
1.6 million taxpayers to file these simple forms.
  The other thing this bill does is it provides for elimination of some 
deadwood provisions, those provisions that are needlessly complicating 
our Tax Code, and they are obscuring the true meaning of the tax laws. 
So we need to take the opportunity, while we are increasing the limit 
on the use of the 1040EZ, to eliminate some of these deadwood 
provisions.
  The tax burdens on Americans is great, and it is as much about how we 
pay taxes as the amount of taxes we pay. This bill makes it a little 
easier and a little simpler for Americans to pay their taxes. It is 
common-sense legislation. It restores reason to the taxable income 
limits for 1040A and the 1040EZ use. It clarifies confusion in the Tax 
Code, and it removes deadwood.
  Mr. Speaker, I cannot imagine anyone opposing common-sense tax 
simplification, and I want to urge all of my colleagues to support this 
bill today.
  Mr. SANDLIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, again I want to restate my commitment to reform our Tax 
Code in ways that meaningfully benefit America's working families. 
While I support this bill, I am afraid that we missed an opportunity. 
H.R. 4841 offers little meaningful benefit. It is, as we say in Texas, 
all sizzle and no steak.
  In effect, the bill before the House does three things, only one of 
which provides any real benefit to the American taxpayer; and even that 
particular change does not require any legislative action by this body. 
The IRS could accomplish that same result by regulation.
  First, under the current law there is special filing status for heads 
of households. The bill before us does not change the criteria for 
qualifying for that filing status, but simply inserts the term 
``single'' before ``head of household.''
  This decision or provision does not change or simplify anything. 
Indeed, it may create some confusion because some individuals who are 
legally married under State law, but otherwise considered unmarried 
qualify for head-of-household status. For example, a spouse living 
apart with children can qualify for head-of-household status even 
though that spouse is married.
  Second, the bill would make the form 1040EZ and form 1040A short 
forms available for individuals with incomes up to $100,000; currently, 
the limit is $50,000. Also, the bill allows the filer to have more than 
$1,500 in interest income. There is no question but that this change is 
useful, particularly as individual incomes rise in concert with 
inflation. Nevertheless, this change does not require an act of 
Congress. The IRS is fully empowered to make tax form revisions without 
additional legislation.
  Finally, the bill purports to repeal some deadwood language on the 
Tax Code on the grounds that the language has no legal effect. However, 
the majority apparently is uncertain that all of the provisions no 
longer have effect. Therefore, the bill includes a savings clause. The 
savings clause in effect reenacts the repeal provisions if it turns out 
that anyone would benefit from the provisions in the future. Once 
again, it is all sizzle and no steak.
  Mr. Speaker, we need real reform. We need real simplification. The 
bill may be entitled and named ``The Tax Simplification for Americans 
Act of 2004,'' but adding one modifier to the head of household's 
filing status provision has no effect and may, in fact, be contrary to 
the stated purpose and introduce confusion rather than clarity. 
Moreover, changing legislatively what can be accomplished through 
agency action does not serve meaningfully to simplify an onerously 
complex Tax Code.
  Mr. Speaker, the legislation before the House today is simplification 
in name only. We can and must do better in this House.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I appreciate my colleague from Texas indicating that he 
is not supportive of these simplifications. But I would say that if we 
use the argument that we do not need to legislate

[[Page 16866]]

because it can be done administratively, then we will have a lot of 
problems in our tax administration system because all that the IRS has 
the power to do, a lot of the things that we have done in this Chamber, 
including many of the reforms we did in 1996 when we totally 
restructured the IRS, we would be waiting forever sometimes.
  The gentleman from New York (Mr. Houghton) is retiring from this 
Congress. We want to get this done before he leaves. The IRS has had 
since 1982 to make these changes on the 1040EZ and the 1040A, and they 
have certainly had over the last decade as it has been increasingly 
evident that they have not adjusted the level for inflation, and we 
want taxpayers to be able to use this simpler form if they can.
  So the argument that they can do it administratively at the IRS and, 
therefore, we should not touch it seems to me to be an unusual one when 
there is, as in this case, such an urgent need to make the change.
  So I do think the legislation before us is important. I also think 
that the 6 million Americans, estimated by the IRS by the way, who make 
a mistake on their filing status because they think that ``head of 
household'' is folks who are exclusively married, ``head of household'' 
is the change that we make in this legislation, to say that that is not 
a change that is meaningful, I think is inaccurate because those 6 
million people by indicating the wrong filing status get in trouble 
with the IRS.
  Some of them get audited because of that. That causes enormous 
problems for those taxpayers, particularly low-income taxpayers who do 
not have the professional help to be able to deal with these audits. It 
also causes tremendous downstream costs to the IRS as they try to 
untangle the mess that sometimes occurs when somebody chooses the wrong 
filing status.
  So I think this legislation is important. I think it is good 
legislation. Again, it is not everything. It is not meant to be 
everything. But I do not think it should be legislation that is not 
supported by the other side of the aisle.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from New York (Mr. Houghton), the chairman of the Subcommittee on 
Oversight. He has devoted himself to simplification. It is his 
legislation in terms of international tax simplification that has 
really been at the forefront on a bipartisan basis over the last 
several years.
  Mr. HOUGHTON. Mr. Speaker, I particularly want to thank the gentleman 
from Georgia (Mr. Burns) for this legislation. I really think it is 
important.
  We can argue whether it is enough or not. Simplification is an 
ongoing process. It is never over; it just goes on and on and on. And 
this is not perfect, but it is one element that I think is important 
and we ought to pass it.
  This bill contains an exception to the rule of tax simplification not 
being simple. It is one simple change that would benefit 19 million 
individual taxpayers. So let me try to explain.
  Over a million taxpayers call the IRS's toll free help line each year 
with questions about the filing status of dependents. One of the first 
questions they ask is, Does ``head of household'' mean what it means? 
What is the filing status and do I qualify? So certainly if you are 
married, the answer is no. But it is no wonder taxpayers are confused 
because if you are married, generally the filing is of a joint return.
  So here is an example of a phrase commonly misunderstood, meaning 
head of one's household. And that has been appropriate for years in the 
Tax Code. And it would be fine if the popular meaning of the phrase it 
was attached to had the same meaning, but sadly, they are different.
  In fact, taxpayers are so likely to be confused, as the gentleman 
from Ohio (Mr. Portman) said, 6 million choose this filing status in 
error each year.
  Now, I do not want to get into a word game, but changing the name 
``head of household'' to ``single head of household'' is going to 
provide some clarification. The change will alert filers that the 
favorable rate structure is for single taxpayers or those considered 
single under the special rules for married taxpayers who are separated.
  It will also make clear to single and long-term separated taxpayers 
that they might qualify if they maintain a home for a dependent child 
or a retired parent.
  I am pleased to say that this builds on legislation that I introduced 
in April to rename the Head of Household filing status, the Filing 
Status Simplification Act.
  This proposal is strongly supported by the National Taxpayer Advocate 
who writes that the proposal inserting the word ``single'' before the 
``head of household'' is going to clarify the law for many married 
taxpayers who do not really understand this term.
  I urge my colleagues to support this common-sense change that will 
help millions of taxpayers each year.
  Mr. SANDLIN. Mr. Speaker, I yield 7 minutes to the gentleman from 
Massachusetts (Mr. Neal).
  Mr. NEAL of Massachusetts. Mr. Speaker, I think everybody in this 
institution knows the high personal regard in which we hold the 
gentleman from New York (Mr. Houghton), and we certainly regret that he 
is moving on to other things.
  That applause there was singular.
  Mr. Speaker, there is another issue that draws us to this floor 
today, and I have heard the gentleman from Ohio (Mr. Portman) is a good 
enough guy. He said a couple of times today, he said, Well, this is not 
a silver bullet.
  Well, when I was a kid, if my father was witnessing something that he 
thought was particularly outrageous or he was looking at some sort of a 
question that he thought lacked proper definition, he would say, Well, 
at least Jesse James had the honor to wear a mask. And when I hear 
these folks on the other side come to the floor today and talk about 
simplification, it is outrageous.
  Let me remind Members of this body that in 1994 the chairman of the 
Committee on Ways and Means said emphatically he was going to ``pull 
the Tax Code up by its roots.'' Then, of course, the charade was 
perpetrated on the rest of the committee when others said, Well, not to 
be outdone, we are going to drive a stake through the heart of the Tax 
Code. And then another one said, Well, we are going to have a long 
funeral procession for the Tax Code.
  Well, to those of you who filled out your own tax forms in the last 
round, that Tax Code is more complicated than ever. There has been no 
effort to simplify that Tax Code, but we know there is an election that 
is going to take place 15 weeks from yesterday, so we are going to be 
on the side of tax simplification.
  I would submit to you today that this is the easiest thing in this 
body that could be done with Democrats and Republicans to simplify the 
Tax Code. But the rhetoric does not fit public policy, because we have 
got to get people psyched up and convince them in this short span that 
we are going to simplify the Tax Code. We will be back next year, and 
we will not simplify the Tax Code because once again it is inconsistent 
with the rhetoric, as opposed to the policy that is necessary.

                              {time}  1545

  Let me talk today about something we could do to really simplify the 
Tax Code.
  While I am disappointed with the context of the bill, simply because 
I think it could have been expanded in an effort to achieve 
simplification, we examine the four provisions that are put to us 
today. So we are going to clarify how to classify people who were born 
on January 1.
  Then the second section is going to replace the phrase ``head of 
household'' with a phrase that says ``single head of household'' 
throughout the Tax Code.
  The third provision is going to instruct the IRS to make the EZ 
available to more people; but my colleagues know what, the IRS already 
has the authority to do that. That could be done short of what we are 
undertaking at this moment.
  The final provision deletes some parts of the Tax Code that no longer 
has any legal effect. My goodness, I can feel the heartland of America 
today, boy, the satisfaction they must feel

[[Page 16867]]

that we are taking up this major piece of legislation that, in the end, 
really does very little for them.
  It is easy to talk about tax simplification, and we all know it is 
very difficult to accomplish; but for the last three Congresses, I have 
offered a tax simplification bill that would include a paid-for repeal 
of alternative minimum tax. If this body is serious about making it 
easier for Americans to file their taxes, there is no better place to 
start.
  The alternative minimum tax was designed to prevent the very 
wealthiest Americans from overusing certain tax benefits to avoid most 
of their tax burden. Today, we all know it does not accomplish that 
goal any longer. Today, it ensnares millions of ordinary middle-class 
taxpayers, and I spoke to the American Manufacturing Association last 
night, and they were enraged by what has happened, and by the way, they 
generally support the other party.
  By the end of this decade, the AMT will apply to over 30 million 
taxpayers, including more than three-quarters of taxpayers with incomes 
between $75,000 and $100,000. In fact, unless we change the tax laws, 
in 2005, married couples with four children will be subject to the 
alternative minimum tax as soon as their incomes reach $58,500. What 
used to be a class tax has now become a mass tax.
  Now, I understand the reasons for the original imposition of AMT, but 
it no longer makes any sense. It no longer solves the problem that it 
was supposed to correct. It, in fact, creates a new problem. It doubles 
the amount of work that millions of Americans have to do to determine 
how much they owe.
  Because of the AMT, these taxpayers have to fill out two tax forms. 
The process has become so complex that it now takes an average middle-
class family 19 hours to fill out their tax forms. That is 7\1/2\ hours 
longer than it took in 1994 when they were going to pull the Tax Code 
up by its roots or drive a stake through the heart of the Tax Code.
  The American people could be hardly more clear on the message they 
are sending to all of us. They need help navigating this process. It 
has become much too complicated. Sixty percent of the individuals hire 
a professional today to prepare their taxes, an increase of 50 percent 
from 1994 when they were going to drive a stake through the heart of 
the Tax Code, when they were going to have a long funeral procession 
for the Tax Code, when they were going to pull the Tax Code up by its 
roots.
  If my colleagues really want to do something in this institution, we 
do not have to talk about tax increases or tax cuts. What we could do 
is talk about tax simplification. Work with me on this AMT proposal 
that I have had. It could be done in a bipartisan manner. I wish the 
gentleman from New York (Mr. Houghton) was staying because we have had 
success working on bills in a bipartisan manner, the two of us; and I 
regret his departure precisely because of that, and I believe that we 
could still do a tax simplification in the next session of this 
Congress without a great deal of difficulty.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  I would tell my colleague from Massachusetts who had expressed 
concerns about the so-called birthday rule, we actually took it out of 
the legislation because of concerns expressed by the gentleman's side 
of the aisle.
  With regard to AMT, I commend the gentleman for his work on that over 
the years. As the gentleman knows, in 2001 and 2003, we put in place 
increases in the threshold for the first time in many, many years which 
has saved millions of taxpayers from having to go into the AMT. We also 
have an extender bill that passed this House to extend that into the 
future.
  Mr. NEAL of Massachusetts. Mr. Speaker, will the gentleman yield for 
a friendly observation?
  Mr. PORTMAN. I yield to the gentleman from Massachusetts.
  Mr. NEAL of Massachusetts. Mr. Speaker, I have been here for 16 
years, and I have never been involved in an issue where people 
congratulated me more for bringing it forward and did less about it 
than the alternative minimum tax issue.
  Mr. PORTMAN. Reclaiming my time, I will tell the gentleman that I 
actually have had legislation in to repeal the AMT for many years. So I 
go even further than the gentleman goes in terms of AMT relief. So the 
gentleman is not the only one who is interested in it; but he has 
brought focus to it and we appreciate that, as has the gentleman from 
New York (Mr. Houghton).
  I would also say, though, that this Congress has made some progress. 
It is a tough issue. Because we did not index it, therefore AMT goes to 
more and more taxpayers every year. By not indexing the threshold, more 
and more middle-income taxpayers, particularly those with children, get 
caught in it.
  Mr. Speaker, we now have with us the chairman of Committee on Ways 
and Means, who has worked hard on these tax simplification bills before 
us, including this individual tax simplification bill that was authored 
by the gentleman from Georgia (Mr. Burns).
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Thomas), chairman of the Committee on Ways and 
Means.
  Mr. THOMAS. Mr. Speaker, I thank the gentleman for yielding me time, 
and I have been listening to some of the discussion; and, sadly, it 
tends to revolve around the same themes, and what I would like to do is 
suggest that instead of a semantic war, i.e., you are concerned because 
this particular legislation was called tax simplification, we would be 
open to some terms that would suit you, such as Tax Code 
rationalization, Tax Code clarification.
  If you are hung up on the fact that this is not the end-all and the 
be-all in terms of simplification, I can suggest to you that if you 
want to look at the recent record of voting on measures, the ultimate 
simplification of the Tax Code would be to zero out a tax 
responsibility for someone. That was done. In terms of the low-income 
who fall into the tax-paying category, if you have dividend income or 
you have capital gains returns, we provided a Tax Code modification 
which would produce a zero tax rate. Now, that is ultimate 
simplification, and the fact of the matter is you voted against that.
  So when you take a look at areas that the administration should have 
changed, I do hope that you take a step back from yourself and look at 
yourself as others do. You are standing here on the floor of the House 
criticizing legislation because it does not do enough, and you point 
out that there are provisions in this legislation that could be done 
administratively, but they have not; and at some point, either you 
continue to state that it could be done administratively and it is not 
done, or you agree it is relatively modest and minor and you wonder why 
it has not been done, and you go ahead and say you should do it. Now, 
that is at least a step forward.
  So when I find you criticizing, what you do is you criticize if it is 
too grand, you criticize if it is too minimal, you criticize if it were 
requiring the administrator to do something they have the 
administrative power to do, but they do not exercise it. In fact, all 
you do is criticize.
  When you listen to your arguments, it really boils down to one point. 
You simply cannot stand the fact that you are no longer in the 
majority, and I understand that. I was in the minority for 16 years, 
and I watched what you folks did to the Tax Code when you were in the 
majority, and I will return briefly and then end on the theme of the 
alternative minimum tax.
  The problem we are in today is based upon a tax measure passed by the 
Congress of the United States, originating in the House of 
Representatives, controlled by my friends on the other side of the 
aisle, with not one Republican voting for it, which created the 
nonindexed provisions which you all lament have driven people into the 
alternative minimum tax structure.
  I will tell you, when I was in the minority on the committee, I could 
not understand the logic in which you wanted to impose an alternative 
minimum tax in the first place. Because when we began discussing the 
fact that there were some people who did not

[[Page 16868]]

pay taxes and because of the various deductions in the code, it allowed 
them not to pay taxes, the question I asked you was why do we not 
modify the deductions so everybody pays taxes. That is a fundamental, 
direct change.
  Oh, no, we are not going to do that; we are going to create a whole 
alternate world, akin to physics in terms of matter versus anti-matter. 
We are going to have a structure which has a minimum tax, then we are 
going to create a structure which has an alternative minimum tax, and 
it only works in your bipolar world if the indexing in terms of the 
objects you do allow to be counted against a modification of the 
alternative minimum tax are adjusted the way those same items are in 
the regular tax structure.
  What you wound up doing in that piece of legislation was freezing 
those deductions in the alternative world which has created this march 
into lower and lower brackets. It is wholly something that you are 
responsible for.
  Now, since we are now in the majority, we obviously need to address a 
number of areas that you either failed to address or complicated 
significantly when you were in the majority; but it seems to me if you 
want to be a constructive minority, you join with us when we have these 
modest changes that make sense, instead of opposing absolutely 
anything, whether large, small, simple, or clarification.
  Someone once said the role of the opposition party is to oppose. You 
folks are driving it to the absolute supreme example. What you really 
ought to do is begin to talk about where it makes sense and we join 
together, we join together. You start in the small areas, and we can 
move to the larger areas.
  You folks proved absolutely conclusively that when you ran the place 
you could really mess up the large areas. What you are doing now is 
indicating that you are more than willing to be the opposition and the 
obstructionists even in the small.
  Mr. SANDLIN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Speaker, let me thank my friend from Texas for 
yielding me this time.
  Mr. Speaker, I have heard my distinguished chairman make his argument 
many times about the fact that we did this problem as Democrats when we 
were in the majority. I would think that after 10 years, the statute of 
limitations should have run on that argument. The Republicans have had 
10 years in which to act.
  I guess one of the problems that I have, Mr. Speaker, is that this 
bill did not go through a markup in the Committee on Ways and Means. We 
did not have an opportunity to offer amendments.
  The chairman complains about the fact that we do not like the title 
of this bill, Tax Simplification for Americans Act. If we had had it in 
committee, maybe I would have had a chance to offer an amendment to 
clarify exactly what this bill does, which is very little. It does not 
carry out a commitment that was made by the Republicans to simplify our 
Tax Code.
  We bring that up because, as my colleagues have already pointed out, 
there were statements made 10 years ago when the Republicans took 
control of this body that tax simplification was going to be their top 
priority, and they simply have not delivered on that. We have not had 
any bold proposals. Instead, what does the record show?
  Well, we have seen that the number of pages of the Internal Revenue 
Code and Regulation now equals 54,846 pages. That is a 35 percent 
increase from what it was in 1995. That is hardly tax simplification.
  We have talked about the alternative minimum tax, and why do we 
mention this? My good friend from Ohio indicates that we are making 
progress in dealing with the alternative minimum tax. Mr. Speaker, I 
would say to my colleagues that we are not making progress in dealing 
with the alternative minimum tax because, under current tax law, the 
number of taxpayers who are going to be subject to the alternative 
minimum tax by the year 2010 will be 33 million taxpayers, up from 1 
million taxpayers in 1999. That is not making progress. One out of 
every three taxpayers will be subject to the alternative minimum tax. 
Six million taxpayers will face the alternative minimum tax in 2010 
just because they have children, and we talk about marriage penalties 
here. A person is 20 times more likely to be subject to the alternative 
minimum tax if they are married.
  These are issues that we would like to address in the committee that 
I have the honor of serving on; but instead, we get bills that are 
brought directly to the floor; that we do not have a chance to offer 
amendments on; that are brought up under suspension where all we can do 
is vote the bill up or down. Obviously, it might make some progress but 
very little, and it does not deal with the underlying issue of 
complexity in our Tax Code and, therefore, should not be called the Tax 
Simplification for Americans Act.

                              {time}  1600

  Mr. Speaker, let me just say in conclusion, we are doing all this and 
still adding billions and billions of dollars to the national debt in 
the tax policies that we are bringing forward. That is hardly serving 
the interests of the people we represent.
  Mr. PORTMAN. Mr. Speaker, I reserve the balance of my time.
  Mr. SANDLIN. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman 
from Washington (Mr. McDermott).
  Mr. McDERMOTT. Mr. Speaker, as I sat and listened to this debate, I 
thought of a very famous quote from Groucho Marx. He said if you are 
going to go into politics, the first thing you have to learn to do is 
learn to keep a straight face and act sincere.
  Now this bill taxes anybody's ability to do that. It is election 
time. We have a man from a southern State who is running for election. 
He spent a million dollars in the primary, and yesterday he did not do 
that well. But he now has this bill the next day to take home and say, 
``I have brought tax simplification to Georgia.'' That is what we have 
here today.
  I understand it is election time, and the gentleman from Texas (Mr. 
DeLay) certainly has interest in tax simplification, but the other side 
of the aisle simply has no credibility on this issue.
  They have been talking about this for 10 years. My colleague from 
Maryland pointed out the other side has passed 42 new laws since 1994, 
and they have added 3,533 changes to the law covered in more than 
10,000 additional pages.
  Now, not one single committee had a hearing on this. This is such a 
political bill, they did not even bother to run it through committee. 
They said, What does this guy from Georgia need? Let us give him a bill 
and pass it so he can run home with it and put out his press release.
  Mr. Speaker, I guarantee there will be a press release this afternoon 
that will hit the Atlanta Constitution and whatever else is in Georgia. 
It is done for that reason. Otherwise it would have gone through 
committee and had a hearing, and we would actually talk about it. But 
when it has no purpose legislatively, there is no sense running it 
through the legislative process; just jam it through so we can get it 
into the campaign.
  Now, we cannot find time in this Congress to deal with the 
alternative minimum tax. Everybody is out here saying bad things about 
it. The reason AMT was put in in 1986 was very simple, and that is, 
there are rich people in this country. It may come as a surprise to 
some Members who do not think of themselves as rich, but there are some 
really rich people, and they were manipulating the Tax Code so 
effectively that they could have $10 billion and not pay any taxes at 
all.
  The average working Joe or Jill who carries a lunch bucket to work or 
to the restaurant where she works or as a maid in a hotel, they pay 
taxes. And then you have got these really rich people out there who are 
not paying anything.
  So the decision of the Congress was, and it was another Congress, not 
a Republican Congress, it would never have passed if you guys had been 
in charge, I understand that, because you think if you can figure a way 
out of paying

[[Page 16869]]

taxes, you should not pay any. You do not owe anything to the country. 
You should not pay any part of what is going on in Iraq.
  You should not pay anything for what is going on in Iraq, you should 
not pay anything for what is going on in homeland security, that should 
be paid by Joe Lunch Bucket and Jill Lunch Bucket. You do not want an 
alternative minimum tax, and what you are doing, we all know, is 
letting more and more people get sucked into it. They have to do their 
taxes twice, so you can get rid of it to help the people at the top. It 
is real clear what the other side is up to.
  Mr. Speaker, this silly bill the other side of the aisle has out here 
today, I do not think anybody is going to vote against a title like 
``tax simplification.'' The first section you dropped; the other ones 
do not do anything.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I appreciate the gentleman's defense of the alternative 
minimum tax. We just fundamentally disagree. We do not think there 
ought to be an alternative minimum tax. We think we ought to change the 
code. If Members think people should not get preferences in the code, 
change the preferences. Let us be honest about it.
  But I am glad the gentleman is honest about it and saying he supports 
it, and it was done in a Democrat Congress and he would like it to 
continue. I would also say that the gentleman's attempt to imitate a 
southern accent, and my colleague from southern Texas can confirm this, 
is as bad as his analysis of the underlying legislation before us. This 
is not everything, but it is a good bill.
  Let us talk about the facts. We have had a lot of interesting 
conversation about what it does and does not do, but let us get to the 
facts. Number one, it clarifies a misleading part of the code which has 
to do with a filing status title. It will help about 6 million 
Americans who file the wrong way because it is misleading.
  It is going to help with regard to letting people use the short 
1040EZ and 1040A tax forms, which will help save millions of dollars 
and also millions of hours of taxpayer work in terms of putting their 
taxes together.
  Finally, it eliminates a bunch of deadwood. The ``head of household'' 
filing status, which is the first thing it does, is generally for 
single taxpayers with dependents, we changed it to say that, ``single 
head of household.'' That makes it clear to the vast majority of 
married taxpayers that they are not eligible.
  Again, about 6 million of them a year inappropriately choose that 
filing status when they should not, and it causes great problems to 
them and to the IRS. In fact, the IRS gets over a million calls a year 
just about filing status. At any given time, there are 18 million 
people who might be subject to audit because they choose the wrong 
filing status. Being subject to audit, especially to lower-income 
taxpayers, is devastating, and so we are trying to help those people.
  It also expands the 1040EZ and the 1040A by allowing taxpayers with 
up to $100,000 in taxable income, rather than $50,000, and who have 
interest payments, to be able to use these shorter forms.
  What is the difference? The normal tax forms takes on average 28.5 
hours to fill out. The 1040EZ, 3.5 hours. That is a huge time savings 
for Americans who do not have enough time to do the things that they 
want to do, to take that time away from filling out taxes. Again, it is 
a tremendous savings of money and time.
  Yes, the IRS may be looking at this, but they have not done it, and 
it is the right thing to do, so let us do it. It has not been adjusted 
since 1982.
  Finally, getting rid of some of these deadwood provisions is 
extremely important, cleaning up the code for individuals because 
people make mistakes based on these inaccurate provisions in the code. 
We have gone through it using the Joint Committee on Taxation, 
professional analysis, to determine what is appropriate and what is 
not.
  This is good government legislation. I urge my colleagues on both 
sides of the aisle to strongly support this.
  Mr. SANDLIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, our honorable chairman mentioned maybe we should rename 
the act because we had been criticizing it, and maybe call it the 
``Taxpayer Rationalization Act.'' Well, I had already proposed calling 
it the ``All Sizzle and No Steak Taxpayer Act,'' and certainly we would 
accept that moniker.
  The honorable chairman indicated that we are unfairly criticizing the 
bill, but I might mention, we are only criticizing it because it is 
wrong. Adding ``single'' to the ``head of household'' is just simply 
incorrect. If it was so simple, we would not have to be debating and 
talking about it so much.
  In fact, the Tax Code contains 1.4 million words, 10,000 of which 
have been added since the gentleman from California (Chairman Thomas) 
got into the majority, and now we can make that 10,001 words, as we add 
the word ``single,'' although it certainly is incorrect.
  I feel that in looking at this we have to clarify what the bill does 
and does not do by asking ourselves certain questions and asking the 
author certain questions about the intent of the bill.
  The questions would be: Does the bill deny the tax benefits of head 
of household status to a married woman whose husband has abandoned her 
and the kids? And the answer to that would be ``no.''
  Does the bill deny tax benefits of head of household status to a 
married man who is legally separated under the laws of a State of this 
Nation, who has custody of the children? And again the answer would be 
``no.''
  So if the provision does not apply only to single taxpayers, what 
does the provision do other than add confusion by using the word 
``single,'' which is inapplicable.
  Finally, I am curious about the other provision of the bill, which 
would require the IRS to change the short forms to allow taxpayers with 
higher incomes, up to $100,000, to use the forms. My questions are: 
Does the code need to be amended, added to, to change how tax forms are 
printed and formatted? And the answer would be ``no,'' they have 
authority to do that under the current law.
  And do the experts at the IRS and the Treasury think that these forms 
that we currently have should be changed? And I think obviously not or 
that would have been done.
  Now, possibly some of these issues could have been addressed if we 
had gone through the regular order and process of the House, as was 
mentioned by the gentleman from Maryland (Mr. Cardin). The rules are 
there for a purpose. Possibly if we had gone through the Committee on 
Ways and Means to consider this bill, these issues could have been 
addressed. We could have renamed the bill the ``All Sizzle and No Steak 
Act.'' We could have made sure that the word ``single'' was inserted if 
it was accurate, and not inserted if it was not.
  But again, the rules are there for a purpose. We did not follow the 
rules, and we find ourselves here today in this confusion. So again 
this legislation may be marginally helpful, but why miss an opportunity 
for real tax simplification?
  Since 1994, the majority has enacted 42 new public laws with 3,533 
changes to the Tax Code contained in those more than 10,000 additional 
pages of complex public laws. That averages 360 changes a year with no 
serious efforts made to provide simplification. The Tax Code currently 
contains about 1.4 million words. The Tax Code has more than 4,700 
pages. The Tax Code content has grown by at least 15 percent since the 
majority took over in 1994. It has grown 15 percent. The Master Federal 
Standard Tax Reporter used by accountants and lawyers is more than 
60,000 pages. Since 1994, that manual has increased by 2,000 pages.
  Today it takes average, middle American families 7.5 hours longer to 
fill out their tax return than it did in 1994, an increase from 11.5 
hours in 1994 to 19 hours today. That is a full day's work for most 
Americans. And what do we do to simplify? We add the word ``single.''

[[Page 16870]]


  Mr. PORTMAN. Mr. Speaker, I yield for the purpose of making a 
unanimous consent request to the gentleman from Minnesota (Mr. 
Ramstad).
  Mr. RAMSTAD. Mr. Speaker, I rise in strong support of the Tax 
Simplification for Americans Act.
  Mr. Speaker, I rise in strong support of the Tax Simplification for 
Americans Act.
  As American taxpayers know too well, the tax code is incredibly 
complex and compliance is all to expensive. Americans spend 3 billion 
hours per year filling out tax forms and keeping tax records. The cost 
of complying with the code is a whopping $85 billion per year. That's 3 
billion hours and $85 billion that could be put to much productive uses 
in America.
  This bill will offer taxpayers some meaningful relief from 
complexity. about 1.6 million people will be able to fill out simpler 
tax forms--1040A and 1040EZ--rather than filling out the 1040 form with 
all its schedules, which takes about 28.5 hours to complete.
  The bill would also end the confusing use of definitions regarding a 
taxpayer's age. It also clarifies the ``head of household'' definition, 
which will help taxpayers prevent errors in filing status. In addition, 
the bill gets rid of a number of outdated and unnecessary provisions in 
the tax code.
  Mr. Speaker, we have a lot of work to do in the area of 
simplification, but this bill is an excellent start. It will mean real 
help to real people.
  I urge my colleagues to support this important bill.
  The SPEAKER pro tempore (Mr. Simpson). The question is on the motion 
offered by the gentleman from Ohio (Mr. Portman) that the House suspend 
the rules and pass the bill, H.R. 4841, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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