[Congressional Record (Bound Edition), Volume 150 (2004), Part 7]
[House]
[Pages 8420-8451]
[From the U.S. Government Publishing Office, www.gpo.gov]




        MIDDLE-CLASS ALTERNATIVE MINIMUM TAX RELIEF ACT OF 2004

  Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 619 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 619

       Resolved, That upon the adoption of this resolution it 
     shall be in order to consider in the House the bill (H.R. 
     4227) to amend the Internal Revenue Code of 1986 to extend to 
     2005 the alternative minimum tax relief available in 2003 and 
     2004 and to index such relief for inflation. The bill shall 
     be considered as read for amendment. The previous question 
     shall be considered as ordered on the bill and on any 
     amendment thereto to final passage without intervening motion 
     except: (1) one hour of debate on the bill equally divided 
     and controlled by the chairman and ranking minority member of 
     the Committee on Ways and Means; (2) the amendment in the 
     nature of a substitute printed in the report of the Committee 
     on Rules accompanying this resolution, if offered by 
     Representative Rangel of New York or his designee, which 
     shall be in order without intervention of any point of order, 
     shall be considered as read, and shall be separately 
     debatable for one hour equally divided and controlled by the 
     proponent and an opponent; and (3) one motion to recommit 
     with or without instructions.

  The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Georgia (Mr. 
Linder) is recognized for 1 hour.
  Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentleman from Florida (Mr. Hastings), 
pending which I yield myself such time as I may consume. During 
consideration of

[[Page 8421]]

this resolution, all time yielded is for the purpose of debate only.
  Mr. Speaker, H. Res. 619 is a modified, closed rule that provides for 
the consideration of H.R. 4227, the Middle-Class Alternative Minimum 
Tax Relief Act of 2004.
  It provides for one hour of debate in the House, equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on Ways and Means.
  H. Res. 619 also provides for the consideration of the amendment in 
the nature of a substitute printed in the Committee on Rules report 
accompanying this resolution, if offered by the gentleman from New York 
(Mr. Rangel) or his designee, which shall be considered as read, and 
shall be separately debatable for one hour equally divided and 
controlled by the proponent and an opponent.
  It waives all points of order against the amendment printed in the 
report and provides for one motion to recommit, with or without 
instructions.
  Mr. Speaker, this is a fair and traditional rule for the 
consideration of legislation amending the Internal Revenue Code, and I 
hope that the House will approve the rule in order to have the 
opportunity to consider the merits of the underlying consideration.
  The Alternative Minimum Tax was originally conceived as a means of 
ensuring that the wealthy ``paid their fair share of taxes'' in 1969. 
But, as has happened so many times in the past, the law of unintended 
consequences has meant that the AMT has produced a very different 
result.
  Because the AMT is not currently indexed to the inflation rate, the 
number of taxpayers falling into the ``AMT trap'' is growing larger and 
larger every year. In 1970, 19,000 people paid the AMT. Today, this 
number has risen to over 3 million taxpayers. According to some 
estimates, approximately 35 million taxpayers will come under the AMT's 
procedures in the next 6 years.
  These taxpayers are not wealthy by any stretch of the imagination. 
Increasingly, the AMT is punishing hard-working, middle class families.
  With this in mind, I wanted to commend the gentleman from Connecticut 
(Mr. Simmons) for bringing H.R. 4227 to the floor today. This bill 
extends for 1 year the current limits on income exceptions from the AMT 
that Congress and President Bush enacted in 2001 and 2003. Notably, 
H.R. 4227 also indexes the limits for inflation, thereby precluding the 
AMT from taking an even bigger bite out of most moderate-income 
families' paychecks.
  President Clinton's 1993 tax raise increased the AMT tax rate without 
adjusting the AMT exemption amount for inflation. Since then, however, 
the Republican majority in the Congress has repeatedly delivered AMT 
relief to taxpayers.
  The Economic Growth and Tax Relief Reconciliation Act of 2001 
increased the AMT exemption amounts, and the Jobs and Growth Tax Relief 
Reconciliation Act of 2003 further increased the AMT exemption amounts. 
These steps provided some relief to families, but for procedural 
reasons, the current law's AMT relief will expire next year if we do 
not enact H.R. 4227. While H.R. 4227 is a good proposal that deserves 
our support today because it will help provide much-needed AMT relief 
to workers, it is increasingly clear to me that the current income Tax 
Code is fatally flawed and in dire need of a fundamental overall.
  To that end, I have introduced legislation, H.R. 25, that moves the 
Federal Government from an income tax-based system to a personal 
consumption system by abolishing all Federal income taxes and the IRS 
and replacing the Tax Code with a national retail sales tax on 
consumers buying new goods and services. Enacting the Fair Tax would, 
as just one example, solve the AMT problem for all families in the 
United States.
  Mr. Speaker, I urge my colleagues to join me in supporting this rule 
so we may proceed with the debate on the underlying legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I thank the gentleman from Georgia (Mr. Linder) for the 
time, and I rise today in opposition to the underlying bill and the 
closed rule providing for its consideration.
  Once again, my friends on the Republican side have come to this floor 
in a restrictive manner stifling debate before it is even allowed to 
begin. The majority preaches fairness and inclusiveness while 
practicing and maintaining an agenda that divides and obstructs.
  The gentleman from Georgia (Mr. Linder) previously suggested it is a 
fair rule because it allows for a Democratic substitute. With all due 
respect to the gentleman, this rule is anything but fair, and it is far 
from open. The rule does make in order an amendment offered by the 
gentleman from New York (Mr. Rangel), the ranking member on the 
Committee on Ways and Means. The Rangel substitute is far more 
encompassing than the Republican proposal, easier to understand, and 
most importantly, it pays for itself.
  Despite making this amendment in order, the rule blocks the gentleman 
from Washington (Mr. Baird) from offering an amendment dealing with the 
deductibility of State income taxes or State sales taxes. Yesterday 
evening, the Baird measure came to the Committee on Rules. The 
gentleman from Washington asked that his amendment be made in order 
under the rule. In typical fashion, Republicans are blocking what they 
may not be able to defeat. Just like Shakespeare wrote, a rose by any 
other name would smell as sweet; a closed rule will always stink, and 
not even dozens of roses could blanket this stench.
  The so-called Middle-Class Alternative Minimum Tax Relief Act that 
the House will consider later today is just another example of the 
majority's recklessly irresponsible tax agenda, not to mention creative 
naming practices. Even at first glance, this bill fails America's 
middle class. Folks, it raises taxes on the middle class. I do not know 
about the rest of my colleagues, but I have a pretty tough time making 
the argument in the district that I am proud to represent that a 
household income between $100,000 and $200,000 is middle class because 
in the district I represent, the average household income is barely 
$31,000.
  In that district that I am proud to represent, $100,000 in household 
income is upper class by any definition; yet this is the income level 
that the majority continues to use as an example when making the case 
to eliminate the AMT.

                              {time}  1045

  The majority maintains that extending AMT exemptions help the middle 
class. I say it neglects America's real middle class. It raises their 
taxes. If Congress is serious about helping middle-class families, then 
it ought to use the $18 billion we are spending on the AMT extension 
this year alone and invest in the public schools which middle-class 
children attend. Congress should use the $18 billion and invest in 
health insurance for the 8.1 million uninsured middle-class Americans. 
Furthermore, 1-year fixes do not solve our problems. Over a 10-year 
period, this really will cost us $559 billion. It would be easier to 
eliminate the entire income tax. It would cost us less than what the 
Republicans are proposing under the AMT provisions that they offer.
  Or if we really want to make a statement about our priorities, 
Congress should dedicate this $18 billion to the transportation 
reauthorization bill, a bill that a colleague of ours noted last week 
is currently stuck in a Republican legislative traffic jam. If we take 
this $18 billion and add it to the nearly $96 billion that we spent 
last week in eliminating the marriage tax, we have got ourselves more 
than 110 billion in new dollars to invest in America's transportation 
and infrastructure. At the same time, we would be creating some 4.6 
million new jobs. Congress could have the $375 billion transportation 
bill that America needs without any increase in the gas tax and 
avoiding a Presidential veto. Instead, the majority chooses to cut 
taxes at the expense of our national priorities.

[[Page 8422]]

  Mr. Speaker, I do not know any tax cuts that can teach high school 
algebra. I certainly cannot recall ever meeting a tax cut that could 
build a road. But I do know the Bush administration tax cuts, that 3 
years of those have stalemated this body to the point that we are 
unable to adequately address long-term unemployment, an increasing 
number of uninsured people, escalating costs for health care, the 
uncertainty of an aging Social Security program, and an inadequate 
transportation system in this great country of ours. Three years of the 
Bush administration tax cuts have resulted in the largest deficit in 
the history of America, the greatest decline in household income in 
nearly 40 years, and an economy that is showing no immediate signs of 
recovery to help the more than 8 million unemployed Americans. Most 
important, tax cuts affect our ability to provide for America's 
military.
  Let me send a message to President Bush and his minions. We cannot 
have guns and butter and ice cream as they propose. Our country has 
serious needs. Mr. Speaker, the underlying resolution neglects all of 
them. For that reason and that reason alone, Members should stand up 
against the interests of a few at the expense of all. I urge my 
colleagues to oppose this closed rule and reject the underlying 
resolution.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume to 
comment on the gentleman's opening statement. The gentleman from 
Washington did not show up at the committee to pursue his proposed 
amendment. And it is regular order for the Committee on Rules not to 
allow an open amendment process in bills that come out of the Committee 
on Ways and Means.
  Lastly, let me just applaud the gentleman for saying we should get 
rid of the IRS. I welcome him as a cosponsor on H.R. 25.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I 
may consume.
  Most respectfully, my friend from Georgia has misspoken. If he reads 
my comment, he will understand that I said the Baird measure was 
proposed before the Committee on Rules last night. I was there like the 
gentleman from Georgia was. I do know, as a matter of fact, the 
gentleman from New York (Mr. Israel) presented the measure, and it was 
not accepted by us.
  Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. 
Frost), the ranking member of the Committee on Rules.
  Mr. FROST. Mr. Speaker, I thank the gentleman from Florida for 
yielding me this time.
  The alternative minimum tax was originally intended to provide 
fairness for all taxpayers by requiring wealthy individuals to pay 
their fair share of taxes. Unfortunately, the alternative minimum tax 
is affecting more and more middle-class families. Middle-class families 
clearly should not be subject to the AMT, and I am glad we are looking 
at solutions to end this unfairness today.
  But there is another tax issue that affects millions of Americans and 
that I think deserves the chance to be debated today, the issue of 
State sales tax deductibility. Since the sales tax deduction was 
eliminated in 1986, citizens from States that do not have State income 
taxes, such as my home State of Texas, have been unfairly punished. 
While taxpayers living in States that impose an income tax are entitled 
to deduct their State income taxes from their Federal tax bill, those 
living in States without income taxes do not receive an equivalent 
deduction for the sales tax. The result is that citizens of States like 
Texas, Florida, Washington State, and Tennessee are paying more to the 
IRS than are citizens of other States.
  I do not think this is fair, Mr. Speaker. All taxpayers should be 
treated equally regardless of their State's tax system. A number of 
Members from both sides of the aisle have introduced measures to 
reinstate the sales tax deduction, and I think it is high time that 
this House consider their proposals.
  Last night in the Committee on Rules, I offered an amendment to the 
rule brought forth by the gentleman from Washington (Mr. Baird). His 
amendment would restore fairness to the Federal tax system by allowing 
taxpayers who have no State income taxes to instead deduct their State 
and local sales taxes. Unfortunately, the Rules Committee majority 
defeated my amendment. Mr. Speaker, I do not think that is right. This 
House has debated dozens of other tax bills, but the Republican 
leadership will not allow this House to debate an issue that penalizes 
millions of American taxpayers.
  Mr. Speaker, this is not a partisan issue. It is a matter of 
fairness. If this House is to be presented the tax bill of the week for 
the foreseeable future, I cannot understand why the Republican 
leadership will not allow the House to even consider an issue that will 
provide equity for the people of my State and six others. I think the 
American people deserve a full and honest debate on this matter.
  Consequently, so that the House might be allowed to consider the 
sales tax deduction, we will attempt to defeat the previous question. 
If the previous question is defeated, we will offer an amendment to the 
rule allowing for the consideration of the gentleman from Washington's 
proposal to reinstate the State sales tax deduction for those States 
that do not have a State income tax. This may well be the only chance 
Members have to take a stand on this issue.
  I urge my colleagues to vote ``no'' on the previous question so that 
this House may consider reinstating the sales tax deduction and so our 
constituents know where we stand on the issue of reinstating this 
deduction.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I note that all of my 
Republican colleagues who have such great interest in this AMT are just 
showing up in great numbers to speak on this measure.
  Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr. 
Cooper).
  Mr. COOPER. Mr. Speaker, I would urge all of our Members who are from 
Texas, Washington, Florida, South Dakota, Tennessee, Nevada, or Wyoming 
to pay close attention. This may be your best time, it may be your only 
time in your congressional career to get basic Federal income tax 
fairness for your State. Let me repeat. If you are from Texas or 
Florida or Wyoming or South Dakota or Tennessee or Washington, this may 
be your only chance to get basic tax fairness for the citizens of your 
State. This is not a partisan issue. This is an issue of basic 
unfairness that has existed in this country since 1986 when the tax 
laws changed to deprive the citizens of our States basic tax fairness.
  The citizens of those States I just named, Texas, Florida, Tennessee, 
Washington, South Dakota, Nevada, Wyoming, pay more Federal income tax 
per capita than citizens equally positioned in other States. Why? 
Because our basic tax mechanisms are the sales tax, not the State 
income tax, and we cannot deduct the State sales tax from our Federal 
income. So this is your best chance, this is your only chance, and you 
must vote against the previous question. That idea is anathema to some 
of our colleagues, but I think we need to rise above the petty 
proceduralisms of this House, rise above what your House leadership may 
be telling you or not telling you; and this is a choice to stand up 
with your people back home or to obey the rules of Washington.
  Let us stand up for our people back home. Let us get basic tax 
fairness to our citizens. To do that, you have to vote against the 
previous question. This is not an ordinary vote on a regular Wednesday 
in Washington, D.C. This is your best chance, this is your only chance 
to get tax fairness for your people back home.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I would urge our colleagues

[[Page 8423]]

who are back in their offices and committees to come on down here and 
explain to the middle class in America why this AMT is not a tax 
increase on them.
  Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr. 
Davis).
  Mr. DAVIS of Tennessee. Mr. Speaker, I compliment my colleague from 
Tennessee for the remarks he has just made. Having served in the 
Tennessee State legislature in both the House and the Senate, one of 
the issues that was debated and discussed so often in both of those 
chambers, in both the House and Senate in Tennessee, is how can we 
bring tax fairness from the Federal level to those of us who live in 
States that only fund education through a sales-tax-based revenue 
stream. Our Speaker of the Senate was so fond of saying, ``Uncle Sam 
taxes taxes.'' In fact, that is exactly what this Congress and what 
this Federal tax structure does to States who choose not to have an 
income tax. We tax taxes. That is certainly not what we intend, but 
that is the fact. We allow States who impose an income tax, either 
local or on the State level, on individuals who live in those States a 
deduction for the tax that they pay in State taxes to be deducted from 
the Federal income tax, but we do not allow those of us who live in 
States such as Tennessee who choose to manage their governments better, 
perhaps, than most by not imposing a tax on income.
  In this Nation, we tax assets, a person's home. We tax purchases of 
food and clothing in the State that I live in and nonprescription 
drugs. Other States tax income. We have chosen not to do that. As a 
result of the tax bill that passed in 1986, you are imposing a tax on 
tax for those of us who choose to manage our States better, perhaps, 
than other States. I ask my colleagues to vote against the previous 
question.
  Mr. LINDER. Mr. Speaker, I would like to just take enough time to 
remind the gentleman that the 1986 tax act was called the Bradley-
Gephardt bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. The name of the bill, Mr. Speaker, does not 
make it any more correct. The problem still exists.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. 
Lampson).
  Mr. LAMPSON. Mr. Speaker, I also want to say it does not matter what 
you call it. If it is inequity, it is inequity. If it is not fair, it 
is not fair. That is what I want to talk about this morning in this 
debate. We have lost the issue of a simple matter of equity and 
fairness.
  I spent 19 years as a property tax collector in the State of Texas. 
My whole goal in assessing value to property was to make sure that no 
property owner, no taxpayer paid an unfair burden in comparison to the 
others. Our Tax Code unfairly penalizes those who live in States where 
there is no local or State income tax, which includes my State of 
Texas. Just as I cannot accept discrimination on how our government 
treats individuals, I do not want to accept discrimination in how our 
government taxes our citizens across the board. My colleague from 
Washington State knows this all too well, and that is why his proposed 
amendment is so important and timely, because it restores sales tax 
deductibility for residents of States with no local or State income 
taxes.
  As current law stands, residents in States with local or State income 
taxes can deduct those amounts from their Federal taxes. So I ask you, 
where is the fairness for our hardworking, tax-paying citizens? Texas 
is one of nine States with no income tax; and as a result of the 1986 
Federal tax reform law, regardless of who wrote it and who voted for 
it, that does not matter. That happened then, today is today. Sales 
taxes are not deductible. As a result, we are not treating all 
taxpayers in this country equally. Consider this: if Texans could 
deduct what they pay in State and local sales taxes, they could keep 
more than $700 million. That is a lot of money. That is money that the 
hardworking citizens of southeast Texas and the gulf coast region in my 
district could use to care for their senior citizens, pay their daily 
bills, use for unexpected emergencies, or even help offset our rising 
cost of school property taxes at home.

                              {time}  1100

  My colleague from Washington's proposed amendment offers a smart and 
simple fix and lets us remedy one part of our tax code so we can focus 
on reforming the rest of it. This money belongs to the residents of 
Texas, and by golly, if all other Americans get to deduct part of their 
taxes, then Texans should get to keep it as well. Let us vote against 
this previous question.
  And this amendment would be limited to just one year, so it is not a 
permanent measure--I cannot think of anything more reasonable for us to 
consider.
  After all, that's what equity is all about, and since it seems lately 
that all we are considering are tax bills, well then we might as well 
consider this one too.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, how much time remains on each 
side?
  The SPEAKER pro tempore (Mr. Kolbe). The gentleman from Florida (Mr. 
Hastings) has 14 minutes remaining, and the gentleman from Georgia (Mr. 
Linder) has 26 minutes remaining.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I 
may consume.
  Twenty-six minutes for those people who believe in this measure to 
come down here and prove to America that their provision on the AMT is 
not a tax increase on middle class America, yet they are not using that 
time.
  Mr. Speaker, I yield three minutes to the gentleman from Texas (Mr. 
Stenholm), my good friend and good student of this process.
  Mr. STENHOLM. Mr. Speaker, I rise in strong opposition to the 
previous question so the House might be able to consider the Baird 
amendment restoring the deduction for sales tax, State sales taxes.
  This is one of those issues that I wish the Committee on Ways and 
Means would have brought to the floor of the House 2 years ago. The AMT 
question is a very serious question of which there is a lot of concern 
about. But this is not the way to handle it in the bill today and the 
tax cut of the week, and obviously the lack of participation by my 
friends on the majority side shows how political this is and how 
substance is being thrown away.
  But I want to talk about the State sales tax deduction which was 
eliminated in 1986. Citizens from States that do not have State income 
taxes such as my home State of Texas have been unfairly penalized. 
While taxpayers living in States that have an income tax are entitled 
to deduct their State sales taxes from federal taxes, folks living in 
States without income taxes do not receive an equivalent deduction. And 
my State is now in the process of increasing the sales tax on all 
citizens of Texas, which will compound the problem that we are talking 
about today. The result is that citizens of States like my State of 
Texas are paying more taxes than are citizens in other States with 
identical incomes, and I do not understand why the Committee on Ways 
and Means does not take up the question of tax fairness.
  The Baird amendment would restore fairness to the Federal tax system 
by allowing taxpayers who have no State income taxes to, instead, 
deduct their State and local taxes. Why not? What is wrong with that? 
Why not have a discussion of that on the floor instead of the tax cut 
of the week, which is purely for political purposes that will show up 
in campaign ads all over the United States as evidenced by the lack of 
participation in the substance of that which we are talking about 
today?
  I also believe that the fundamental bill, if we are going to have to, 
on the floor, ought to be paid for. I agree that this exemption of 
State sales taxes will cost an estimate of $1.2 billion, but it ought 
to be paid for and it should be paid for in the interest of fairness. 
States should be able to decide for themselves whether or not they want 
to adopt an income tax instead of being pressured to do so because the 
Tax Code is biased in favor of a State income tax instead of a State 
sales tax.
  What is wrong with that picture? Why can we not have a serious debate

[[Page 8424]]

 on this floor about tax reform? Instead of just talking about it in 
campaign slogans, which we do, flat tax, et cetera, a fundamental 
question, why can the Committee on Ways and Means not take up the bill 
that they bring to the floor today and have a serious discussion of 
that within the committee? Why not let Members in a bipartisan way 
participate in these issues? Instead, it is a campaign issue. If they 
want a campaign issue, this is a campaign issue.
  In Texas, the inability of Texans to deduct sales taxes should be an 
issue on the hearts and minds of every single Texan, and the vote on 
the previous question will clearly identify in this body who is in 
favor of fairness and who is not.
  Vote against the previous question. Allow fairness to be discussed on 
the House floor.
  Mr. LINDER. Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, by continuing the exemption for another year, 1 year, 
Republicans are incrementally trying to postpone the day of reckoning 
with the AMT. At some point a decision will have to be made to, number 
one, repeal some of President Bush's tax cuts or, number two, index the 
AMT for inflation at a cost of roughly $370 billion or, number three, 
eliminate the AMT altogether at a cost of $600 billion without the Bush 
tax cuts, or $900 billion if President Bush's tax cuts remain beyond 
2010.
  What I just said is a part of inside baseball that at best we could 
feed to the goats the language that we employ here. The mythical Ms. 
Johnson and Jane and Joe Lunch Bucket understand only one thing and one 
thing only, that we need to have a debate on how it affects them. No 
one comes into my office talking about an AMT. But people come into my 
office talking about health care. People come into the office of our 
all of us talking about education. People come to our offices to talk 
about supporting the military in an adequate fashion. And countless, 
thousands, of Americans come to us talking about either being uninsured 
or needing to have incentives for small businesses. And yet we find 
ourselves unable to have a discussion in this House of Representatives 
that is meaningful as far as economics are concerned. What we get are 
campaign gimmicks and fancy names of things that do not become the law.
  This measures has passed the House of Representatives before. If the 
American people wanted it to be law, they would be in our offices 
saying they want this to be the law. We cannot get ten people in most 
of our communities to write a decent paragraph on what the alternative 
minimum tax really is. I dare say we could not get a whole lot of 
Members of the House to do likewise.
  With that in mind, it is a confusing set of circumstances that is a 
1-year fix. If you think so much of it, why did you stay in your 
offices and not come down here and explain to the American public why 
the middle class will not experience a tax increase over the haul of 10 
years? What you do is you reduce the income taxes, then you eliminate 
the AMT on one hand and you take from the right hand and give to the 
left hand.
  To correct my friend from Georgia, who will have the last word on 
this subject, correctly so, because he and his Members are in the 
majority, let me give him a summary of the motion that he brought to 
the House of Representatives. It says ``Providing for Consideration of 
H.R. 4227, Middle-Class Alternative Minimum Tax Relief Act of 2004, Mr. 
Linder, from the Committee on Rules, submitted the following.''
  I shall not read the entire report, but since he took it upon himself 
to say that the Baird measure was not before us, I shall only refer to 
the language of the motion offered by the gentleman from Texas (Mr. 
Frost) last night when the gentleman from Georgia (Mr. Linder) and I 
were in the Committee on Rules.
  ``Summary of motion: To make in order and provide the appropriate 
waivers for the amendment offered by Representative Baird.'' Do not 
challenge me when I say that that was what was brought to us. That 
measure was defeated six to five by the majority, and I say today we 
have a chance to remedy that problem if Members, particularly those 
from Florida, were to see my Republican colleagues from Florida come 
down here and say that this is not a sound measure when all we have is 
a sales tax and right up the street somebody else with an income tax 
can deduct it from their Federal tax offering and we are unable to do 
this so. Fair is fair. This measure is not fair.
  Mr. Speaker, I will be asking Members to vote ``no'' on the previous 
question. If the previous question is defeated, I will offer an 
amendment to the rule that will allow the House to vote on the Baird 
sales tax equity amendment that was offered in the Committee on Rules 
last night but not allowed by the Republican leadership. I think 
Members deserve an opportunity to vote on this important amendment. I 
want to point out that this is not a partisan amendment. It has support 
from both sides of the aisle as was demonstrated in the Committee on 
Rules vote yesterday.
  The Baird amendment would allow taxpayers who itemize their 
deductions the option to deduct their State income tax or sales taxes 
paid in a given year. The option for deduction of sales taxes was 
available to taxpayers until 1986 when it was eliminated. The gentleman 
from Georgia (Mr. Linder) said that the gentleman from Missouri's (Mr. 
Gephardt) name was on that. I remind him that it was signed by 
President Ronald Reagan. However, taxpayers in those States with a 
State income tax still retain the ability to deduct those taxes. The 
loss of the State sales tax option was particularly tough for taxpayers 
in States with no income tax like my own State of Florida.
  As a result, people in my State and others similarly situated pay 
more taxes than people with identical taxable incomes in States that 
have a State income tax. It is very important that we equalize the tax 
relief for citizens in those States without the State income taxes.
  Let me emphasize that a ``no'' vote on the previous question will not 
stop consideration of H.R. 4227, the Middle-Class Alternative Minimum 
Tax Relief bill. But it will allow the House to vote on reinstating the 
sales tax deduction option and correct the current tax inequity. But a 
``yes'' vote will block Members from an up or down vote on this 
important tax relief.
  Again, I urge a ``no'' vote on the previous question.
  Mr. Speaker, I ask unanimous consent that the text of the amendment 
be printed in the Record immediately prior to the vote on the previous 
question.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield back the balance of my 
time.
  The material previously referred to by Mr. Hastings of Florida is as 
follows:

       In the resolution strike ``and (3)'' and insert the 
     following:

     ``(3) the amendment printed in Sec. 2 of this resolution if 
     offered by Representative Baird of Washington or a designee, 
     which shall be in order without intervention of any point of 
     order, shall be considered as read, and shall separately 
     debatable for 30 minutes equally divided and controlled by 
     the proponent and an opponent; and (4)''
       Sec. 2. The amendment referred to in (3) follows:
       At the end of the bill insert the following new section:

     SEC. 3. DEDUCTION OF STATE AND LOCAL GENERAL SALES TAXES IN 
                   LIEU OF STATE AND LOCAL INCOME TAXES.

       (a) In General.--Subsection (b) of section 164 of the 
     Internal Revenue Code of 1986 (relating to definitions and 
     special rules) is amended by adding at the end the following:
       ``(5) General sales taxes.--In the case of taxable years 
     beginning during 2004, for purposes of subsection (a)--
       ``(A) Election to deduct state and local sales taxes in 
     lieu of state and local income taxes.--
       ``(i) In general.--At the election of the taxpayer for the 
     taxable year, subsection (a) shall be applied--

[[Page 8425]]

       ``(I) without regard to the reference to State and local 
     income taxes,
       ``(II) as if State and local general sales taxes were 
     referred to in a paragraph thereof, and
       ``(III) without regard to the last sentence.

       ``(B) Definition of general sales tax.--The term `general 
     sales tax' means a tax imposed at one rate with respect to 
     the sale at retail of a broad range of classes of items.
       ``(C) Special rules for food, etc.--In the case of items of 
     food, clothing, medical supplies, and motor vehicles--
       ``(i) the fact that the tax does not apply with respect to 
     some or all of such items shall not be taken into account in 
     determining whether the tax applies with respect to a broad 
     range of classes of items, and
       ``(ii) the fact that the rate of tax applicable with 
     respect to some or all of such items is lower than the 
     general rate of tax shall not be taken into account in 
     determining whether the tax is imposed at one rate.
       ``(D) Items taxed at different rates.--Except in the case 
     of a lower rate of tax applicable with respect to an item 
     described in subparagraph (C), no deduction shall be allowed 
     under this paragraph for any general sales tax imposed with 
     respect to an item at a rate other than the general rate of 
     tax.
       ``(E) Compensating use taxes.--A compensating use tax with 
     respect to an item shall be treated as a general sales tax. 
     For purposes of the preceding sentence, the term 
     `compensating use tax' means, with respect to any item, a tax 
     which--
       ``(i) is imposed on the use, storage, or consumption of 
     such item, and
       ``(ii) is complementary to a general sales tax, but only if 
     a deduction is allowable under this paragraph with respect to 
     items sold at retail in the taxing jurisdiction which are 
     similar to such item.
       ``(F) Special rule for motor vehicles.--In the case of 
     motor vehicles, if the rate of tax exceeds the general rate, 
     such excess shall be disregarded and the general rate shall 
     be treated as the rate of tax.
       ``(G) Separately stated general sales taxes.--If the amount 
     of any general sales tax is separately stated, then, to the 
     extent that the amount so stated is paid by the consumer 
     (other than in connection with the consumer's trade or 
     business) to the seller, such amount shall be treated as a 
     tax imposed on, and paid by, such consumer.
       ``(H) Amount of deduction to be determined under tables.--
       ``(i) In general.--The amount of the deduction allowed 
     under this paragraph shall be determined under tables 
     prescribed by the Secretary.
       ``(ii) Requirements for tables.--The tables prescribed 
     under clause (i)--

       ``(I) shall reflect the provisions of this paragraph,
       ``(II) shall be based on the average consumption by 
     taxpayers on a State-by-State basis, as determined by the 
     Secretary, taking into account filing status, number of 
     dependents, adjusted gross income, and rates of State and 
     local general sales taxation, and
       ``(III) need only be determined with respect to adjusted 
     gross incomes up to the applicable amount (as determined 
     under section 68(b)).''.

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

       Amend the title so as to read: ``A bill to amend the 
     Internal Revenue Code of 1986 to extend to 2005 the 
     alternative minimum tax relief available in 2003 and 2004 and 
     to allow a temporary election to deduct State and local 
     general sales taxes in lieu of deducting State and local 
     income taxes.''.

  Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume.
  I merely point out that the majority party will be here to discuss 
the merits of the bill. The last debate has been on the rule, 
irrespective of the debate we heard from the other side, which was 
neither on the rule nor on anything in the rule nor on the merits of 
the bill. So I will urge my colleagues to come and pass the previous 
question, pass the rule, and get on with the debate on the bill, which 
is the extension of the AMT exclusion.
  Mr. Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HASTINGS of Florida. 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.
  Pursuant to clause 9 of rule XX, the Chair will reduce to 5 minutes 
the minimum time for electronic voting, if ordered, on the question of 
adoption of the resolution.
  The vote was taken by electronic device, and there were--yeas 220, 
nays 201, not voting 12, as follows:

                             [Roll No. 142]

                               YEAS--220

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Nethercutt
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Upton
     Vitter
     Walden (OR)
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--201

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (IN)
     Carson (OK)
     Case
     Chandler
     Clay
     Clyburn
     Conyers
     Cooper
     Costello
     Cramer
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley (CA)
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Ford
     Frank (MA)
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)

[[Page 8426]]


     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Turner (TX)
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--12

     Ballance
     Barton (TX)
     Bono
     Boyd
     DeMint
     Filner
     Greenwood
     Kaptur
     Reynolds
     Solis
     Tauzin
     Walsh

                              {time}  1139

  Messrs. MARKEY, RAHALL, DELAHUNT, HOEFFEL, SPRATT, MOLLOHAN, THOMPSON 
of Mississippi, and OBEY, and Ms. CARSON of Indiana and Mrs. JONES of 
Ohio changed their vote from ``yea'' to ``nay.''
  Mrs. CUBIN changed her vote from ``nay'' to ``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. FILNER. Mr. Speaker, on rollcall No. 142, I was unavoidably 
detained, and I missed the vote. Had I been present, I would have voted 
``nay.''
  Mr. BALLANCE. Mr. Speaker, I was not present for rollcall vote No. 
142. Had I been present, I would have voted ``nay.''
  Ms. SOLIS. Mr. Speaker, during rollcall vote No. 142 on previous 
question on H. Res. 619, I was unavoidably detained. Had I been 
present, I would have voted ``no.''
  The SPEAKER pro tempore (Mr. Kolbe). The question is on the 
resolution.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.
  Mr. ENGLISH. Mr. Speaker, pursuant to House Resolution 619, I call up 
the bill (H.R. 4227) to amend the Internal Revenue Code of 1986 to 
extend to 2005 the alternative minimum tax relief available in 2003 and 
2004 and to index such relief for inflation, and ask for its immediate 
consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 619, the bill 
is considered read for amendment.
  The text of H.R. 4227 is as follows:

                               H.R. 4227

       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 at the ``Middle-Class Alternative 
     Minimum Tax Relief Act of 2004''.

     SEC. 2. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF TO 2005.

       (a) In General.--Subparagraphs (A) and (B) of section 
     55(d)(1) of the Internal Revenue Code of 1986 are each 
     amended by striking ``and 2004'' and inserting ``, 2004, and 
     2005''.
       (b) Inflation Adjustment.--Subsection (d) of section 55 of 
     such Code is amended by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Inflation adjustment.--
       ``(A) In general.--In the case of any taxable year 
     beginning in calendar year 2005, the $58,000 amount contained 
     in paragraph (1)(A) and the $40,250 amount contained in 
     paragraph (1)(B) shall each 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, determined by substituting `2003' for `1992' in 
     subparagraph (B) thereof.
       ``(B) Rounding.--Any increase determined under subparagraph 
     (A) which is not a multiple of $50 shall be rounded to the 
     next lowest multiple of $50.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall 
be in order to consider an amendment in the nature of a substitute 
printed in House Report 108-477, if offered by the gentleman from New 
York (Mr. Rangel) or his designee, which shall be considered read, and 
shall be debatable for 1 hour, equally divided and controlled by the 
proponent and an opponent.
  The gentleman from Pennsylvania (Mr. English) and the gentleman from 
New York (Mr. Rangel) each will control 30 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. English).
  Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, today the House will consider one of the most important 
bills from the standpoint of tax equity that we will consider this 
year, the Middle-Class Alternative Minimum Tax Relief Act, a bill to 
make sure that the tax cuts which allowed middle-class families to keep 
more of their income over the past 3 years will not be undermined by 
the Alternative Minimum Tax.
  There is little dispute, certainly none outside of this Chamber, that 
the Republican tax cuts helped families cope with economic 
uncertainties and played a significant role in stimulating the economic 
growth that we are seeing today. But if we do not act now to give the 
taxpayers another year of reprieve, the AMT will suddenly reappear and 
11 million taxpayers will be hit with an average tax increase of 
$1,520.
  Mr. Speaker, by preventing middle-class Americans from claiming their 
rightful exceptions from tax liability, the AMT punishes families with 
children or those who live in high tax localities. If we do not act, 
married couples will see their AMT exceptions snap back from a 
threshold of $58,000 to $45,000. Single individuals will see their AMT 
exception drop from $40,250 to $33,750.
  Mr. Speaker, let us be clear about this. These are not wealthy 
people. These are middle-class Americans who would be slapped with a 
steep tax hike that they would not know about until tax day, when they 
learn that the tax exemptions that they thought they could take, the 
same tax exemptions we intended for them to take and told them we were 
giving them, would no longer apply.
  For example, a family of four with a household income of $58,000 
would, in 2005, be hit with the AMT. I am sure that no one here would 
seriously argue that that family is wealthy.
  Today, the House has the opportunity, indeed, the duty, to extend AMT 
relief for 1 year and to ensure that middle-class Americans are not 
faced with an increase in their tax liability; and we must do this 
without raising taxes someplace else and stifling growth and killing 
jobs.
  Mr. Speaker, this is an important measure to buy us time to truly 
reform the AMT and, as I hope, to repeal this regressive tax entirely. 
I have taken it upon myself to work with a number of colleagues, 
including the gentleman from Louisiana (Mr. McCrery), a fellow member 
of the Committee on Ways and Means, to form a Zero AMT Caucus. We will 
have our day; but in order to get there, we need to pass this bill 
today on behalf of working families.
  Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, let me join in with the gentleman from Pennsylvania in 
trying to work to eliminate this burden that has been placed on people 
that it was never intended to penalize. But, Mr. Speaker, before we can 
work together on this issue, the issue has to come before our 
committee. Is that not a novel idea, a tax bill coming before the 
Committee on Ways and Means?

                              {time}  1145

  Why is it that we yield our authority, our jurisdiction to the 
Committee on Rules? Is this not something that should not be a partisan 
issue? Is this bill, this AMT, not adversely affecting Democrats and 
Republicans and liberals and conservatives? Why do we have to, in the 
middle of the night, shift this over to the Committee on Rules and then 
come to the House floor and say we want to spend $167 billion to go 
into debt but we only want to do it for 1 year? That is truly unfair.
  Why do you give away tax relief for the marriage penalty and then 
take it back away with the alternative minimum tax? Why do we have this 
sloppy way to develop a Tax Code that is so complicated that it takes 
hours for people to try to get the benefits that we say we are giving 
to them?
  So what I am saying to my friend from Pennsylvania, please do not 
tell us how you have got to struggle to make this permanent. Tell us 
how we can get the jurisdiction back in the Committee on Ways and 
Means.
  It would be wonderful if you were saying that we were going to 
schedule

[[Page 8427]]

hearings on this so witnesses can come forward. And while you are doing 
that, would you please tell the American people whether they are 
providing this tax relief at the expense of the debt that they are 
giving their children and grandchildren.
  Would it not be good to know how you intend to pay for this? Where do 
we get the $17 billion? Do we take it away from DOD as we fight in 
Iraq? Do we take it away from homeland security or do we borrow it so 
the Chinese can buy our debt?
  I do not know. I am 74 so it may not be my problem, but it may be the 
problem of our children and our grandchildren, as we give relief, which 
we should give on a permanent basis in one hand, and then we take it 
back from our children and our grandchildren. This is no place to 
legislate this complex legislation.
  I just hope that no matter what happens at the end of this year, that 
somebody has the guts to say that tax legislation should come from the 
Committee on Ways and Means and not the distinguished Committee on 
Rules.
  Mr. Speaker, I reserve the balance of my time.
  Mr. Speaker, I ask unanimous consent that the gentleman from 
Washington (Mr. McDermott) be allowed to control the remainder of my 
time.
  The SPEAKER pro tempore (Mr. Kolbe). Is there objection to the 
request of the gentleman from New York?
  There was no objection.
  Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds.
  Mr. Speaker, I note that this issue has come up repeatedly before the 
Committee on Ways and Means. The Committee on Ways and Means has 
repeatedly worked its will on this issue and it has made very clear 
that it is committed to this kind of exemption. The Committee on Ways 
and Means is clearly in the loop in this.
  Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. 
Crane), a distinguished member of the Committee on Ways and Means.
  Mr. CRANE. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, in 1969 Congress enacted the individual alternative 
minimum tax, AMT. The purpose of this tax was to require that all 
taxpayers pay some tax on their income. We can have a debate about the 
merits, or lack thereof, of the AMT and I hope that in time we will.
  Many of the provisions of the Tax Code that gave rise to the AMT do 
not exist today and have not existed for many years. However, today a 
more immediate issue confronts us. Mr. Speaker, the Clinton tax 
increase of 1993 increased the AMT tax rate but failed to adjust the 
exemption numbers for inflation. As a result of this tax increase, 
millions of American families, middle income families are forced to pay 
the AMT each year.
  President Bush's 2001 and 2003 tax relief bills increase the AMT 
exemption amount from $45,000 to $58,000 for married couples and from 
$33,750 to $40,250 for single individuals. These increases ensure that 
the AMT is the result of the tax relief provided in the 2001 and 2003 
tax relief laws do not hit middle income families. However, if we do 
not act now, this relief will expire at the end of this year. As time 
goes on and as inflation and costs increase, the number of taxpayers 
subject to the AMT increases.
  If we do not act, over one million single filers and seven million 
married filers will be caught up in the AMT. The legislation before us 
today will extend the 2003 tax relief through 2005 and will adjust the 
exemption amount for inflation. Single filers earning up to $40,900 and 
married couples earning up to $58,950 will be exempt from the AMT.
  Mr. Speaker, millions of middle class Americans run the small 
businesses that are the backbone of our economy. It is private 
citizens, not the Federal Government, that create this Nation's wealth 
and pay this Nation's taxes. If we do not act today, nearly eight 
million middle class taxpayers will suffer from our inaction. That is 
unconscionable and I urge my colleagues to support this legislation.
  Mr. McDERMOTT. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, this is one of those days when we come out here and try 
to fix a problem the Republicans created for themselves. Ever since you 
have been in charge of this place, you did not want to have regular 
order. You wanted to run bills through the committees without having 
any witnesses come in and talk about them. You would not listen to what 
people said to you. And now you have a big problem on your hands and 
you want to come out again today and put one more Band-Aid on a program 
that you put a Band-Aid on last year, and you will be back next year 
and next year and next year because you never understood what you were 
doing.
  Now, when this bill went into effect in 1987, it was designed to tax 
those people who made lots of money and paid not one penny. That is 
what it was about. It affected .1 percent of the payers in this 
country. And the same was true even with the adjustments that we made 
in 1993 when I was here. The numbers were essentially the same, around 
.2 percent of taxpayers. Today we are looking at 25 percent of the 
people in this country are having to figure their taxes twice, because 
the Republicans made all those tax cuts in 1997 and paid absolutely no 
attention to what was going on.
  If you live in a high tax State like New York or like California or 
like a lot of the progressive States in this country, and you have a 
couple of kids, you cannot deduct the money you pay in State taxes. You 
cannot deduct the money you pay in local taxes. You cannot deduct the 
deductions for your children. That is why it is sweeping down into the 
middle class. Half of the households who will be paying this tax are 
making less than $100,000 a year and over a third of them will be 
paying between 50 and $75,000.
  Now, consider we made these great big tax cuts, we gave $112,000 to 
people making more than a million and we gave $676 to people in the 
average income range in this country. And then we turn around and slap 
them with the AMT tax. Most Americans do not know what the AMT is. It 
is called, for those of you watching this on television including 
somebody at the White House maybe, alternative minimum tax. It means if 
you are not paying enough income tax, then you have to pay this 
alternative.
  Now, what has happened because the Republicans messed it up so badly, 
they have now swept up about a quarter of the taxpayers in the country 
with it rising to a third if they do not do something about it, and 
they have done that while they were busily helping their friends at the 
top who were not paying taxes anyway.
  Now, this bill is another, as I say, Band-Aid. We have an alternative 
which will be offered by one of my colleagues from Massachusetts which 
solves the problem in a much more reasonable way and gets the middle 
class out of this tax trap.
  Mr. Speaker, the following is an article from the Seattle Post-
Intelligencer which describes this whole program.

          [From the Seattle Post-Intelligencer, Jan. 17, 2004]

               Get Ready for the Alternative Minimum Tax

                            (By Mary Deibel)

       Few Americans have heard of the alternative minimum tax, 
     but many taxpayers are about to find out that it's the 
     biggest financial setback they face, an IRS taxpayer advocate 
     says.
       ``Although the AMT was originally enacted to prevent 
     wealthy taxpayers from avoiding tax liability through the use 
     of tax avoidance techniques, it now affects substantial 
     numbers of middle-income taxpayers and will, absent a change 
     of law, affect more than 30 million taxpayers by 2010,'' 
     taxpayer advocate Nina Olson said in her 508-page annual 
     report naming this parallel tax system taxpayer enemy No. 1.
       Olson should know: State and local taxes pushed her into 
     the alternative minimum tax last year so now it is personal 
     as well as professional for her.
       And it's about to get personal for lots of other taxpayers, 
     too. Absent action by Congress and President Bush, one in 
     four households will owe the alternative minimum tax by 2010.
       Some 52 percent of them will be families making $100,000 or 
     less a year, including 73 percent of households making 
     $75,000 to $100,000 and 37 percent making $50,000 to $75,000.

[[Page 8428]]

       Married couples--especially couples with lots of children--
     are most apt to be hit by the alternative minimum tax, which 
     prohibits deductions for dependents along with write-offs for 
     mortgage interest, state and local taxes, medical expenses 
     and the like.
       ``It's a class tax that became a mass tax,'' says Urban 
     Institute economist Len Burman, who co-authored the study 
     projecting the future growth of the alternative minimum tax 
     unless the tax code is changed.
       Congress enacted the tax in 1969 after being flooded with 
     mail protesting reports that 155 ultra-rich Americans gamed 
     the system to avoid paying a penny toward income tax.
       The alternative tax has been on the books since then, never 
     indexed to inflation the way regular income taxes have been 
     since 1981.
       The tax breaks President Bush and Congress enacted since 
     2001 expanding child tax credits, ``marriage penalty'' relief 
     and the like make it more likely taxpayers who try to claim 
     these write-offs will owe the alternative minimum tax.
       The 2003 tax cut contains a temporary provision that will 
     help many families avoid the alternative minimum tax for just 
     one year.
       Repealing the tax through 2010 would cost the Treasury $600 
     billion in revenue, according to the non-partisan Tax Policy 
     Center, a Washington think tank.
       Meanwhile, taxpayer advocate Olson says taxpayers who might 
     owe the alternative minimum tax can expect to pay a higher 
     tax bill and spend an extra 12 hours preparing their 2003 
     taxes.
       Many won't owe it, but they still must spend the extra 
     half-day on the paperwork, she says.

  Mr. Speaker, the average citizen in this country is not aware what is 
happening; and the Republicans are out here today, the reason they do 
not want to have hearings in the committee is it might get on C-SPAN. 
Some people might find out what was really going on in the tax 
structure. But, no, we have to come out here, take it up to the 
Committee on Rules in the middle of the night, slip it down on the 
floor; and slam, bam, thank you, ma'am, it is out of here in an hour so 
that people will not know how badly you have messed it up for the 
middle class.
  You have got to put these commercials on that say the middle class 
have benefited immensely from our tax cuts, and then you run out here 
to take the pain away that you are creating for them. And in my view, 
it could all be stopped if you simply would follow the regular order 
and allow this to be a debate in this House and about the issues that 
you are changing. To go from .1 percent of the taxpayers to 25 percent 
of the taxpayers, including people making between 50 and $75,000 
without letting people ever, their representatives in the Congress, to 
have an opportunity to explain that to the American people, is 
absolutely unacceptable.
  We will all vote for this bill, but it is another Band-Aid; and you 
will be back here next year. I bet you a month of my salary on that.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ENGLISH. Mr. Speaker, I yield 1 minute to the distinguished 
gentleman from Florida (Mr. Shaw), a member of the Committee on Ways 
and Means.
  Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me time.
  To listen to the gentleman from Washington (Mr. McDermott) you would 
think that the Republicans are the ones that invented this tax. This 
was put in in the 1980s and under a Democrat Congress.
  Also, I would like to remind the gentleman from Washington (Mr. 
McDermott) that in 1993, I believe without a single Republican vote, 
the rate was increased. We are trying now to roll some of this back. Is 
it enough? No, it is not enough. We need to do more. In fact, we need 
to kill this thing entirely, but until we can find the revenue, at 
least this would get to the middle class people, people that it was 
never intended to get, and to stop the bracket creep and the problem 
that they are having.
  These are folks that are struggling to educate their kids, to buy 
groceries and pay their mortgages. They do not need an alternative 
minimum tax. It has got to be done away with. It should be done away 
with all the American taxpayers. This is a small step but it is a 
meaningful step. And I would predict that we would get a unanimous or 
near unanimous decision out of this House.
  Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Lowey).
  Mrs. LOWEY. Mr. Speaker, I rise today on behalf of the more than 2 
million taxpayers who are unfairly burdened by the alternative minimum 
tax. As we know and it was explained today, it was designed in 1969 to 
ensure that the wealthiest Americans would still pay a fair share of 
taxes. The AMT now ensnares many middle income Americans in what was 
once envisioned as an alternative minimum tax has become nothing short 
of a mandatory maximum tax. And those it sought to protect have become 
its greatest victims.
  Let us be clear on what the AMT is not. It is not a technicality of 
significance to only a few bureaucrats and the tax intelligentsia. It 
is not a mere glitch, the repair of which would only help a handful of 
disproportionately rich individuals. It is a system that affects 2.4 
million families this year. A system that, if left unchecked, will 
affect nearly 75 percent of families making $75,000 to $100,000. It is 
a system that, in my district, can cost an individual making a good 
living, but not a lavish living and taking itemized deductions, 
thousands of dollars more in taxes each year.
  In 2008, a family making over $50,000 with three children would be 
affected. Any family with one child or more, 60,000 would be affected.

                              {time}  1200

  Although I am pleased to see bipartisan support to act to ameliorate 
the AMT, these temporary remedies will only be as valuable as the 
permanent solutions developed in the interim. These measures have the 
potential to help millions of families this year, but we must work 
together to crack the system that protects all hardworking Americans 
going forward.
  I support the fiscally responsible Rangel substitute and urge my 
colleagues to help put an end to the inequities of the alternative 
minimum tax.
  Mr. ENGLISH. Mr. Speaker, it is a great privilege for me to yield 4 
minutes to the gentleman from Connecticut (Mr. Simmons), the prime 
sponsor of this legislation and a real advocate for middle-class 
taxpayers.
  Mr. SIMMONS. Mr. Speaker, I thank my friend from Pennsylvania for 
yielding me the time.
  I rise today in support of the Middle-Class Alternative Minimum Tax 
Relief Act of 2004, a bill that will prevent millions of middle-class, 
middle-income Americans from paying higher taxes next year.
  Mr. Speaker, when the IRS's national taxpayer advocate Nina Olsen 
presented her annual report to Congress at the end of last year, she 
deemed the AMT, or the alternative minimum tax, as ``the biggest 
problem taxpayers face today.'' She did not say upper-income taxpayers. 
She did not say top tax brackets. She did not say wealthy taxpayers, 
but simply taxpayers. In fact, middle-class families with children are 
becoming increasingly liable to come under the AMT for several reasons.
  First, the baseline exemptions in this tax were never exempted for 
inflation. So as more and more Americans have entered into the middle 
class over the past 25 or 30 years, they have outrun the exemption and, 
therefore, fallen into the AMT trap.
  Secondly, the AMT has begun to fall especially hard on middle-class 
families with children, the very people we in this body have aimed to 
help, not hurt, with our tax laws. These Americans work hard, they play 
by the rules, they pay their taxes year after year and are now sending 
more of their earnings to the Federal Government because this tax does 
not allow them to take the standard deduction for married couples, and 
it does not allow them to enjoy individual exemptions for themselves 
and their children.
  What is more, as my colleague from New York has indicated, high-tax 
States such as New York and Connecticut are much more likely to be 
caught because the State, local, and personal property taxes are not 
deductible. Connecticut is the most taxed State in the Nation; and this 
year, around April 15, I heard from many of my constituents about the 
AMT tax.

[[Page 8429]]

  Just last week, on a radio call-in show, I heard from a constituent, 
Rose Curran. She called in to complain about the AMT. Rose and her 
husband, Dan, did not have to pay it this year, but they anticipate 
that if we do not act they will pay it in the next couple of years.
  Rose is a retired State employee whose only income is Social 
Security. Dan is a Vietnam veteran, disabled, a retired sailor from the 
U.S. Navy who now works as a civilian at the submarine base in Groton. 
I do not consider Rose and Dan Curran what I would call wealthy or rich 
people. They do not either, and yet they are concerned that if Dan 
keeps working at the submarine base they will fall into this trap.
  This is one of the reasons why I introduced the Middle-Class 
Alternative Minimum Tax Relief Act of 2004, to extend through 2005 the 
AMT relief provided in the 2003 law. This measure will ensure that 
taxpayers who are currently exempt from the AMT will continue to be 
protected because AMT will be indexed for inflation over the next year.
  If this legislation is not enacted, Mr. Speaker, the number of 
working families affected by the AMT will increase from over 3 million 
this year to over 11 million in 2005. Here is a chart that illustrates 
what will happen. We will go from 3 million to 11 million. If we enact 
this legislation, we will remain at the 3 million.
  Mr. Speaker, I urge all of my colleagues to join me today in support 
of middle-class Americans like Dan and Rose Curran of Norwich, 
Connecticut. I urge their support for this legislation.
  Mr. Speaker, I rise today to support my ``Middle-Class Alternative 
Minimum Tax Relief Act of 2004,'' a bill that will prevent millions of 
middle-class Americans from paying higher taxes next year.
  In 1969, the Treasury Secretary testified before Congress that 155 
individual taxpayers with incomes above $200,000 paid no Federal income 
tax on their 1967 tax returns by taking advantage of the many 
exemptions and deductions in the tax code. This revelation sparked an 
immediate backlash from the American people. That year Congress 
received more constituent letters regarding those 155 taxpayers than on 
the Vietnam War.
  Following this outburst from taxpaying constituents, legislation was 
passed that created a minimum tax designed to ensure that wealthy 
individuals could not escape income tax liability. It was termed the 
alternative minimum tax or ``AMT,'' for short.
  The AMT is a parallel tax system. You calculate your taxes under the 
normal tax system and again under the AMT. Whichever one yields a 
higher tax is the one you pay. The difference is that when calculating 
the AMT you cannot take the standard deduction, child exemptions, or 
deduct state, local, and personal property taxes. Without these 
important deductions, the AMT often carries the higher price tag of the 
two. Over three million American families discovered this just last 
month when calculating their taxes. For them, the AMT became their 
income tax.
  Mr. Speaker, when the IRS's national taxpayer advocate, Nina Olsen, 
presented her annual report to Congress at the end of last year, she 
deemed the AMT to be the ``biggest problem taxpayers face today.''
  I would urge my colleagues to note that Ms. Olsen said ``taxpayers.'' 
Not upper-income, not top bracket, not wealthy taxpayers, but simply 
taxpayers. In fact, middle-class families with children are 
increasingly liable to come under the AMT for several reasons.
  First, the baseline exemptions in this tax were never indexed for 
inflation. So as more Americans have entered the middle-class over the 
past 30 years, they have ``outrun'' the exemption and therefore fallen 
into the AMT trap.
  Second, the AMT has begun to fall especially hard on middle-class 
families with children--the very people who we in this body have aimed 
to help not hurt with our tax laws. These Aemricans--who have worked 
hard, played by the rules, and paid their taxes year after year--are 
now sending more of their earnings to the Federal government because 
this tax does not allow them to take the standard deduction for married 
couples and it does not allow them to enjoy individual exemptions for 
themselves and their children. The more children a family has, the more 
likely they will be forced into the AMT.
  What's more, if families hail from high-tax States like Connecticut 
they are much more likely to be snared, as State, local, and personal 
property taxes are not deductible under the AMT. I represent the most-
taxed state in the nation. This time of year I am hearing more and more 
about the AMT.
  Just last week while participating on a call-in radio program I heard 
from a constituent of mine from Norwich, Connecticut. Rose Curran and 
her husband, Dan, did not have to pay the AMT this year, but they did 
owe Federal taxes for the first time in years. In going over their 
return, they discovered the AMT and were curious about what it was. 
Upon learning more about its current exemption levels, they realized 
that this supposed ``tax for the rich'' may well affect them in future 
years.
  Rose is a retired State employee whose only income is social 
security. Dan is a disabled Vietnam veteran and retired sailor who 
works now as a civilian at the Subase in Groton. Mr. Speaker, I don't 
think Dan and Rose Curran would call themselves ``rich.'' But they are 
concerned that if Dan keeps working at the base they will fall into 
this tax trap. During my conversation with Rose I urged her to follow 
up with office and I promised that I would look into this matter.
  When I did I was stunned. As one publication put it, this problem is 
``growing like the monster from the tax lagoon.''
  Today, the AMT exemption amount for a married couple is $58,000. 
However, this relief is scheduled to expire at the end of the year. 
Without action, the exemption amount will drop from $58,000 to $45,000 
in 2005--raisinig taxes on millions of hard-working, middle-income 
families beginning next year. The exemption for individual payers will 
drop from $40,250 to $33,750 with the same result.
  Therefore I have introduced the ``Middle-Class Alternative Minimum 
Tax Relief Act of 2004,'' to extend through 2005 the AMT relief 
provided in the 2003 law. This measure will also ensure that those 
taxpayers that are currently exempt from the AMT will continue to be 
protected from the AMT because it will be indexed for inflation over 
the next year.
  If my legislation is not enacted, Mr. Speaker, the number of working 
families affected by the AMT will increase from over 3 million this 
year to over 11 million in 2005. Let me repeat that--over 11 million 
Americans will face this surtax next year without action on my bill 
today. What's more, the 8 million new families paying the AMT will face 
an average tax increase of $1,520 according to the Joint Committee on 
Taxation.
  I'm sure that many of my friends here today will say that this won't 
solve the greater structural problems of this tax and that this is just 
a temporary fax. There is some truth to that. Thanks in part to the 
diligent work of people like my colleague from just next door, the 
gentleman from Massachusetts, Mr. Neal, we all recognize the 
seriousness of this issue and the need for a long-term solution. But 
lets not get so mired in debating how to address the long-range 
consequences of this problem that we fail to provide this critical 
extension.
  Mr. Speaker, what began as a way to make sure that high-income 
Americans payed their fair share has today become little more than an 
unfair surcharge on people who choose to get married, have children and 
work their way into the middle class. My friends, the fireman and the 
teacher making around $65,000 together are not rich. They work hard 
every day to put food on the table, pay the mortgage, and save for 
their children's education. They cannot afford high-priced accountants 
to help them reduce their tax bill. But if this couple has three 
children and takes the standard deduction, they WILL--according to 
CRS--pay the AMT next year if we don't act. Lets make sure--with this 
legislation--that next April people like Rose and Dan Curran do not pay 
the considerable price of the alternative minimum tax because we failed 
to act on their behalf today.
  Mr. Speaker, I urge all of my colleagues to join me in support of 
middle-class Americans like Dan and Rose Curran of Norwich, Connecticut 
and support the ``Middle-Class Alternative Minimum Tax Relief Act of 
2004.''
  Mr. McDERMOTT. Mr. Speaker, I yield 2 minutes to the gentleman from 
New Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Speaker, my friend from Connecticut has spoken 
somewhat of the truth, but the anecdotal stories that have been 
presented on the floor are only an indication of all of the things that 
are happening throughout the United States, and if we really care about 
shifting the burden of the alternative minimum tax right now up the 
scale rather than trying to burden the middle class, then we should do 
this and be honest with the American people and tell us what the 
effects are of all the taxes, because we are giving with one hand and 
we are taking back with the other hand.
  Today presents us with yet another cynical ploy of gimmicks and 
illusions

[[Page 8430]]

masquerading as long-term tax policy. Indeed, despite the widespread 
acknowledgment of the urgency for preventing large swaths of the middle 
class from being sucked into the alternative minimum tax over the next 
decade, neither the administration nor the leaders in the House or the 
Senate are willing to propose permanent relief.
  Why is that? Is it because some of my friends do not want to 
acknowledge the overall cost of the AMT? Is it because some of my 
friends want to make our tragic budget situation seem less grim? Was 
the decision to provide AMT relief for only 1 year designed to 
understate the cost of other tax cuts enacted, as well as various 
pending tax cut proposals, including those to make 2001 and 2003 tax 
cuts permanent?
  I think we all know the answers to the questions. We should. It is 
unfortunate. For over 3 years, this body has employed deceptive budget 
stratagems to force through politically infused tax cuts that threaten 
our Nation's long-term fiscal health, and so it continues.
  We should all vote for the Rangel substitute. We should all say 
enough burden on the middle class. This bill is reported to cost a 
relatively modest $17 million, but if we extend it as expected, its 
actual long-term costs are much higher. Why do we not tell the American 
public what it will cost, since we want to stretch out the permanent 
tax cuts for another 10 years? Why do we not tell them what it is going 
to cost? We do not want to do that because folks are going to ring back 
and say, oh, my God, that is a lot of money.
  Indeed, by proposing a 1-year fix to a perpetual problem, H.R. 4227 
purposely obscures not just the long-term costs but also the other tax 
cuts recently enacted.
  Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds just to say to 
the gentleman what is fairly clear and Chairman Greenspan recently 
indicated to us before the Joint Economic Committee that the tax cuts 
are working as a tonic for the economy. Clearly they are helping us to 
expand our tax base and move back toward a balanced budget, and that is 
fairly clear.
  Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Sam 
Johnson), a member of the Committee on Ways and Means.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, the AMT is a sneaky tax. It is 
a parallel tax system where normal rules of income and deductions do 
not apply. You lose most of your deductions and your children become a 
liability.
  The bill we are debating today will keep this sneaky tax from taking 
away the benefit of many of the 2001 tax cuts. However, we are just 
holding back the tide of the AMT that in 2008 will swamp the tax system 
and actually collect more money than the rest of the income tax system 
combined.
  Yes, it is going to be cheaper to repeal the entire income tax system 
than to repeal the AMT. I think this sneaky, destructive tax will 
finally cause the income tax system to implode.
  This bill today will buy us some more time so we can get on with 
building a consensus on replacing the income tax system. We need to 
replace our income tax system that is, as my colleagues know, 
economically destructive, impossibly complex, and overly intrusive. It 
has impeded our ability to create jobs, encourage savings and 
investment, and realize the American dream.
  When I speak with constituents, the biggest applause line I get is 
about abolishing the IRS. I think that the system, any replacement, any 
new system, should reduce the role of the Federal Government, encourage 
savings and investment, be simple, and most of all, it must be fair. 
AMT does none of this, and we must repeal it; but until we can repeal 
it, we must hold harmless those Americans whose taxes are being raised 
in the next year.
  One additional interim step we need to take is to help those trapped 
in AMT through exercise of incentive stock options or ISOS. In this 
instance, the AMT requires people who exercise options on their 
employer's stock to pay tax on phantom profits. Many people stuck in 
AMT owe tens of thousands or hundreds of thousands of dollars in AMT on 
phantom profits never realized because the bottom fell out of the 
market. We cannot justify a tax system where taxes are owed when no 
gain was ever realized.
  I hope we will also be able to fix this inequity as this bill moves 
through the process; but for sure, we need to get rid of this sneaky 
tax now.
  Mr. McDERMOTT. Mr. Speaker, I yield myself 15 seconds.
  The gentleman from Texas talks about this being a sneaky tax sneaking 
up on people. It is only sneaky because my colleagues would not have 
hearings. If they would have listened to us when they were passing 
these tax bills in 1997 and 1998 and 1999 and 2000, we told them over 
and over again, we offered these changes that were necessary then and 
it all happens now. They say we snuck up on them.
  Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. 
Engel).
  Mr. ENGEL. Mr. Speaker, I thank the gentleman for yielding time to 
me; and I, too, rise in strong support of the alternative minimum tax 
reform. In fact, I would go so far as to say, if there was one tax that 
should be permanently reformed, it would be this one.
  First of all, as everyone has mentioned, many middle-income people 
find themselves caught with this tax. They have plenty of deductions, 
but they are not allowed to deduct it because they have met the 
threshold, and it certainly is regressive and should be changed.
  In 1969, the tax was put into effect. It has not been modified since 
it makes no sense whatsoever not to have it indexed to inflation; and 
again, if there was any tax reform that ought to be made permanent, it 
should be this tax.
  We have heard about other taxes. The estate tax is one with which I 
do not agree that that tax should be permanently repealed. The estate 
tax repeal would only benefit the very, very high-income people, and I 
think they should pay their fair share; but this alternative minimum 
tax really hits a lot of working people, a lot of middle-class people 
and is really grossly unfair.
  If a person lives in a high-tax State, as was mentioned by my friends 
from New York and Connecticut, it even hurts and hits them even more 
so. This tax, as it is currently written, makes no sense at all. I 
would hope that after this 1-year extension we could put our heads 
together and come back with something that makes sense, a permanent 
reform.
  While this bill is a step in the right direction many middle class 
families that are hurt by the AMT, will not be helped by this and will 
only be helped by a total re-write of the AMT and a permanent reform.
  I think on this side of the aisle the point had been made that the 
Committee Ways and Means, which is the tax-writing committee, ought to 
have hearings. And after we can finally put together a plan that would 
reform the AMT permanently for good.
  Right now, I will take this quick fix, but we ought to build on to 
it. We should permanently reform the AMT. It makes no sense whatsoever 
to keep doing short-term extensions on tax policy that hurts a lot of 
hardworking families.
  Mr. ENGLISH. Mr. Speaker, I first yield myself 15 seconds to thank 
the gentleman from New York for his presentation. It was very 
thoughtful. I want to associate myself with his remarks. We appreciate 
his making this debate very bipartisan, and I welcome him to get 
involved in our Zero AMT Caucus and try to work on a bipartisan basis 
to deal with this problem.
  Mr. Speaker, it is a great privilege for me to yield 5 minutes to 
another gentleman from New York (Mr. Houghton), who has put an 
extraordinary amount of time in on this issue, the chairman of the 
Subcommittee on Oversight of the Committee on Ways and Means, my 
colleague.

                              {time}  1215

  Mr. HOUGHTON. Mr. Speaker, I thank the gentleman for yielding me this 
time, and say to the gentleman from New York (Mr. Engel) that we have 
fought a good fight on many issues, and I am delighted to be associated 
with the gentleman on this.
  Mr. Speaker, I am not going to talk about the alternative minimum 
tax. People have described it, nobody wants

[[Page 8431]]

it, we want to get rid it. The question is how. Do we do it the 
Democratic way or the Republican way. I happen to believe that H.R. 
4227, the bill of the gentleman from Connecticut (Mr. Simmons), is the 
right approach.
  I guess the only thing I would hope is that we would not get tangled 
up in two things: One is we not get tangled up in the politics of this 
thing. This is a national interest. We could argue back and forth and 
criticize each other, but the point is people are going to get hurt and 
we have to stop that. The other thing, I hope we do not get tangled up 
in procedural issues. This is a procedural House, but the impact is not 
procedural on people on the outside.
  I want to thank the gentleman from Pennsylvania (Mr. English) and the 
gentleman from Connecticut (Mr. Simmons) for what they have done. The 
gentleman from Connecticut (Mr. Simmons) has really been the watchdog 
here for a lot of people who could get hurt, and they do not know they 
could get hurt. The fact that they have been watchful and sensitive to 
the human condition is very important.
  As Members have said, this is a stopgap measure. But without this, we 
cannot go to the next leg. The next leg is to get rid of a tax. It is 
an interesting concept because before 1986, people with large amounts 
of capital could give that capital away; and, therefore, under 
provisions of the tax law, would not have to pay any tax. It was not 
fair and it was not democratic, and that is why this thing came into 
effect.
  But there was no indexing, and that is why this is creeping up and 
involving enormous numbers of people. There are over 3 million people 
now, and there will be another 8 million involved. It is a very hurtful 
tax. I think it is a very good idea. If you want to vote the Democratic 
proposition, that is fine. I happen to believe what the gentleman from 
Connecticut (Mr. Simmons) has done is right on target. It is essential. 
It is straightforward, simple, and will benefit everybody. Therefore, I 
request that Members support the bill, H.R. 4227.
  Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may 
consume.
  I would say to my distinguished colleague, the gentleman from New 
York (Mr. Houghton), we are going to miss the gentleman when he leaves 
Congress. It will be a loss for all of us. The gentleman said this is a 
tax that nobody wanted. Well, if we take the Democratic alternative and 
look at it in the Statement of Congressional Findings and Purposes, and 
mostly Members blow through these bills and never read that. I have a 
little bit of time, so I would like to say a few things about it.
  In 1986, because of tax preferences on oil and gas depletion and a 
whole lot of things, there were a number of people in this country who 
made a lot of money who then could write it all off because they had 
these preferences on oil and gas exploration and so forth. So there was 
an agreement in this House to put in an alternative minimum tax, 
believing that every American ought to pay something. No matter how 
rich or how poor, we believe that each worker should put something in 
the pot. Here we had these people at the top who figured out how to get 
rid of it all. So we put the alternative minimum tax in.
  Then came the 1990s and we had tax reform. We got rid of all of those 
preferences. Even when we did that, we still had less than 1 half of 1 
percent of taxpayers who paid this alternative minimum tax. It never 
became a problem until 1997 when we took away the personal deductions 
and the deductions for kids, and we suddenly swept up a quarter of the 
people this year. If we look at the projections, we are going to have 
three-quarters of the people paying this thing at some point down the 
road.
  We could have fixed it along the way, but most people did not want it 
in the first place, and so they said let us get rid of it. Those people 
on the top should not have to pay anything if they can figure out how 
to get out of it. So we have not fixed it.
  I give you a tale of two taxpayers. There is one standing here, and I 
have a wife who works and the two of us make a nice living. We have 
good salaries. We do not have any children, and we do not pay the 
alternative minimum tax. And the other thing is I live in Washington 
State. We do not have a State income tax. A great State to live in. It 
wants folks to come and visit, but do not stop there and live. We do 
not have any problem with the AMT.
  Mr. Speaker, I am not arguing for myself. I am arguing for these 
people behind me who live in the District of Columbia. One has two 
kids, one has four kids. They have to pay it on staff salaries in the 
House of Representatives. Tell me where is the fairness in that tax 
structure? How is it my wife and I benefit tremendously from this 
system, and we clobber the people in the middle class behind us? That 
is why we are here today.
  Obviously, Republicans realize that the people out there are going to 
find things out when they do their taxes. They start through the form, 
and if you have an adjusted gross income of $58,000, you should begin 
to figure your taxes in a parallel fashion, the regular income tax 
form, the 1040, and then there is the alternative minimum tax. So there 
you are at $60,000, $70,000, and you have to figure your taxes twice.
  If you ask the IRS, they put out a flyer that says it takes 3 hours 
and 56 minutes to figure the alternative minimum tax. Now people are 
filling out their tax forms making $70,000, a lot are not using 
accountants, that is their time. So we are putting them through the 
wringer twice to fill out their taxes because you would not listen.
  Now this idea that we will repeal the alternative minimum tax, that 
is nice. That is a great idea. You know who that helps, well, it helps 
these people behind me a little bit, but it helps the people at the 
top. Again, it would be a give-away to the people on the top. I 
understand what the Republican Party is all about. I believe that is 
what your goal is. That is a major plank in your platform, is no one 
who has millions of dollars should pay anything, they know how to use 
their money, we should let them have it and they will invest it and we 
will have a lot of jobs.
  Well, these tax cuts have not worked in the State of Washington. They 
have not worked in the State of Washington. We have more people 
unemployed today than we have ever had. It is the highest long-term 
unemployment we have ever had since the 1950s, and we are still waiting 
for the recovery. In February, there were 21,000 jobs created, all 
government jobs. So the tax cuts did not work except for people who had 
a lot of money. The next month, March, we had 306,000 jobs. Goodie, we 
are growing.
  The fact is that economists say that it takes 250,000 new jobs every 
month to simply keep up with the growth in the labor force in this 
country. So 300,000 is just barely replacement, saying nothing about 
the 3.5 million that we have lost since President Bush has been in 
office.
  This economy has been an absolute disaster for the middle class and 
the ordinary working people in this country. This tax structure 
Republicans have created is awful. We will vote for this today. There 
is no Member who is not going to vote to put a 1-year patch on it, but 
it is not being fixed. As a Member said, the way things are going, down 
the way, you are going to have half the people we are going to have to 
deal with, and at some point it is going to cost a lot of money.
  The other side of the aisle would not fix it in 1997. We tried to 
tell them, but they were too smart and too full of their own ideas and 
ideology to look at what they were doing to people, and that is why we 
are here today. We certainly will all vote for it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Michigan (Mrs. Miller).
  Mrs. MILLER of Michigan. Mr. Speaker, I rise today in support of H.R. 
4227 to extend the alternative minimum tax relief to our Nation's 
middle class and working families. This legislation will ensure that 
almost 8 million Americans are not going to be subject to unfair higher 
taxes. It is interesting because just last week, I listened to my

[[Page 8432]]

colleagues on the other side of the aisle. About 100 of them actually 
voted against the marriage penalty relief. They said that offering this 
Nation's working families relief from a tax on marriage was 
inconsequential because these families would be subject to AMT.
  H.R. 4227 is a pro-growth, and most importantly, pro-family piece of 
legislation that will help us fix this problem.
  Mr. Speaker, as has been mentioned already several times today, the 
original intent of AMT provisions in our Nation's Tax Code were 
designed to prevent high-income taxpayers from using tax deductions, 
from using write-offs, as well as loopholes from avoiding paying their 
fair share of taxes. But under the leadership of the Democratic Party 
prior to 1995 and their obstructive politics since then, the AMT will 
continue to force hard working middle class families to pay more than 
their fair share unless something is done.
  H.R. 4227 at least offers a temporary fix to this problem until 
Congress can develop a permanent solution. I commend President Bush and 
the majority party in Congress for implementing an economic growth 
package that has all of the economic indices on a positive trend line. 
Consumer confidence in our economy is on the rise because thanks to the 
leadership of President Bush, more Americans are able to keep more of 
their hard-earned money. The President and the Republican majority 
trust and believe in the American people. By extending relief from the 
AMT, we can make sure that taxpayers are not paying more than their 
fair share and they can have money in their pocket to help expand our 
economy even further.
  Mr. Speaker, this House is faced with an important decision today, 
one that will affect up to 8 million working families. I support this 
legislation because I support those families. I urge my colleagues to 
make the right decision and vote to pass this.
  Mr. McDERMOTT. Mr. Speaker, I reserve the balance of my time.
  Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Herger).
  Mr. HERGER. Mr. Speaker, I rise in strong opposition to the Rangel 
substitute. Under the guise of individual tax relief from the 
alternative minimum tax, or AMT, the Rangel substitute would raise 
taxes by $15 billion. This new tax increase would fall squarely on the 
shoulders of America's small businesses, the same American companies 
that create jobs and drive our Nation's economic engine.
  The tax relief this Congress has passed over the past 3 years has 
contributed mightily to the economic recovery we are now experiencing. 
More than 750,000 jobs have been created in the past 8 months. We have 
strong economic growth of between 4 and 5 percent, low inflation, and 
homeownership rates at the highest level ever.
  Mr. Speaker, why in the world would we choose to raise taxes on 
American small businesses just as our economy has turned the corner? 
Why would we smother the engines of job creation with higher taxes? Yet 
this is exactly what the Democrat substitute would have us do. Hard-
working Americans need relief from the unfair AMT tax, and the majority 
bill offered by the gentleman from Connecticut (Mr. Simmons) will give 
it to them.
  Without passage of the majority bill, an additional 8 million middle 
income taxpayers will see their Federal taxes rise because of the AMT 
next year.

                              {time}  1230

  We cannot allow this to happen. Let us reject the Democrat substitute 
and pass the underlying bill. Americans deserve relief from the AMT 
tax, not new taxes.
  Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Tennessee (Mrs. Blackburn).
  Mrs. BLACKBURN. Mr. Speaker, I came to Washington to work on several 
issues, one of which is the sales tax deduction. Tennesseans know my 
record on tax fairness. I have been working with the gentleman from 
Texas (Mr. Brady) to put that sales tax deduction issue on the map. I 
am glad to see that we have got some folks on the other side of the 
aisle that are coming in here and ready to help us with this debate. 
Like my mom always said, better late than never.
  Unfortunately, true to form, their proposal, the Democrat proposal is 
a classic political bait and switch. They are talking about supporting 
a sales tax deduction while they are hiding the fact that their motion 
to recommit contains a tax increase. Tennesseans are not going to buy 
that kind of gimmickry. Whenever you make that kind of bargain, the end 
result is always higher taxes.
  Today we are talking about the AMT, the alternative minimum tax. One 
of my Democrat colleagues said he never hears from constituents about 
the AMT, that they do not know what it is. He might be right. There are 
millions of middle-income taxpayers that do not know what is coming, 
that 11 million of them will be hit with an average tax increase of 
$1,520. So let us come back in a year and tell these people they do not 
know what the AMT is. They are going to know. They will know that they 
have been walloped with a $1,500 tax hike if we do not take action 
right now. They will be angry because people opposed the Republican 
plan that is supported today.
  My friends across the aisle claim that their motion to recommit 
addresses the tax hike. Where were they when President Clinton raised 
taxes and failed to adjust the AMT for inflation? They had their chance 
to act then, and they failed. People back home need to ask themselves 
who do they trust on the tax policy; who has been consistently on the 
side of the taxpayer. It is an easy call. Democrats only talk about tax 
relief in election years. Republicans talk about tax relief every year.
  Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from New Hampshire (Mr. Bradley).
  Mr. BRADLEY of New Hampshire. Mr. Speaker, I would like to salute the 
leadership of the gentleman from Pennsylvania (Mr. English) on this 
issue.
  Mr. Speaker, what we face with the alternative minimum tax is a 
sleeping giant, a sleeping giant that is starting to wake up and gobble 
the hard-earned funds of millions of American taxpayers. Today it is 3 
million taxpayers; but tomorrow if we do not pass this legislation, it 
will be 11 million taxpayers. And if we do not have the time necessary 
to have a longer-term solution for the alternative minimum tax, by the 
end of the decade it will be 30 million taxpayers, one in three 
Americans, will fall victim to this tax that was originally designed to 
catch about 150 very wealthy Americans that did not pay their fair 
share of taxes.
  What we have today, though, with the alternative minimum tax is a 
situation where middle-income Americans will be paying more than the 
wealthier Americans because they lose their personal exemptions, they 
lose the exemption for State and local taxes, and they lose the 
exemptions for itemized deductions. Most of the benefits of the tax 
cuts in 2001 and 2003 will be evaporated for these taxpayers; and for 
anybody that has had to go through the alternative minimum tax, the 
compliance costs of having to fill out taxes in a dual universe, the 
normal way and the alternative minimum way, is much higher.
  Mr. Speaker, I urge my colleagues to support H.R. 4227 and allow us 
this year of time to have a long-term solution to fix the alternative 
minimum tax.
  Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time with the 
right to close.
  Mr. McDERMOTT. Mr. Speaker, I yield myself the balance of my time.
  One of the problems here in the House on an issue like this is that 
it is hard to have a real debate because we do not set it up as a 
debate. We really are having a bunch of 2-minute speeches, and nobody 
ever gets to answer anybody back and forth. The gentleman from 
Pennsylvania (Mr. English) is an honorable Member and, I think, is just 
wrong on this issue. I do not bear him any ill will, but one of the 
interesting things about this is one of the more recent Members who 
came out here was the gentleman from California (Mr.

[[Page 8433]]

Herger). He went on about the fact that the Democratic alternative is 
going to cost $17 billion. This is a time at which the Republican 
management of the economy has developed the biggest deficits in a very 
long time. We are going to have to raise the Federal debt limit again. 
We are going to have to sell more bonds to the Chinese. We are going to 
have to sell more bonds around the world to keep our economy afloat 
than ever before.
  The gentleman from California's complaint about the gentleman from 
New York (Mr. Rangel) is that the gentleman from New York has come in 
here and said, you know, I think we ought to pay for this bill. We 
ought to pay for it. The gentleman from Pennsylvania (Mr. English) and 
his colleagues are not interested in paying for it. They just want to 
throw it on the credit card, another $17 billion onto their kids and 
their grandchildren. I just had a grandchild born last August, so for 
the first time I am really thinking about grandchildren. I used to just 
think about my kids. But now I am looking two generations down the 
road. It is no problem for the gentleman from California and the 
gentleman from Pennsylvania and other Members to say, Hey, throw it to 
the kids. Let's not pay for it.
  You have done that since 1996. The mess we are in is directly related 
to what you have done. When President Bush took over, we had some kind 
of surplus, I forget, $200 billion; and we are now going into the hole 
at least $400 billion or $500 billion every year. When the gentleman 
from New York comes out here and says I would like to pay for it, he 
gets criticized. That is called raising taxes. No, it is being fiscally 
responsible.
  The gentleman from New York is no wild-eyed liberal. You think he is, 
but you have never looked at the proposal he made. He reached over 
across the hall here into another place and took a provision from the 
Finance chairman in the United States Senate. The provisions that he 
put in are offsets that are contained in the provisions of a tax 
abusive transactions bill from the Senate Finance Committee written by 
a Senator from over there. I cannot name him. The offsets are not tax 
increases. They are provisions designed to ensure that corporations 
cannot use aggressive tax shelter transactions to avoid the taxes they 
pay.
  So the charge that the gentleman from New York is trying to raise 
taxes is simply misleading, to be very generous. I am sure we will see 
advertisements going all over, well, you know, the Democrats tried to 
raise taxes on you another $17 billion, and we stopped them. They are 
not going to tell you about what it is going to cost your kids and your 
grandchildren in terms of interest rates and what is going on in this 
economy.
  The first group of offsets that the other body came up with are 
designed to curtail tax shelters by clarifying the economic substance 
doctrine. People back home, I am sure their eyes are crossed by now, 
but some of you people ought to be thinking about it. Increased 
reporting and penalty provisions. The economic substance doctrine is a 
rule of law that denies artificial losses or other tax benefits from 
transactions that have no business purpose or profit motive. It is the 
usual shenanigans of tax attorneys. Even a Republican in the other body 
thinks that ain't right. But, no, people over here say, oh, no, we 
can't do that, we can't tighten up. Oh, no, no, no. All those tax 
attorneys will have to go out there and find another way to take it 
away from the middle class and give it to the rich. They apply to 
transactions with no substance other than tax avoidance.
  That is what the gentleman from New York's bill does. He says, let's 
get people to pay their fair share. If we did, we could do this 
alternative minimum tax. In fact, we could do more. His bill actually 
says that if you have a combined adjusted gross income of $250,000, if 
you are less than that, you do not even have to look at this. That 
would take millions of people off the rolls. But the Republicans want 
to leave it so that everybody has to be at $58,000 and start into this 
alternative plan.
  The IRS says the record-keeping for that is 19 minutes. Then they say 
it takes an hour and 14 minutes to read the law and understand it. This 
is the IRS telling the taxpayers: it is going to take you an hour and a 
quarter to read this law and figure it out. Then it takes an hour and 
49 minutes to actually figure it. And then copying and assembling and 
sending the form takes another 34 minutes. That is where we get the 4 
hours.
  You are putting a half a day's work on the American public because 
you will not consider an alternative from the Democrats. You will not 
have a hearing to find out whether this is a better proposal or not, 
because all wisdom resides on that side of the aisle. And it is really 
wonderful to stand in the presence of people who know everything; but 
the problem, the reason you got into this mess is because you would not 
listen to anybody else and you are still in the mess because you will 
not listen to anybody else. The fact is that your own people, a guy 
from Iowa, my gosh, he is a wild liberal, right? Head of the Senate 
Finance Committee. He comes up with this, and you think it is no good.
  The fact is that this is a big problem that we need to work on 
together. If there were any bipartisanship at all on the Committee on 
Ways and Means, we could get something done. But if it is going to be 
done all by one side, where the ideology is we have to give it all to 
the people at the top and we cannot worry about what happens to the 
middle class, then we are going to continue to have these kinds of 
deals. If, God forbid, you are still in charge next year, you will be 
out here with a bill just like this with a bigger problem and a bigger 
cost and more money into the deficit.
  The question that really is sitting here today is, when is the 
Republican majority going to face up to the hole in the tax structure 
that you have dug and into which you have thrown all the people? You 
gave pittances, $676 average, for the average family and $112,000 for 
the people at the top. Do you think there is a millionaire in this 
country who needs $112,000? I mean, seriously. How could anybody come 
out here and support that, given the problems we have in this country 
right now? Spending $200 billion on a war that never should have 
happened in the first place, led into it by a President who stood right 
here and misled us, and you are throwing money out the door every way 
we can imagine; and you will not face what you are doing economically.
  I really pray, I really do pray that the day never comes when Europe 
stands up or the Japanese or the Chinese stand up and say, we are not 
buying any more of that worthless paper from the United States.
  The SPEAKER pro tempore (Mr. Simpson). The time of the gentleman has 
expired.


                Announcement By the Speaker Pro Tempore

  The SPEAKER pro tempore. Members are reminded that remarks in debate 
in the House may not cite the views of Senators. Sponsorship may be 
identified, but further characterization is not in order.
  Mr. ENGLISH. I presume, Mr. Speaker, that also means that we cannot 
mischaracterize them.
  Mr. Speaker, I yield myself the balance of my time.
  This has been a useful debate because I think in an odd way it has 
highlighted a couple of things. First of all there is a consensus in 
this Chamber behind the bill that the gentleman from Connecticut (Mr. 
Simmons) has put forward. There will be a substitute offered. I will 
have ample opportunity and grounds to criticize that substitute when it 
is offered, but for now I think what needs to be emphasized here is 
that in the end both parties are committed to at least moving forward 
on this very limited bill. I wish we were doing more today, but the 
fact is, this is probably the best we could agree on in the gridlock 
that exists in the institution right now.
  I would like to use some of my time to respond to some of the points 
that were made by the other side. First of all, let us be clear. This 
bill is not about the war. It is not really about the deficit in the 
sense that I think it is fairly clear and I would hope people on both 
sides could agree that we do

[[Page 8434]]

not need revenue from this source. We can come up with spending cuts, 
and we can come up with alternative revenue sources to deal with this.

                              {time}  1245

  We do not need the revenue applied from applying an AMT that was 
intended to be applied originally only to a very narrow band of very 
wealthy taxpayers, applying it to the middle class.
  Some strange things have been said here and I would like to respond 
to them. First of all, this problem was not created by the Republicans. 
This was created back in 1986 when a tax reform passed when the other 
body controlled the Chamber, and in all the time that they controlled 
the Chamber afterward, they did nothing to deal with this problem. In 
fact, in 1993, they voted to actually increase the burden of the AMT. 
And we have heard from a number of speakers today who purport to be 
against the AMT, but actually who voted for that increase.
  It has been said by the distinguished gentleman from Washington, my 
friend, that Republicans do not know what they are doing. I would 
submit to the Members when this AMT was put in place without any 
provision for how inflation would move and more taxpayers into AMT 
status, they knew what they were doing. They wanted the revenue. They 
wanted to apply a progressively higher tax burden to the American 
people and use that future revenue in order to justify a higher level 
of spending and an expansion of the welfare state.
  We in this Chamber today are committed to moving forward to making 
sure that a new heavier tax burden is not applied to taxpayers next 
year and that next year taxpayers do not face a bait and switch on some 
of the key provisions that we have passed. That I would submit is 
really what the Republican Party is all about.
  And as for Republican management of the economy, I am proud to 
associate myself with Republican management of the economy at a time 
when clearly responsible economists agree the tax policies enacted in 
this Congress supported by this administration are having the effect of 
lifting the economy, not as much as I would like right now in my 
district, but clearly turning around the slowdown that we had 
experienced that we inherited from the last administration and 
providing a significant prospect of new jobs and new economic growth 
and new dynamics that are going to provide opportunities for working 
families in the coming months. We recognize that we need to do more, 
and this Congress is clearly committed to doing that. And yet we need 
to agree at very least today to pass this provision.
  I am very proud to support this bill as introduced by the gentleman 
from Connecticut (Mr. Simmons) that provides some relief to middle 
class taxpayers, to make sure that they have access to the relief that 
we promised them so that we can continue to grow the economy, that we 
can continue to create opportunities, that we can continue to provide 
some relief to families that have children and that are eligible and 
should be eligible for the tax credit that we have passed in this 
Chamber.
  This is to me a critical issue of tax equity. We need to be prepared 
to guarantee to middle class families that they do not face a higher 
burden because of a stab in the back called the AMT, that they are not 
hit on tax day with an unexpected tax burden, that they are not 
required to recalculate their taxes accordingly. We have an opportunity 
today to strike a real blow for tax equity for the middle class.
  With that, I hope we pass this bill.
  Mr. HOLT. Mr. Speaker, the Alternative Minimum Tax (AMT) is a 
terrible burden on middle class taxpayers and the middle class should 
be excluded from the AMT.
  Once again, however, the Republican leadership is using budget 
gimmicks to hide the real cost of their tax cut and doing nothing to 
offset it. While the proposed AMT relief bill carries an official cost 
of $17 billion, its actual long-term costs are much higher: $549 
billion over ten years, or $658 billion if the added interest costs on 
the national debt are taken into account. Indeed, by proposing a one-
year ``fix'' to a perpetual problem, H.R. 4227 purposefully obscures 
not just the long-term cost of AMT reform. Ignoring these long-term 
costs irresponsibly undermines our ability to adequately plan for the 
future. It costs the future generation, as well as the present economy.
  More unpaid-for tax cuts will not only jeopardize critical public 
services now, but they will also hurt Americans well into the future. 
Massive deficits now create large debt and high interest payments that 
will crowd out spending on public investments for future generations. 
Moreover, these deep deficits threaten to increase interest rates in 
the future--making it harder for Americans to buy homes and afford 
higher education, and making it harder for business to raise capital.
  This is why I support the Democratic alternative to relieve the 
burden of the AMT on middle class taxpayers. The substitute would 
provide temporary relief from the AMT that is more broad and simpler 
than the relief contained in H.R. 4227. The substitute would simply 
eliminate AMT liability for all taxpayers whose adjusted gross income 
is less than $250,000 ($125,000 for single taxpayers). Above those 
income levels, AMT liabilities would be phased in over a $40,000 range 
($20,000 for single individuals).
  The substitute would provide a framework for total reform of the AMT. 
It would require the Secretary of the Treasury to promptly submit 
legislative recommendations to the Congress, and it would require the 
Committee on Ways and Means to act on those recommendations this 
summer. It is time for the Congress to be honest with the American 
taxpayers and proceed with real AMT reform.
  Moreover, the substitute would be revenue neutral. Its cost would be 
offset by restricting certain tax shelters, which has already passed 
the Senate on a bipartisan basis. The AMT was designed to ensure that 
all taxpayers pay a minimum amount of tax and, in effect, limited the 
ability to use tax loopholes. The substitute would directly address 
those tax avoidance transactions, thereby minimizing the need for the 
minimum tax and provide relief for the middle class families of my 
district.
  We cannot continue to pretend that the AMT problem will go away on 
its own and to make major policy decisions based on the reckless 
unrealistic assumption that it will. We must work toward a long-term, 
fully paid-for solution that protects our ability to fund critical 
national priorities and allows us to make realistic plans for the 
future.
  Mr. KIND. Mr. Speaker, I strongly support providing relief to middle-
income Americans from an encroaching Alternative Minimum Tax (AMT).
  Without action this year to extend the current AMT exemption levels 
passed in 2003, millions of Americans will feel the AMT crunch in 2005. 
While the AMT was enacted in 1969 to prevent high-income earners from 
using loopholes in the tax code to avoid paying their fair share, the 
AMT is increasingly becoming an unfair tax burden on millions of 
middle-income Americans. Because of factors including inflation and 
income tax reductions, the complex calculations used by individuals and 
couples to determine if they must pay any AMT have adjusted and now 
unfairly punish middle-income families, particularly those with 
children in high-tax states.
  For the third year in a row, the Internal Revenue Service's Taxpayer 
Advocate Service's Report to Congress lists AMT encroachment as the 
most serious problem encountered by taxpayers. The AMT now impacts more 
than 2.4 million Americans. Unless reformed, the AMT will impact 12.4 
million in 2005 and more than 30 million Americans in 2010. On top of 
that, even more taxpayers will be forced to perform intense 
computations to determine if AMT applies to them.
  While the majority of the 2003 tax proposal that passed the House was 
fiscally irresponsible and designed to benefit only the wealthiest of 
Americans, its provision providing increased AMT exemptions in 2003 and 
2004 had bipartisan agreement. However, while everyone seems to agree 
that the AMT needs to be reformed, the President's budget for fiscal 
year 2005 again covered up the full cost of fixing the AMT--estimated 
by the CBO at over $500 billion--by proposing another one-year 
extension. A comprehensive, bipartisan proposal is long overdue to 
address the problems of the AMT, and it is important that Congress 
account for this necessary reform in its budget resolutions.
  As we reform the AMT to provide relief to middle-income Americans, we 
need to act in a fiscally responsible manner. It is unfair to Americans 
today, and especially the next generation, to delude ourselves by 
thinking the record budget deficits facing our nation, estimated by the 
White House at over $500 billion this year alone, will simply go away.
  As a member of the House Budget Committee, I supported a budget 
resolution that allows for extending AMT relief while still reducing 
the deficit. This approach requires tough

[[Page 8435]]

choices, prioritization, and a bipartisan commitment to helping working 
families. With the House-Senate conference committee still negotiating 
the budget resolution for fiscal year 2005, I remain hopeful that we 
will be able to provide Americans continued tax relief today without 
raising the debt burden on our children's generation.
  The substitute offered today by Representative Neal is a more 
responsible bill that will provide relief to more than 10 million 
families while not increasing the budget deficit. By closing corporate 
tax shelters, the Neal substitute provides a responsible offset to 
benefit more American families without burdening our children with 
added debt that they will have to pay off. Further the Neal substitute 
unambiguously and completely exempts married couples with incomes under 
$250,000 from the AMT. This is a superior approach, helps more 
Americans, and ensures most middle income taxpayers will not have to 
worry about the AMT.
  Mr. Chairman, it is important that we act today to ensure average 
income Americans will not unfairly face the alternative minimum tax in 
2005. However, I believe we can and must provide this relief in a 
fiscally responsible manner that will not burden future generations of 
Americans. Just as it was true last week when we passed legislation 
permanently repealing the marriage penalty tax, our work is far from 
over in helping working families face the challenges of today's 
economy. We must come together in a bipartisan manner to craft a 
fiscally responsible budget resolution.
  Ms. KILPATRICK. Mr. Speaker, today we are considering H.R. 4227, the 
Middle-Class Alternative Minimum Tax (AMT) Relief Act. I have 
considered the merits of the legislation and concluded that the base 
bill offered by the Republican majority needed to be amended. I voted 
aye to the Neal-Bishop-Israel substitute, that would have exempted 
married couples making $250,000, and singles making $125,000, from 
paying the alternative minimum tax. The substitute would have been 
offset by cracking down on corporate tax shelters and tax avoidance 
schemes used by corporations like Enron. The current budget deficit has 
been fueled by unprecedented tax cuts that have erased a surplus in 
excess of $200 billion when the Bush administration took office. Given 
the loss of 2.6 million private-sector jobs over the last three years, 
I and my fellow Democrats believe tax cuts should not add to the record 
budget deficits, because ballooning deficits threaten economic growth, 
raise interest rates, and cost jobs. That is why the Democratic 
alternative targeted tax cuts--providing more tax relief to the 
millions of families with children in high-tax states with incomes 
under $250,000.
  I was also concerned by facts provided by Ways and Means staff that 
indicated the base bill is expected to reduce federal revenue by 
approximately $17 billion to $18 billion over 10 years, and none of the 
provisions in the bill were accompanied by any offsets.
  The substitute provided the framework for total reform of the AMT. It 
would have been paid for, and would have provided AMT relief that is 
broader and simpler than the relief contained in H.R. 4227. The 
substitute eliminated AMT liability for all taxpayers whose income is 
less than $125,000 for single taxpayers and $250,000 for married 
couples. Above those income levels, AMT liabilities would be phased in 
over a $20,000 range for single taxpayers and a $40,000 range for 
married couples. The cost of the substitute was roughly $19 billion and 
would have been offset by restrictions on tax shelters that have been 
supported by House Democrats as offsets in other substitutes that have 
been approved in the Senate on a bipartisan basis.
  I opposed H.R. 4227 because it did not provide a sufficient level of 
tax relief to my constituents.
   Mr. STARK. Mr. Speaker, I rise today to oppose H.R. 4227, the 
``Middle-Class Alternative Minimum Tax Relief Act of 2004,'' and in 
support of the Democratic substitute that provides real relief for 
middle-class families.
   The alternative minimum tax, AMT, was designed to ensure high-income 
taxpayers did not thwart the system and avoid their share of the tax 
burden. But once again, the Republicans are on the floor with a tax 
proposal favoring the wealthy over the middle class, penalizing hard 
working Americans raising families. We should not mortgage our future 
with tax policies that will merely pass on the ever-increasing debt to 
our children.
   Despite its title, the Republicans are offering a bill that does not 
provide effective AMT relief for lower-income households and those 
families claiming the dependent care credit. In addition, the 
irresponsible AMT relief proposed by the Republicans is not paid for 
with any offsetting revenue increases or spending cuts.
   In contrast, the Democratic substitute provides AMT relief to more 
households than the Republican bill and gives increased relief to low-
income households--especially those claiming the dependent care credit. 
This tax relief for real middle-class families is paid for with new 
restrictions on corporate tax shelters. The Republicans call this a tax 
hike, but it is actually the most responsible way to provide effective 
middle-class tax relief without adding to the national debt.
   The Democratic substitute provides AMT relief to 10.2 million 
households, a full 1 million more than the GOP proposal. Married 
households below $250,000 adjusted gross income will be completely 
excluded from the AMT under the Democratic substitute, while the 
Republican bill gives big breaks to those over $250,000 who obviously 
need tax relief the least--and have already most benefited from the 
Bush tax cuts.
   I urge my colleagues to vote against the inadequate Republican 
proposal and support the Democratic substitute, which provides AMT 
relief for American families who need it most.
  Ms. DeLAURO. Mr. Speaker, the alternative minimum tax, AMT, is a huge 
and growing burden on a middle class that is already burdened by a 
tough economy and the loss of 2.6 million private sector jobs. 
Originally designed to make sure everyone paid their fair share by 
limiting excessive tax shelters for wealthy families, the AMT has 
become a tax penalty for families with children who live in high-tax 
States. By 2010, 30 million Americans will be faced with minimum tax 
liability, as compared to about 3 million today and 1 million in 1999.
  Everyone in this chamber agrees that something must be done to ease 
this burden on the middle class. And let me make clear--Democrats have 
a long track record of supporting real tax relief for the middle class. 
Unfortunately, this bill represents a band-aid approach to what has 
been deemed by the IRS's National Taxpayer Advocate as the Nation's top 
tax problem.
  Under the Republican bill, 1 million families would still be paying 
the AMT. A two-income family with four children in a high-tax State 
would be hit by the alternative minimum tax even if their income is 
only $95,000. And their bill would extend AMT relief for just 1 year--
meaning taxes on millions of middle class families will go right back 
up in 2006.
  The Congressional Budget Office estimates that a true fix of the AMT 
would cost $376 billion over 10 years. But Republicans have refused to 
step back on their tax cuts for the wealthy, which have created a $3 
trillion deficit, in order to pay for this essential middle class tax 
relief.
  Today Democrats bring to the House floor a true solution to the AMT 
problem. The Democratic substitute completely exempts married couple 
families with incomes under $250,000 from the alternative minimum tax, 
providing tax relief to more than 10 million families, particularly 
those with children in high-tax States. Compared to the Republican 
bill, it provides more relief to 1 million additional families.
  And, the Democratic plan is fully paid for by cracking down on 
corporate tax shelters. As nearly two-thirds of corporations paid no 
tax at all in 2000, this is an important step to ensuring that 
corporations pay their fair share while relieving middle class families 
from the unfair burden of the alternative minimum tax. The middle class 
does not benefit by adding to our already ballooning budget deficit and 
further threatening economic growth.
  I urge my colleagues to support true AMT tax relief for middle class 
families, without adding to the budget deficit, by supporting the 
Democratic plan.
  Mr. FRELINGHUYSEN. Mr. Speaker, today I rise in support of H.R. 4227, 
which extends through 2005 the higher alternative minimum tax exemption 
amounts enacted in the Jobs and Growth Tax Relief Reconciliation Act of 
2003. This important piece of legislation will prevent a tax increase 
on middle class families next year.
  The fact of the matter is if Congress does not act this year, 
taxpayers will feel the burden of a significant tax increase.
  The alternative minimum tax hits the residents of northern New Jersey 
the hardest, especially those who are considered middle-class, because 
it doesn't allow for a deduction of our State's outrageously high 
property taxes. In 2001 and 2003, Congress took steps to present 
middle-class families from falling deeper into the AMT trap. The 
legislation the House has before it today continues in that tradition, 
ensuring that working families throughout northern New Jersey and the 
country are not hit with a tax increase in 2005.
  Created more than 30 years ago, this out of date tax was meant to 
prevent high-income taxpayers from using multiple-tax deductions and 
write-offs to avoid paying income taxes. In 1993, President Clinton 
increased the AMT and did not index it for inflation. As a result, more 
and more middle-income taxpayers are now forced to pay the AMT.

[[Page 8436]]

  As you know, H.R. 4227 extends through 2005 the higher AMT exemption 
amounts enacted last year ($58,950 for joint filers and $40,900 for 
single taxpayers) and adjusts these amounts for inflation to protect 
their value.
  Without enactment of this legislation, the current exemption amounts 
will automatically fall in 2005 to $45,000 for married couples and to 
$33,750 for single taxpayers. As a result, the Joint Committee on 
Taxation reports 11 million taxpayers would be hit with an average tax 
increase of $1,520.
  I would hardly say by today's standards, a family making $45,000 is 
considered ``rich.''
  Mr. Speaker, I recognize that H.R. 4227 is a short term fix to a long 
term problem which must be addressed. I understand the Committee on 
Ways and Means is exploring ways to correct this inequity in a more 
permanent way and I look forward to voting on that legislation.
  But for now, I urge my colleagues to build on our ongoing efforts to 
provide tax relief for all hard working Americans. Let's pass H.R. 4227 
today.
  Mr. BALLENGER. Mr. Speaker, I am happy to come to the floor today in 
support of lowering taxes on American families--all American families. 
The Democrat substitute basically says that it's O.K. to cut taxes on 
some American families, but that other American families should have to 
pay for those tax cuts. Mr. Speaker, that's not tax cut at all.
  As everyone in this body knows, the Alternative Minimum Tax was 
enacted to prevent the wealthiest taxpayers from using loopholes to 
avoid paying any federal taxes. Today, the AMT doesn't just affect the 
rich, but hits a substantial portion of middle-income Americans. The 
2001 and 2003 tax relief bills increased the AMT exemption to help deal 
with this problem. However, this needed relief is scheduled to expire 
at the end of this year. If we do not act today, 11 million middle 
class taxpayers will experience an average tax increase of $1,520 next 
year.
  Mr. Speaker, we can't allow the AMT to take away everything Congress 
and President Bush have done to lower the tax burden on American 
families. We also shouldn't force some Americans to pay for other 
American's tax cuts. I urge my colleagues to defeat the Democrat 
substitute and extend the AMT exemption by voting for the underlying 
bill, authored by my Republican colleague and friend, Representative 
Rob Simmons.
  Mr. ENGLISH. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Simpson). All time for debate on the 
bill has expired.


    Amendment in the Nature of a Substitute Offered by Mr. Neal of 
                             Massachusetts

  Mr. NEAL of Massachusetts. Mr. Speaker, I offer an amendment in the 
nature of a substitute.
  The SPEAKER pro tempore. Is the gentleman a designee of the gentleman 
from New York (Mr. Rangel)?
  Mr. NEAL of Massachusetts. Yes, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will designate the amendment in 
the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. Neal 
     of Massachusetts:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``AMT Reform 
     Act of 2004''.
       (b) Amendment of 1986 Code.--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.--

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Statement of Congressional findings and purposes.

 TITLE I--TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX; FRAMEWORK 
                               FOR REFORM

Sec. 101. Temporary relief from the alternative minimum tax.
Sec. 102. Framework for reform.

                 TITLE II--RESTRICTIONS ON TAX SHELTERS

        Subtitle A--Provisions Designed To Curtail Tax Shelters

Sec. 201. Clarification of economic substance doctrine.
Sec. 202. Penalty for failing to disclose reportable transaction.
Sec. 203. Accuracy-related penalty for listed transactions and other 
              reportable transactions having a significant tax 
              avoidance purpose.
Sec. 204. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.
Sec. 205. Modifications of substantial understatement penalty for 
              nonreportable transactions.
Sec. 206. Tax shelter exception to confidentiality privileges relating 
              to taxpayer communications.
Sec. 207. Disclosure of reportable transactions.
Sec. 208. Modifications to penalty for failure to register tax 
              shelters.
Sec. 209. Modification of penalty for failure to maintain lists of 
              investors.
Sec. 210. Penalty on promoters of tax shelters.
Sec. 211. Increases in penalties for aiding and abetting 
              understatements.

            Subtitle B--Enron-Related Tax Shelter Provisions

Sec. 221. Limitation on transfer or importation of built-in losses.
Sec. 222. No reduction of basis under section 734 in stock held by 
              partnership in corporate partner.
Sec. 223. Expanded disallowance of deduction for interest on 
              convertible debt.
Sec. 224. Expanded authority to disallow tax benefits under section 
              269.
Sec. 225. Modification of interaction between subpart F and passive 
              foreign investment company rules.

     SEC. 2. STATEMENT OF CONGRESSIONAL FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds the following:
       (1) The current alternative minimum tax (hereinafter 
     referred to as the ``AMT'') was enacted in 1986 with the 
     stated purpose of ensuring that individuals with relatively 
     large incomes would pay some minimum amount of Federal income 
     tax, notwithstanding the fact that the individuals could have 
     used otherwise allowable tax preferences to reduce their 
     regular tax to zero.
       (2) The AMT, when enacted, affected a very small percentage 
     of individuals. Approximately 0.1 percent of all individuals 
     were subject to the AMT in 1987.
       (3) During the 1990's virtually all items that have been 
     traditionally considered to be tax preferences were removed 
     from the AMT.
       (4) As a result, virtually all AMT liability now is 
     attributable to 3 items that few people would consider to be 
     tax preferences: the deduction for personal exemptions, the 
     deduction for State and local taxes, and miscellaneous 
     itemized deductions.
       (5) In 1993, adjustments to minimum tax rates were made to 
     correspond to adjustments made in regular income tax rates. 
     The 1993 legislation also increased the amount of the AMT 
     exemption.
       (6) The percentage of individuals subject to the AMT did 
     not increase as a result of the 1993 changes. The percentage 
     in 1992 was 0.3 percent. It was 0.3 percent in 1994.
       (7) The first significant increase in the percentage of 
     individuals paying the AMT occurred by reason of the Taxpayer 
     Relief Act of 1997. Some of the benefits of the capital gains 
     tax reduction provided in the 1997 Act were taken back by the 
     AMT. As a result of the 1997 Act, the percentage of 
     individuals paying the AMT doubled in less than 2 years.
       (8) Even after the impact of the 1997 Act, the number of 
     individuals subject to the AMT was extremely small until the 
     enactment of the tax reductions by the Economic Growth and 
     Tax Relief Reconciliation Act of 2001. Less than 1 percent of 
     individuals were subject to the AMT before 2001.
       (9) The Economic Growth and Tax Relief Reconciliation Act 
     of 2001 contained reductions in the regular income tax rates 
     but not in the minimum tax rates. As a result, the number of 
     individuals subject to the AMT is projected to skyrocket. In 
     the future--
       (A) 92 percent of all households with income between 
     $100,000 and $500,000 will be subject to the minimum tax;
       (B) 73 percent of households with income between $75,000 
     and $100,000 will be subject to the minimum tax; and
       (C) 37 percent of households with income between $50,000 
     and $75,000 will be subject to the minimum tax.-------
       (10) The AMT has a substantial marriage penalty that has 
     never been addressed by recent ``marriage penalty repeal'' 
     legislation. Married couples are 20 times more likely to be 
     on the minimum tax than single individuals.
       (11) More than one-half of the promised tax reductions in 
     the recent marriage penalty bill passed by the House of 
     Representatives will be taken back by the AMT.
       (12) The AMT disproportionately applies to families with 
     children. Ninety-seven percent of families with children and 
     with incomes between $75,000 and $100,000 will be subject to 
     the AMT.
       (13) The current AMT means that many of the tax reductions 
     enacted in 2001 and 2003 are essentially temporary regardless 
     of whether Congress makes them permanent by repealing the 
     sunset contained in the 2001 Act. On average, the AMT will 
     take back--
       (A) 15.3 percent of the benefits of the recent tax cuts 
     from families with incomes between $50,000 and $70,000;

[[Page 8437]]

       (B) 37.2 percent of the benefits from families with incomes 
     between $75,000 and $100,000;
       (C) 65 percent of the benefits from families with incomes 
     between $100,000 and $200,000; and
       (D) 71.8 percent of the benefits from families with incomes 
     between $200,000 and $500,000.
       (14) Only extremely wealthy taxpayers will retain most of 
     the benefits of the recent tax cuts. Taxpayers making more 
     than $1,000,000 will find only 8 percent of their tax 
     reductions taken back by the AMT.
       (15) The Bush Administration's Fiscal Year 2005 Budget 
     recommends that the recent tax reductions be made permanent. 
     Accomplishing that goal requires a total reform of the AMT.
       (b) Purpose.--It is the purpose of this Act to--
       (1) provide significant temporary relief from the 
     alternative minimum tax; and
       (2) to provide a framework for a total reform of the 
     alternative minimum tax.

 TITLE I--TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX; FRAMEWORK 
                               FOR REFORM

     SEC. 101. TEMPORARY RELIEF FROM THE ALTERNATIVE MINIMUM TAX.

       (a) In General.--Section 55 (relating to alternative 
     minimum tax imposed) is amended by adding at the end the 
     following new subsection:
       ``(f) Exemption for Individuals for Taxable Years Beginning 
     in 2005.--For any taxable year beginning in 2005, in the case 
     of an individual--
       ``(1) In general.--The tentative minimum tax of the 
     taxpayer shall be zero if the adjusted gross income of the 
     taxpayer (as determined for purposes of the regular tax) is 
     equal to or less than the threshold amount.
       ``(2) Phasein of liability above exemption level.--In the 
     case of a taxpayer whose adjusted gross income exceeds the 
     threshold amount but does not exceed $145,000 ($290,000 in 
     the case of a joint return), the tax imposed by subsection 
     (a) shall be the amount which bears the same ratio to such 
     tax (determined without regard to this subsection) as--
       ``(A) the excess of--
       ``(i) the adjusted gross income of the taxpayer (as 
     determined for purposes of the regular tax), over
       ``(ii) the threshold amount, bears to
       ``(B) $20,000 ($40,000 in the case of a joint return).
       ``(3) Threshold amount.--For purposes of this paragraph, 
     the term `threshold amount' means $125,000 ($250,000 in the 
     case of a joint return).
       ``(4) Estates and trusts.--This subsection shall not apply 
     to any estate or trust.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 102. FRAMEWORK FOR REFORM.

       (a) Recommendations by the Secretary of the Treasury.--Not 
     later than 30 days after 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 to the 
     Committee on Finance of the Senate detailed legislative 
     recommendations designed to reform the alternative minimum 
     tax. Unless the Secretary determines that it is not feasible, 
     such recommendations shall include changes designed to ensure 
     that the percentage of individuals paying the minimum tax 
     would be reduced to the level in effect before the enactment 
     of the Economic Growth and Tax Relief Reconciliation Act of 
     2001 (which is less than 1 percent). The Secretary shall 
     include with such recommendations estimates of their revenue 
     cost.
       (b) Action by Committee on Ways and Means.--Not later than 
     August 1, 2004, the Committee on Ways and Means of the House 
     of Representatives shall report legislation providing 
     permanent reform of the alternative minimum tax. Such 
     legislation shall be designed so that the percentage of 
     individuals subject to the minimum tax will be restored to 
     the level in effect before the enactment of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 (which is 
     less than 1 percent).

                 TITLE II--RESTRICTIONS ON TAX SHELTERS

        Subtitle A--Provisions Designed To Curtail Tax Shelters

     SEC. 201. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 is amended by redesignating 
     subsection (n) as subsection (o) and by inserting after 
     subsection (m) the following new subsection:
       ``(n) Clarification of Economic Substance Doctrine; Etc.--
       ``(1) General rules.--
       ``(A) In general.--In any case in which a court determines 
     that the economic substance doctrine is relevant for purposes 
     of this title to a transaction (or series of transactions), 
     such transaction (or series of transactions) shall have 
     economic substance only if the requirements of this paragraph 
     are met.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal tax effects) the taxpayer's economic position, 
     and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

     In applying subclause (II), a purpose of achieving a 
     financial accounting benefit shall not be taken into account 
     in determining whether a transaction has a substantial nontax 
     purpose if the origin of such financial accounting benefit is 
     a reduction of income tax.
       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction is substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.
       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying paragraph 
     (1)(B)(ii) to the lessor of tangible property subject to a 
     lease--
       ``(i) the expected net tax benefits with respect to the 
     leased property shall not include the benefits of--

       ``(I) depreciation,
       ``(II) any tax credit, or
       ``(III) any other deduction as provided in guidance by the 
     Secretary, and

       ``(ii) subclause (II) of paragraph (1)(B)(ii) shall be 
     disregarded in determining whether any of such benefits are 
     allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law, and the requirements of 
     this subsection shall be construed as being in addition to 
     any such other rule of law.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection. Such regulations may include 
     exemptions from the application of this subsection.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 202. PENALTY FOR FAILING TO DISCLOSE REPORTABLE 
                   TRANSACTION.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6707 the following new section:

[[Page 8438]]



     ``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE 
                   TRANSACTION INFORMATION WITH RETURN OR 
                   STATEMENT.

       ``(a) Imposition of Penalty.--Any person who fails to 
     include on any return or statement any information with 
     respect to a reportable transaction which is required under 
     section 6011 to be included with such return or statement 
     shall pay a penalty in the amount determined under subsection 
     (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the amount of the penalty under subsection (a) shall be 
     $50,000.
       ``(2) Listed transaction.--The amount of the penalty under 
     subsection (a) with respect to a listed transaction shall be 
     $100,000.
       ``(3) Increase in penalty for large entities and high net 
     worth individuals.--
       ``(A) In general.--In the case of a failure under 
     subsection (a) by--
       ``(i) a large entity, or
       ``(ii) a high net worth individual,
     the penalty under paragraph (1) or (2) shall be twice the 
     amount determined without regard to this paragraph.
       ``(B) Large entity.--For purposes of subparagraph (A), the 
     term `large entity' means, with respect to any taxable year, 
     a person (other than a natural person) with gross receipts in 
     excess of $10,000,000 for the taxable year in which the 
     reportable transaction occurs or the preceding taxable year. 
     Rules similar to the rules of paragraph (2) and subparagraphs 
     (B), (C), and (D) of paragraph (3) of section 448(c) shall 
     apply for purposes of this subparagraph.
       ``(C) High net worth individual.--For purposes of 
     subparagraph (A), the term `high net worth individual' means, 
     with respect to a reportable transaction, a natural person 
     whose net worth exceeds $2,000,000 immediately before the 
     transaction.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Reportable transaction.--The term `reportable 
     transaction' means any transaction with respect to which 
     information is required to be included with a return or 
     statement because, as determined under regulations prescribed 
     under section 6011, such transaction is of a type which the 
     Secretary determines as having a potential for tax avoidance 
     or evasion.
       ``(2) Listed transaction.--Except as provided in 
     regulations, the term `listed transaction' means a reportable 
     transaction which is the same as, or substantially similar 
     to, a transaction specifically identified by the Secretary as 
     a tax avoidance transaction for purposes of section 6011.
       ``(d) Authority To Rescind Penalty.--
       ``(1) In general.--The Commissioner of Internal Revenue may 
     rescind all or any portion of any penalty imposed by this 
     section with respect to any violation if--
       ``(A) the violation is with respect to a reportable 
     transaction other than a listed transaction,
       ``(B) the person on whom the penalty is imposed has a 
     history of complying with the requirements of this title,
       ``(C) it is shown that the violation is due to an 
     unintentional mistake of fact;
       ``(D) imposing the penalty would be against equity and good 
     conscience, and
       ``(E) rescinding the penalty would promote compliance with 
     the requirements of this title and effective tax 
     administration.
       ``(2) Discretion.--The exercise of authority under 
     paragraph (1) shall be at the sole discretion of the 
     Commissioner and may be delegated only to the head of the 
     Office of Tax Shelter Analysis. The Commissioner, in the 
     Commissioner's sole discretion, may establish a procedure to 
     determine if a penalty should be referred to the Commissioner 
     or the head of such Office for a determination under 
     paragraph (1).
       ``(3) No appeal.--Notwithstanding any other provision of 
     law, any determination under this subsection may not be 
     reviewed in any administrative or judicial proceeding.
       ``(4) Records.--If a penalty is rescinded under paragraph 
     (1), the Commissioner shall place in the file in the Office 
     of the Commissioner the opinion of the Commissioner or the 
     head of the Office of Tax Shelter Analysis with respect to 
     the determination, including--
       ``(A) the facts and circumstances of the transaction,
       ``(B) the reasons for the rescission, and
       ``(C) the amount of the penalty rescinded.
       ``(5) Report.--The Commissioner shall each year report to 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate--
       ``(A) a summary of the total number and aggregate amount of 
     penalties imposed, and rescinded, under this section, and
       ``(B) a description of each penalty rescinded under this 
     subsection and the reasons therefor.
       ``(e) Penalty Reported to SEC.--In the case of a person--
       ``(1) which is required to file periodic reports under 
     section 13 or 15(d) of the Securities Exchange Act of 1934 or 
     is required to be consolidated with another person for 
     purposes of such reports, and
       ``(2) which--
       ``(A) is required to pay a penalty under this section with 
     respect to a listed transaction,
       ``(B) is required to pay a penalty under section 6662A with 
     respect to any reportable transaction at a rate prescribed 
     under section 6662A(c), or
       ``(C) is required to pay a penalty under section 6662B with 
     respect to any noneconomic substance transaction,
     the requirement to pay such penalty shall be disclosed in 
     such reports filed by such person for such periods as the 
     Secretary shall specify. Failure to make a disclosure in 
     accordance with the preceding sentence shall be treated as a 
     failure to which the penalty under subsection (b)(2) applies.
       ``(f) Coordination With Other Penalties.--The penalty 
     imposed by this section is in addition to any penalty imposed 
     under this title.''.
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by inserting after 
     the item relating to section 6707 the following:

``Sec. 6707A. Penalty for failure to include reportable transaction 
              information with return or statement.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns and statements the due date for which 
     is after the date of the enactment of this Act.

     SEC. 203. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS 
                   AND OTHER REPORTABLE TRANSACTIONS HAVING A 
                   SIGNIFICANT TAX AVOIDANCE PURPOSE.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662 the following new section:

     ``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON 
                   UNDERSTATEMENTS WITH RESPECT TO REPORTABLE 
                   TRANSACTIONS.

       ``(a) Imposition of Penalty.--If a taxpayer has a 
     reportable transaction understatement for any taxable year, 
     there shall be added to the tax an amount equal to 20 percent 
     of the amount of such understatement.
       ``(b) Reportable Transaction Understatement.--For purposes 
     of this section--
       ``(1) In general.--The term `reportable transaction 
     understatement' means the sum of--
       ``(A) the product of--
       ``(i) the amount of the increase (if any) in taxable income 
     which results from a difference between the proper tax 
     treatment of an item to which this section applies and the 
     taxpayer's treatment of such item (as shown on the taxpayer's 
     return of tax), and
       ``(ii) the highest rate of tax imposed by section 1 
     (section 11 in the case of a taxpayer which is a 
     corporation), and
       ``(B) the amount of the decrease (if any) in the aggregate 
     amount of credits determined under subtitle A which results 
     from a difference between the taxpayer's treatment of an item 
     to which this section applies (as shown on the taxpayer's 
     return of tax) and the proper tax treatment of such item.
     For purposes of subparagraph (A), any reduction of the excess 
     of deductions allowed for the taxable year over gross income 
     for such year, and any reduction in the amount of capital 
     losses which would (without regard to section 1211) be 
     allowed for such year, shall be treated as an increase in 
     taxable income.
       ``(2) Items to which section applies.--This section shall 
     apply to any item which is attributable to--
       ``(A) any listed transaction, and
       ``(B) any reportable transaction (other than a listed 
     transaction) if a significant purpose of such transaction is 
     the avoidance or evasion of Federal income tax.
       ``(c) Higher Penalty for Nondisclosed Listed and Other 
     Avoidance Transactions.--
       ``(1) In general.--Subsection (a) shall be applied by 
     substituting `30 percent' for `20 percent' with respect to 
     the portion of any reportable transaction understatement with 
     respect to which the requirement of section 6664(d)(2)(A) is 
     not met.
       ``(2) Rules applicable to assertion and compromise of 
     penalty.--
       ``(A) In general.--Only upon the approval by the Chief 
     Counsel for the Internal Revenue Service or the Chief 
     Counsel's delegate at the national office of the Internal 
     Revenue Service may a penalty to which paragraph (1) applies 
     be included in a 1st letter of proposed deficiency which 
     allows the taxpayer an opportunity for administrative review 
     in the Internal Revenue Service Office of Appeals. If such a 
     letter is provided to the taxpayer, only the Commissioner of 
     Internal Revenue may compromise all or any portion of such 
     penalty.
       ``(B) Applicable rules.--The rules of paragraphs (2), (3), 
     (4), and (5) of section 6707A(d) shall apply for purposes of 
     subparagraph (A).
       ``(d) Definitions of Reportable and Listed Transactions.--
     For purposes of this section, the terms `reportable 
     transaction' and `listed transaction' have the respective 
     meanings given to such terms by section 6707A(c).
       ``(e) Special Rules.--
       ``(1) Coordination with penalties, etc., on other 
     understatements.--In the case of an understatement (as 
     defined in section 6662(d)(2))--
       ``(A) the amount of such understatement (determined without 
     regard to this paragraph) shall be increased by the aggregate 
     amount of reportable transaction understatements and 
     noneconomic substance

[[Page 8439]]

     transaction understatements for purposes of determining 
     whether such understatement is a substantial understatement 
     under section 6662(d)(1), and
       ``(B) the addition to tax under section 6662(a) shall apply 
     only to the excess of the amount of the substantial 
     understatement (if any) after the application of subparagraph 
     (A) over the aggregate amount of reportable transaction 
     understatements and noneconomic substance transaction 
     understatements.
       ``(2) Coordination with other penalties.--
       ``(A) Application of fraud penalty.--References to an 
     underpayment in section 6663 shall be treated as including 
     references to a reportable transaction understatement and a 
     noneconomic substance transaction understatement.
       ``(B) No double penalty.--This section shall not apply to 
     any portion of an understatement on which a penalty is 
     imposed under section 6662B or 6663.
       ``(3) Special rule for amended returns.--Except as provided 
     in regulations, in no event shall any tax treatment included 
     with an amendment or supplement to a return of tax be taken 
     into account in determining the amount of any reportable 
     transaction understatement or noneconomic substance 
     transaction understatement if the amendment or supplement is 
     filed after the earlier of the date the taxpayer is first 
     contacted by the Secretary regarding the examination of the 
     return or such other date as is specified by the Secretary.
       ``(4) Noneconomic substance transaction understatement.--
     For purposes of this subsection, the term `noneconomic 
     substance transaction understatement' has the meaning given 
     such term by section 6662B(c).
       ``(5) Cross reference.--

  ``For reporting of section 6662A(c) penalty to the Securities and 
Exchange Commission, see section 6707A(e).''.
       (b) Determination of Other Understatements.--Subparagraph 
     (A) of section 6662(d)(2) is amended by adding at the end the 
     following flush sentence:
     ``The excess under the preceding sentence shall be determined 
     without regard to items to which section 6662A applies and 
     without regard to items with respect to which a penalty is 
     imposed by section 6662B.''.
       (c) Reasonable Cause Exception.--
       (1) In general.--Section 6664 is amended by adding at the 
     end the following new subsection:
       ``(d) Reasonable Cause Exception for Reportable Transaction 
     Understatements.--
       ``(1) In general.--No penalty shall be imposed under 
     section 6662A with respect to any portion of a reportable 
     transaction understatement if it is shown that there was a 
     reasonable cause for such portion and that the taxpayer acted 
     in good faith with respect to such portion.
       ``(2) Special rules.--Paragraph (1) shall not apply to any 
     reportable transaction understatement unless--
       ``(A) the relevant facts affecting the tax treatment of the 
     item are adequately disclosed in accordance with the 
     regulations prescribed under section 6011,
       ``(B) there is or was substantial authority for such 
     treatment, and
       ``(C) the taxpayer reasonably believed that such treatment 
     was more likely than not the proper treatment.
     A taxpayer failing to adequately disclose in accordance with 
     section 6011 shall be treated as meeting the requirements of 
     subparagraph (A) if the penalty for such failure was 
     rescinded under section 6707A(d).
       ``(3) Rules relating to reasonable belief.--For purposes of 
     paragraph (2)(C)--
       ``(A) In general.--A taxpayer shall be treated as having a 
     reasonable belief with respect to the tax treatment of an 
     item only if such belief--
       ``(i) is based on the facts and law that exist at the time 
     the return of tax which includes such tax treatment is filed, 
     and
       ``(ii) relates solely to the taxpayer's chances of success 
     on the merits of such treatment and does not take into 
     account the possibility that a return will not be audited, 
     such treatment will not be raised on audit, or such treatment 
     will be resolved through settlement if it is raised.
       ``(B) Certain opinions may not be relied upon.--
       ``(i) In general.--An opinion of a tax advisor may not be 
     relied upon to establish the reasonable belief of a taxpayer 
     if--

       ``(I) the tax advisor is described in clause (ii), or
       ``(II) the opinion is described in clause (iii).

       ``(ii) Disqualified tax advisors.--A tax advisor is 
     described in this clause if the tax advisor--

       ``(I) is a material advisor (within the meaning of section 
     6111(b)(1)) who participates in the organization, management, 
     promotion, or sale of the transaction or who is related 
     (within the meaning of section 267(b) or 707(b)(1)) to any 
     person who so participates,
       ``(II) is compensated directly or indirectly by a material 
     advisor with respect to the transaction,
       ``(III) has a fee arrangement with respect to the 
     transaction which is contingent on all or part of the 
     intended tax benefits from the transaction being sustained,
       ``(IV) has an arrangement with respect to the transaction 
     which provides that contractual disputes between the taxpayer 
     and the advisor are to be settled by arbitration or which 
     limits damages by reference to fees paid to the advisor for 
     such transaction, or
       ``(V) as determined under regulations prescribed by the 
     Secretary, has a disqualifying financial interest with 
     respect to the transaction.

       ``(iii) Disqualified opinions.--For purposes of clause (i), 
     an opinion is disqualified if the opinion--

       ``(I) is based on unreasonable factual or legal assumptions 
     (including assumptions as to future events),
       ``(II) unreasonably relies on representations, statements, 
     findings, or agreements of the taxpayer or any other person,
       ``(III) does not identify and consider all relevant facts,
       ``(IV) is not signed by all individuals who are principal 
     authors of the opinion, or
       ``(V) fails to meet any other requirement as the Secretary 
     may prescribe.''.

       (2) Conforming amendment.--The heading for subsection (c) 
     of section 6664 is amended by inserting ``for Underpayments'' 
     after ``Exception''.
       (d) Conforming Amendments.--
       (1) Subparagraph (C) of section 461(i)(3) is amended by 
     striking ``section 6662(d)(2)(C)(iii)'' and inserting 
     ``section 1274(b)(3)(C)''.
       (2) Paragraph (3) of section 1274(b) is amended--
       (A) by striking ``(as defined in section 
     6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
       (B) by adding at the end the following new subparagraph:
       ``(C) Tax shelter.--For purposes of subparagraph (B), the 
     term `tax shelter' means--
       ``(i) a partnership or other entity,
       ``(ii) any investment plan or arrangement, or
       ``(iii) any other plan or arrangement,
     if a significant purpose of such partnership, entity, plan, 
     or arrangement is the avoidance or evasion of Federal income 
     tax.''.
       (3) Section 6662(d)(2) is amended by striking subparagraphs 
     (C) and (D).
       (4) Section 6664(c)(1) is amended by striking ``this part'' 
     and inserting ``section 6662 or 6663''.
       (5) Subsection (b) of section 7525 is amended by striking 
     ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
     1274(b)(3)(C)''.
       (6)(A) The heading for section 6662 is amended to read as 
     follows:

     ``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON 
                   UNDERPAYMENTS.''.

       (B) The table of sections for part II of subchapter A of 
     chapter 68 is amended by striking the item relating to 
     section 6662 and inserting the following new items:

``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements 
              with respect to reportable transactions.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 204. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662A the following new section:

     ``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       ``(a) Imposition of Penalty.--If a taxpayer has an 
     noneconomic substance transaction understatement for any 
     taxable year, there shall be added to the tax an amount equal 
     to 40 percent of the amount of such understatement.
       ``(b) Reduction of Penalty for Disclosed Transactions.--
     Subsection (a) shall be applied by substituting `20 percent' 
     for `40 percent' with respect to the portion of any 
     noneconomic substance transaction understatement with respect 
     to which the relevant facts affecting the tax treatment of 
     the item are adequately disclosed in the return or a 
     statement attached to the return.
       ``(c) Noneconomic Substance Transaction Understatement.--
     For purposes of this section--
       ``(1) In general.--The term `noneconomic substance 
     transaction understatement' means any amount which would be 
     an understatement under section 6662A(b)(1) if section 6662A 
     were applied by taking into account items attributable to 
     noneconomic substance transactions rather than items to which 
     section 6662A would apply without regard to this paragraph.
       ``(2) Noneconomic substance transaction.--The term 
     `noneconomic substance transaction' means any transaction 
     if--
       ``(A) there is a lack of economic substance (within the 
     meaning of section 7701(n)(1)) for the transaction giving 
     rise to the claimed benefit or the transaction was not 
     respected under section 7701(n)(2), or
       ``(B) the transaction fails to meet the requirements of any 
     similar rule of law.
       ``(d) Rules Applicable To Compromise of Penalty.--
       ``(1) In general.--If the 1st letter of proposed deficiency 
     which allows the taxpayer an opportunity for administrative 
     review in the Internal Revenue Service Office of Appeals has 
     been sent with respect to a penalty

[[Page 8440]]

     to which this section applies, only the Commissioner of 
     Internal Revenue may compromise all or any portion of such 
     penalty.
       ``(2) Applicable rules.--The rules of paragraphs (2), (3), 
     (4), and (5) of section 6707A(d) shall apply for purposes of 
     paragraph (1).
       ``(e) Coordination With Other Penalties.--Except as 
     otherwise provided in this part, the penalty imposed by this 
     section shall be in addition to any other penalty imposed by 
     this title.
       ``(f) Cross References.--

  ``(1) For coordination of penalty with understatements under section 
6662 and other special rules, see section 6662A(e).
  ``(2) For reporting of penalty imposed under this section to the 
Securities and Exchange Commission, see section 6707A(e).''.
       (b) Clerical Amendment.--The table of sections for part II 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6662A the following new item:

``Sec. 6662B. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 205. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY 
                   FOR NONREPORTABLE TRANSACTIONS.

       (a) Substantial Understatement of Corporations.--Section 
     6662(d)(1)(B) (relating to special rule for corporations) is 
     amended to read as follows:
       ``(B) Special rule for corporations.--In the case of a 
     corporation other than an S corporation or a personal holding 
     company (as defined in section 542), there is a substantial 
     understatement of income tax for any taxable year if the 
     amount of the understatement for the taxable year exceeds the 
     lesser of--
       ``(i) 10 percent of the tax required to be shown on the 
     return for the taxable year (or, if greater, $10,000), or
       ``(ii) $10,000,000.''.
       (b) Reduction for Understatement of Taxpayer Due to 
     Position of Taxpayer or Disclosed Item.--
       (1) In general.--Section 6662(d)(2)(B)(i) (relating to 
     substantial authority) is amended to read as follows:
       ``(i) the tax treatment of any item by the taxpayer if the 
     taxpayer had reasonable belief that the tax treatment was 
     more likely than not the proper treatment, or''.
       (2) Conforming amendment.--Section 6662(d) is amended by 
     adding at the end the following new paragraph:
       ``(3) Secretarial list.--For purposes of this subsection, 
     section 6664(d)(2), and section 6694(a)(1), the Secretary may 
     prescribe a list of positions for which the Secretary 
     believes there is not substantial authority or there is no 
     reasonable belief that the tax treatment is more likely than 
     not the proper tax treatment. Such list (and any revisions 
     thereof) shall be published in the Federal Register or the 
     Internal Revenue Bulletin.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 206. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES 
                   RELATING TO TAXPAYER COMMUNICATIONS.

       (a) In General.--Section 7525(b) (relating to section not 
     to apply to communications regarding corporate tax shelters) 
     is amended to read as follows:
       ``(b) Section Not To Apply to Communications Regarding Tax 
     Shelters.--The privilege under subsection (a) shall not apply 
     to any written communication which is--
       ``(1) between a federally authorized tax practitioner and--
       ``(A) any person,
       ``(B) any director, officer, employee, agent, or 
     representative of the person, or
       ``(C) any other person holding a capital or profits 
     interest in the person, and
       ``(2) in connection with the promotion of the direct or 
     indirect participation of the person in any tax shelter (as 
     defined in section 1274(b)(3)(C)).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to communications made on or after the date of 
     the enactment of this Act.

     SEC. 207. DISCLOSURE OF REPORTABLE TRANSACTIONS.

       (a) In General.--Section 6111 (relating to registration of 
     tax shelters) is amended to read as follows:

     ``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.

       ``(a) In General.--Each material advisor with respect to 
     any reportable transaction shall make a return (in such form 
     as the Secretary may prescribe) setting forth--
       ``(1) information identifying and describing the 
     transaction,
       ``(2) information describing any potential tax benefits 
     expected to result from the transaction, and
       ``(3) such other information as the Secretary may 
     prescribe.
     Such return shall be filed not later than the date specified 
     by the Secretary.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Material advisor.--
       ``(A) In general.--The term `material advisor' means any 
     person--
       ``(i) who provides any material aid, assistance, or advice 
     with respect to organizing, managing, promoting, selling, 
     implementing, or carrying out any reportable transaction, and
       ``(ii) who directly or indirectly derives gross income in 
     excess of the threshold amount for such aid, assistance, or 
     advice.
       ``(B) Threshold amount.--For purposes of subparagraph (A), 
     the threshold amount is--
       ``(i) $50,000 in the case of a reportable transaction 
     substantially all of the tax benefits from which are provided 
     to natural persons, and
       ``(ii) $250,000 in any other case.
       ``(2) Reportable transaction.--The term `reportable 
     transaction' has the meaning given to such term by section 
     6707A(c).
       ``(c) Regulations.--The Secretary may prescribe regulations 
     which provide--
       ``(1) that only 1 person shall be required to meet the 
     requirements of subsection (a) in cases in which 2 or more 
     persons would otherwise be required to meet such 
     requirements,
       ``(2) exemptions from the requirements of this section, and
       ``(3) such rules as may be necessary or appropriate to 
     carry out the purposes of this section.''.
       (b) Conforming Amendments.--
       (1) The item relating to section 6111 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6111. Disclosure of reportable transactions.''.
       (2)(A) So much of section 6112 as precedes subsection (c) 
     thereof is amended to read as follows:

     ``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS 
                   MUST KEEP LISTS OF ADVISEES.

       ``(a) In General.--Each material advisor (as defined in 
     section 6111) with respect to any reportable transaction (as 
     defined in section 6707A(c)) shall maintain, in such manner 
     as the Secretary may by regulations prescribe, a list--
       ``(1) identifying each person with respect to whom such 
     advisor acted as such a material advisor with respect to such 
     transaction, and
       ``(2) containing such other information as the Secretary 
     may by regulations require.
     This section shall apply without regard to whether a material 
     advisor is required to file a return under section 6111 with 
     respect to such transaction.''.
       (B) Section 6112 is amended by redesignating subsection (c) 
     as subsection (b).
       (C) Section 6112(b), as redesignated by subparagraph (B), 
     is amended--
       (i) by inserting ``written'' before ``request'' in 
     paragraph (1)(A), and
       (ii) by striking ``shall prescribe'' in paragraph (2) and 
     inserting ``may prescribe''.
       (D) The item relating to section 6112 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6112. Material advisors of reportable transactions must keep 
              lists of advisees.''.
       (3)(A) The heading for section 6708 is amended to read as 
     follows:

     ``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH 
                   RESPECT TO REPORTABLE TRANSACTIONS.''.

       (B) The item relating to section 6708 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     to read as follows:

``Sec. 6708. Failure to maintain lists of advisees with respect to 
              reportable transactions.''.
       (c) Required Disclosure Not Subject to Claim of 
     Confidentiality.--Subparagraph (A) of section 6112(b)(1), as 
     redesignated by subsection (b)(2)(B), is amended by adding at 
     the end the following new flush sentence:
     ``For purposes of this section, the identity of any person on 
     such list shall not be privileged.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transactions with respect to which material 
     aid, assistance, or advice referred to in section 
     6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as 
     added by this section) is provided after the date of the 
     enactment of this Act.

     SEC. 208. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER 
                   TAX SHELTERS.

       (a) In General.--Section 6707 (relating to failure to 
     furnish information regarding tax shelters) is amended to 
     read as follows:

     ``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING 
                   REPORTABLE TRANSACTIONS.

       ``(a) In General.--If a person who is required to file a 
     return under section 6111(a) with respect to any reportable 
     transaction--
       ``(1) fails to file such return on or before the date 
     prescribed therefor, or
       ``(2) files false or incomplete information with the 
     Secretary with respect to such transaction,
     such person shall pay a penalty with respect to such return 
     in the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     penalty imposed under subsection (a) with respect to any 
     failure shall be $50,000.
       ``(2) Listed transactions.--The penalty imposed under 
     subsection (a) with respect to

[[Page 8441]]

     any listed transaction shall be an amount equal to the 
     greater of--
       ``(A) $200,000, or
       ``(B) 50 percent of the gross income derived by such person 
     with respect to aid, assistance, or advice which is provided 
     with respect to the listed transaction before the date the 
     return including the transaction is filed under section 6111.
     Subparagraph (B) shall be applied by substituting `75 
     percent' for `50 percent' in the case of an intentional 
     failure or act described in subsection (a).
       ``(c) Certain Rules To Apply.--The provisions of section 
     6707A(d) shall apply to any penalty imposed under this 
     section.
       ``(d) Reportable and Listed Transactions.--The terms 
     `reportable transaction' and `listed transaction' have the 
     respective meanings given to such terms by section 
     6707A(c).''.
       (b) Clerical Amendment.--The item relating to section 6707 
     in the table of sections for part I of subchapter B of 
     chapter 68 is amended by striking ``tax shelters'' and 
     inserting ``reportable transactions''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns the due date for which is after the 
     date of the enactment of this Act.

     SEC. 209. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN 
                   LISTS OF INVESTORS.

       (a) In General.--Subsection (a) of section 6708 is amended 
     to read as follows:
       ``(a) Imposition of Penalty.--
       ``(1) In general.--If any person who is required to 
     maintain a list under section 6112(a) fails to make such list 
     available upon written request to the Secretary in accordance 
     with section 6112(b)(1)(A) within 20 business days after the 
     date of the Secretary's request, such person shall pay a 
     penalty of $10,000 for each day of such failure after such 
     20th day.
       ``(2) Reasonable cause exception.--No penalty shall be 
     imposed by paragraph (1) with respect to the failure on any 
     day if such failure is due to reasonable cause.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to requests made after the date of the enactment 
     of this Act.

     SEC. 210. PENALTY ON PROMOTERS OF TAX SHELTERS.

       (a) Penalty on Promoting Abusive Tax Shelters.--Section 
     6700(a) is amended by adding at the end the following new 
     sentence: ``Notwithstanding the first sentence, if an 
     activity with respect to which a penalty imposed under this 
     subsection involves a statement described in paragraph 
     (2)(A), the amount of the penalty shall be equal to 50 
     percent of the gross income derived (or to be derived) from 
     such activity by the person on which the penalty is 
     imposed.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

     SEC. 211. INCREASES IN PENALTIES FOR AIDING AND ABETTING 
                   UNDERSTATEMENTS.

       (a) In General.--Section 6701(b) is amended to read as 
     follows:
       ``(b) Amount of Penalty.--
       ``(1) In general.--The amount of the penalty imposed by 
     subsection (a) shall be the greater of--
       ``(A) $2,000, or
       ``(B) 50 percent of the gross income derived (or to be 
     derived) from the activity giving rise to the penalty.
       ``(2) Corporations.--If the return, affidavit, claim, or 
     other document relates to the tax liability of a corporation, 
     paragraph (1)(A) shall be applied by substituting `$20,000' 
     for `$2,000'.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

            Subtitle B--Enron-Related Tax Shelter Provisions

     SEC. 221. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT-IN 
                   LOSSES.

       (a) In General.--Section 362 (relating to basis to 
     corporations) is amended by adding at the end the following 
     new subsection:
       ``(e) Limitations on Built-In Losses.--
       ``(1) Limitation on importation of built-in losses.--
       ``(A) In general.--If in any transaction described in 
     subsection (a) or (b) there would (but for this subsection) 
     be an importation of a net built-in loss, the basis of each 
     property described in subparagraph (B) which is acquired in 
     such transaction shall (notwithstanding subsections (a) and 
     (b)) be its fair market value immediately after such 
     transaction.
       ``(B) Property described.--For purposes of subparagraph 
     (A), property is described in this subparagraph if--
       ``(i) gain or loss with respect to such property is not 
     subject to tax under this subtitle in the hands of the 
     transferor immediately before the transfer, and
       ``(ii) gain or loss with respect to such property is 
     subject to such tax in the hands of the transferee 
     immediately after such transfer.
     In any case in which the transferor is a partnership, the 
     preceding sentence shall be applied by treating each partner 
     in such partnership as holding such partner's proportionate 
     share of the property of such partnership.
       ``(C) Importation of net built-in loss.--For purposes of 
     subparagraph (A), there is an importation of a net built-in 
     loss in a transaction if the transferee's aggregate adjusted 
     bases of property described in subparagraph (B) which is 
     transferred in such transaction would (but for this 
     paragraph) exceed the fair market value of such property 
     immediately after such transaction.
       ``(2) Limitation on transfer of built-in losses in section 
     351 transactions.--
       ``(A) In general.--If--
       ``(i) property is transferred by a transferor in any 
     transaction which is described in subsection (a) and which is 
     not described in paragraph (1) of this subsection, and
       ``(ii) the transferee's aggregate adjusted bases of such 
     property so transferred would (but for this paragraph) exceed 
     the fair market value of such property immediately after such 
     transaction,
     then, notwithstanding subsection (a), the transferee's 
     aggregate adjusted bases of the property so transferred shall 
     not exceed the fair market value of such property immediately 
     after such transaction.
       ``(B) Allocation of basis reduction.--The aggregate 
     reduction in basis by reason of subparagraph (A) shall be 
     allocated among the property so transferred in proportion to 
     their respective built-in losses immediately before the 
     transaction.
       ``(C) Exception for transfers within affiliated group.--
     Subparagraph (A) shall not apply to any transaction if the 
     transferor owns stock in the transferee meeting the 
     requirements of section 1504(a)(2). In the case of property 
     to which subparagraph (A) does not apply by reason of the 
     preceding sentence, the transferor's basis in the stock 
     received for such property shall not exceed its fair market 
     value immediately after the transfer.''.
       (b) Comparable Treatment Where Liquidation.--Paragraph (1) 
     of section 334(b) (relating to liquidation of subsidiary) is 
     amended to read as follows:
       ``(1) In general.--If property is received by a corporate 
     distributee in a distribution in a complete liquidation to 
     which section 332 applies (or in a transfer described in 
     section 337(b)(1)), the basis of such property in the hands 
     of such distributee shall be the same as it would be in the 
     hands of the transferor; except that the basis of such 
     property in the hands of such distributee shall be the fair 
     market value of the property at the time of the 
     distribution--
       ``(A) in any case in which gain or loss is recognized by 
     the liquidating corporation with respect to such property, or
       ``(B) in any case in which the liquidating corporation is a 
     foreign corporation, the corporate distributee is a domestic 
     corporation, and the corporate distributee's aggregate 
     adjusted bases of property described in section 362(e)(1)(B) 
     which is distributed in such liquidation would (but for this 
     subparagraph) exceed the fair market value of such property 
     immediately after such liquidation.''.
       (c) Effective Dates.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to transactions after the date of the enactment of this 
     Act.
       (2) Liquidations.--The amendment made by subsection (b) 
     shall apply to liquidations after the date of the enactment 
     of this Act.

     SEC. 222. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK 
                   HELD BY PARTNERSHIP IN CORPORATE PARTNER.

       (a) In General.--Section 755 is amended by adding at the 
     end the following new subsection:
       ``(c) No Allocation of Basis Decrease to Stock of Corporate 
     Partner.--In making an allocation under subsection (a) of any 
     decrease in the adjusted basis of partnership property under 
     section 734(b)--
       ``(1) no allocation may be made to stock in a corporation 
     (or any person which is related (within the meaning of 
     section 267(b) or 707(b)(1)) to such corporation) which is a 
     partner in the partnership, and
       ``(2) any amount not allocable to stock by reason of 
     paragraph (1) shall be allocated under subsection (a) to 
     other partnership property in such manner as the Secretary 
     may prescribe.
     Gain shall be recognized to the partnership to the extent 
     that the amount required to be allocated under paragraph (2) 
     to other partnership property exceeds the aggregate adjusted 
     basis of such other property immediately before the 
     allocation required by paragraph (2).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     SEC. 223. EXPANDED DISALLOWANCE OF DEDUCTION FOR INTEREST ON 
                   CONVERTIBLE DEBT.

       (a) In General.--Paragraph (2) of section 163(l) is amended 
     by inserting ``or equity held by the issuer (or any related 
     party) in any other person'' after ``or a related party''.
       (b) Capitalization Allowed With Respect to Equity of 
     Persons Other Than Issuer and Related Parties.--Section 
     163(l) is amended by redesignating paragraphs (4) and (5) as 
     paragraphs (5) and (6) and by inserting after paragraph (3) 
     the following new paragraph:
       ``(4) Capitalization allowed with respect to equity of 
     persons other than issuer and related parties.--If the 
     disqualified debt instrument of a corporation is payable

[[Page 8442]]

     in equity held by the issuer (or any related party) in any 
     other person (other than a related party), the basis of such 
     equity shall be increased by the amount not allowed as a 
     deduction by reason of paragraph (1) with respect to the 
     instrument.''.
       (c) Exception for Certain Instruments Issued by Dealers in 
     Securities.--Section 163(l), as amended by subsection (b), is 
     amended by redesignating paragraphs (5) and (6) as paragraphs 
     (6) and (7) and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) Exception for certain instruments issued by dealers 
     in securities.--For purposes of this subsection, the term 
     `disqualified debt instrument' does not include indebtedness 
     issued by a dealer in securities (or a related party) which 
     is payable in, or by reference to, equity (other than equity 
     of the issuer or a related party) held by such dealer in its 
     capacity as a dealer in securities. For purposes of this 
     paragraph, the term `dealer in securities' has the meaning 
     given such term by section 475.''.
       (c) Conforming Amendments.--Paragraph (3) of section 163(l) 
     is amended--
       (1) by striking ``or a related party'' in the material 
     preceding subparagraph (A) and inserting ``or any other 
     person'', and
       (2) by striking ``or interest'' each place it appears.
       (d) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued after the date of the 
     enactment of this Act.

     SEC. 224. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER 
                   SECTION 269.

       (a) In General.--Subsection (a) of section 269 (relating to 
     acquisitions made to evade or avoid income tax) is amended to 
     read as follows:
       ``(a) In General.--If--
       ``(1)(A) any person or persons acquire, directly or 
     indirectly, control of a corporation, or
       ``(B) any corporation acquires, directly or indirectly, 
     property of another corporation and the basis of such 
     property, in the hands of the acquiring corporation, is 
     determined by reference to the basis in the hands of the 
     transferor corporation, and
       ``(2) the principal purpose for which such acquisition was 
     made is evasion or avoidance of Federal income tax,

     then the Secretary may disallow such deduction, credit, or 
     other allowance. For purposes of paragraph (1)(A), control 
     means the ownership of stock possessing at least 50 percent 
     of the total combined voting power of all classes of stock 
     entitled to vote or at least 50 percent of the total value of 
     all shares of all classes of stock of the corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to stock and property acquired after the date of 
     the enactment of this Act.

     SEC. 225. MODIFICATION OF INTERACTION BETWEEN SUBPART F AND 
                   PASSIVE FOREIGN INVESTMENT COMPANY RULES.

       (a) Limitation on Exception From PFIC Rules for United 
     States Shareholders of Controlled Foreign Corporations.--
     Paragraph (2) of section 1297(e) (relating to passive foreign 
     investment company) is amended by adding at the end the 
     following flush sentence:
     ``Such term shall not include any period if the earning of 
     subpart F income by such corporation during such period would 
     result in only a remote likelihood of an inclusion in gross 
     income under section 951(a)(1)(A)(i).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of controlled foreign 
     corporations beginning after the date of the enactment of 
     this Act, and to taxable years of United States shareholders 
     with or within which such taxable years of controlled foreign 
     corporations end.

       Amend the title so as to read: ``A bill to provide for 
     significant temporary relief from the alternative minimum tax 
     and for a framework for a total reform of the alternative 
     minimum tax.''.

  The SPEAKER pro tempore. Pursuant to House Resolution 619, the 
gentleman from Massachusetts (Mr. Neal) and a Member opposed each will 
control 30 minutes.
  The Chair recognizes the gentleman from Massachusetts (Mr. Neal).
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, the gentleman from Pennsylvania (Mr. English) is a good 
friend of mine. He is a member of the Committee on Ways and Means, and 
he really is a very decent guy, but he is really wrong in what he said 
earlier. To suggest that these tax cuts and this mania that we have 
witnessed now for tax cuts for the last 3 years has not had a 
substantial impact on the size of Federal deficit is to really put our 
heads in the sand. Let me remind Members of this House we are now 
fighting two wars with three tax cuts, and the mathematics are there 
for everybody to see.
  An announcement this morning by Secretary Rumsfeld that 135,000 
troops now are going to stay in Iraq for an extended tour of duty, well 
into the year 2005, and let us be honest with the American people, they 
are there for 2006 and 2007 and maybe through 2010. That is the reality 
that we confront. We are going to a $500 billion deficit this year 
after coming out of the Clinton years when we not only balanced the 
budget but projected surpluses for years to come.
  I want to remind ``all is well'' that this proposal from the 
gentleman from Connecticut today has never even been vetted in the 
Committee on Ways and Means. Maybe I am mistaken, but I believe after 
having served in that committee for 12 years that the Committee on Ways 
and Means has a responsibility for tax revenue issues. So this is being 
brought to us by an individual who is not on the committee and indeed 
it has not been aired in the committee. There has been no public 
hearing on the proposal that we are going to vote on in an hour. So we 
find ourselves having this debate about alternative minimum tax.
  And I want to say something. I think my hands are clean on this 
issue. I have heard them say that the Democrats put this in place in 
the reform of the Tax Act of 1986. That may well be the case, but let 
me tell the Members something. I am in favor of repealing it. I think 
there ought to be some intellectual honesty as it relates to AMT. It 
has outlived its usefulness. It has outlived its purpose, and now 
middle-income taxpayers are now being asked to carry its burden.
  We have a game of kind of hocus-pocus here. The Republicans stand up 
and say, well, we are going to give AMT relief. They are not giving AMT 
to the number of people they could and should be giving AMT relief to, 
largely because it does not square with the tax cuts that the 
administration has proposed, and once again Republicans in this House 
go along with very few questions asked about any issue. The 
administration says it is so, they just go along with it, no questions 
asked, even if the evidence a few weeks, months, years later turns a 
contrary conclusion.
  Let me speak specifically, if I can, to this issue as it relates to 
this debate today. The alternative minimum tax was originally designed 
to make sure that everyone paid their fair share. Who among us can 
argue with that? The second notion of the proposal that we have offered 
today is that we want to grant some relief to the burden that the 
Republican Party has put on middle-income tax earners. If they, in 
fact, take advantage of certain credits in the Tax Code and they have a 
lot of children, they are penalized by their proposal. Do the Members 
know why? It is very simple, because the philosophy of the majority in 
of this body is that the only people in America that ought to have tax 
relief are the wealthy.
  And to the credit of the wealthy 3 years ago, they were not even 
asking for tax relief. They wanted to pay down the debt, and public 
opinion polling concludes, once again, they still think that paying 
down the deficits are a far better use of taxpayer money than giving 
tax relief to even those who might benefit most from it.
  They promised that they were going to do something about tax reform 
as it relates to AMT. But what they did not tell them was that they are 
going to give them tax relief on one hand and then if they sit down to 
do their tax forms, they are going to take it away from them if they 
have four or five children. If people desire to use the HOPE credit, 
they are going to take it away from them. If they try to take advantage 
of the child credit, they are going to take it away from them. So they 
give it to them on one hand and they take it back on the other. So in 
the end, there really is no tax relief as it relates to alternative 
minimum tax.
  I want the Members to listen to this. Half, half of the promised 
benefits that we voted on last week under the marriage penalty bill, we 
were told we were going to provide relief to those folks as well, they 
are taken back to the Treasury by alternative minimum tax.
  I have offered time and again, Mr. Speaker, a couple of very easy 
proposals in this body. Let us get rid of

[[Page 8443]]

AMT. Let us scale back the size of the tax cuts the administration 
offered. Let us pay down the deficit. Let us pay for these two wars. 
Let us fix Social Security. Let us fix Medicare, as American people 
clearly desire. And let us give tax relief to middle-income Americans, 
particularly from alternative minimum tax.
  I hope in the next few minutes as we engage this debate, we will have 
a chance to put the magnifying glass on the proposal that is before us 
today. And I have got to tell the Members, as a member of the oldest 
committee in this House, a committee that I believe is so desirable to 
sit on, a committee whose history is so profound as it relates to this 
Republic, they did not even have enough regard for the Committee on 
Ways and Means to hold a hearing on this proposal in the committee. 
This is the introduction to their proposal today on the House floor. 
Nobody has seen it until about an hour and a half ago.
  So let us engage this debate. Let us have an opportunity to draw some 
attention to what it is that they are saying but, most importantly, to 
what it is that they are doing.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ENGLISH. Mr. Speaker, I rise to claim the time in opposition to 
the amendment in the nature of a substitute.
  The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. 
English) is recognized for 30 minutes.
  Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume.
  This has been a fascinating debate today, and I particularly want to 
congratulate the gentleman for his contribution. The gentleman from 
Massachusetts, as with his customary eloquence, has laid out his 
position, and in the process perhaps subconsciously has drawn a 
striking contrast between the two parties and perhaps one that he had 
not intended. He characterizes, first of all, Republican tax relief as 
maniacal. I think that is an interesting choice of words, but as I look 
at it, it perhaps I think accurately captures the view on the other 
side of tax relief and a tax program that is already lifting the 
economy, that is creating jobs, that is creating opportunities 
throughout America, including for a lot of people who were not directly 
the beneficiary of as much tax relief as we would have liked.
  Let me say in addition to that, there has been the procedural 
argument made here that this proposal before us today has not been 
adequately vetted. Mr. Speaker, to be very clear, this language is 
similar to what has been included in the tax bill that passed. This 
kind of language has been many times before the body. We have 
thoroughly debated within the Committee on Ways and Means the issue of 
the alternative minimum tax, and it is not clear that additional 
hearings would have provided a substantive additional agenda.
  I am delighted to hear the gentleman come out in favor of full repeal 
because, as I said to the gentleman from New York earlier in our 
discussion, I invite the gentleman to join with me and other members of 
the zero AMT caucus to come together and to work through a proposal to 
get rid of this AMT.
  The substitute that we have now risen to debate, though, was not I 
think adequately discussed in the gentleman's remarks, and perhaps 
there is where the contrast is clearest. Because in an effort to, as 
they put it, pay for the AMT relief that is included in the bill, what 
they have proposed doing is permanently putting in place an increase of 
corporate taxes in order to pay for 1-year relief to the individual 
AMT. That sounds like good politics, but at a time when our economy is 
struggling, at a time when even people on the other side of the aisle 
have conceded that corporate tax rates in our country and on our 
companies and workers are higher than those globally and are a clear 
competitive disadvantage to our companies who are seeking to keep jobs 
here in the United States, that the idea of permanently raising 
corporate taxes is one that I think is striking and I think uniquely 
ill conceived.

                              {time}  1300

  What they have proposed doing is generating revenue through the 
permanent implementation of something called the economic substance 
doctrine. Economic substance is a doctrine that our courts apply on a 
discretionary basis to situations which erode our rules-based tax 
system.
  The substitute attempts to codify this judicial doctrine and expand 
its definition so the IRS can pick apart any ordinary business 
transaction and subjectively look for reasonable business purposes. The 
result is a new requirement for taxpayers to have yet another layer of 
IRS intervention and be burdened with restrictions in ways that the 
courts have not even considered. I realize that there are some who have 
embraced this on the Senate side, but no one on our side of the aisle 
here in the House of Representatives so far has done so. The result 
would be a new requirement for taxpayers and another layer of IRS 
intervention.
  The proposal would then propose strict liability penalties on 
understatements of tax, which would not be limited to abusive 
transactions. The proposal, in our view, is far too broad and 
significantly expands common-law doctrines.
  There is also no indication that the doctrine would be limited to 
abusive transactions. While we are currently debating a 1-year 
extension of tax relief for working families, let me make this clear 
again: this substitute levies a permanent tax increase on employers and 
ultimately on the labor of the workers that they employ.
  The gentleman from New York (Mr. Rangel) has himself indicated 
support for lower corporate tax rates for our manufacturers in his own 
bill to replace the FSC/ETI regime. Here his proxy is insisting on 
raising their taxes by $15 billion.
  In addition to a $15 billion tax increase, companies would now have 
to spend valuable time and resources managing the implications of the 
law, when they could be using these resources to expand their 
operations, invest in production lines, and create jobs. Instead, what 
this proposal effectively does is create jobs only in the legal 
profession.
  Mr. Speaker, the House has voted repeatedly against this tax increase 
because it is bad tax policy, bad economic policy, and it further 
hinders American competitiveness and does so permanently. I think it is 
fairly clear that what is being attempted here in this substitute is to 
take something that we really need to do, addressing the problem of the 
AMT, and attach to it something off of a wish-list from the left, 
which, frankly, has no place here at a time when we are trying to buoy 
the economy.
  I think it is worth noting that the last time someone really 
aggressively proposed to raise taxes during a slowdown was Mr. Hoover, 
so there may even be some Republican genealogy in the proposal we are 
seeing offered on the other side. But the Republicans of today do not 
recognize this as a positive thing.
  Let me summarize the bill of particulars against the Rangel 
substitute and specifically the economic substance doctrine.
  First of all, it is a permanent tax increase. Although the AMT relief 
in the Democratic substitute is temporary, the tax increases are 
permanent.
  In addition, the administration strongly opposes codification of the 
economic substance doctrine. They have looked at it, and they have 
found it wanting. Acting Treasury Assistant Secretary for Tax Policy, 
Gregory Jenner, has stated that codifying the economic substance 
doctrine could be counterproductive, as it would drive tax shelters 
even further underground. Assistant Secretary Jenner has stated that 
the most effective way to stop tax shelter transactions is to require 
increased disclosure. The administration's tax shelter proposal 
increases disclosure by levying substantial penalties on those who fail 
to disclose their transactions.
  As I have noted, this proposal has been repeatedly rejected in the 
House,

[[Page 8444]]

and it would also hurt jobs and investment. Codifying the economic 
substance doctrine would result in businesses foregoing job-creating 
investments because of concerns that the IRS would improperly apply the 
economic substance doctrine to legitimate transactions.
  Finally, this proposal goes beyond accepted case law. The Democratic 
proposal requires that some transactions have at least a risk-free rate 
of return. This type of provision goes beyond what is required by 
either the Tax Code or common-law court doctrines. Furthermore, their 
proposal does not define a risk-free rate of return.
  All things being equal, this is a very poor substitute; and we urge 
its rejection.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, anytime that we can ask those companies that have moved 
to Bermuda to avoid paying American taxes with 134,000 troops in Iraq 
to pay their share, I am happy to have my fingerprints on that issue.
  Mr. Speaker, I yield 4 minutes to the distinguished gentleman from 
Maryland (Mr. Hoyer), the Democratic whip.
  Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, this debate on the alternative minimum tax epitomizes, 
unfortunately, precisely what is wrong in this House today: the 
Republican leadership's refusal to seize bipartisan opportunities where 
they exist, and its desire to turn every tax bill into a decisive 
political bludgeon.
  Let us be honest: every Member of this House, without exception, 
recognizes that we must fix the alternative minimum tax. That is not 
what this debate is about. When the AMT was enacted in 1969, it was 
supposed to ensure that wealthy taxpayers paid a fair share, that is to 
say, that you did not have your accountants figure out 17 ways to 
Sunday that you would not pay any taxes to support this democracy, this 
Republic, this great Nation.
  We said in a bipartisan way, you ought to pay something. But because 
it was not indexed for inflation, the AMT today ensnares more and more 
middle-income taxpayers. That was not the intent of any Member of this 
House. It forces them to pay more than they would under the regular tax 
schedule. But rather than trying to find a bipartisan solution to this 
growing and vexing problem, the majority has offered the legislative 
equivalent of a Band-Aid that would only drive us further into debt.
  Make no mistake: the Democratic substitute drafted by the gentleman 
from New York (Mr. Rangel) is vastly superior. Where the Republican 
bill would extend current AMT exemptions for taxpayers whose adjusted 
gross income is less than $40,250, or $58,000 for married couples, the 
Democratic substitute would say to individuals making $125,000 or 
couples making $250,000, the Alternative Minimum Tax was not meant for 
you. You will pay your regular taxes. It was meant for the very wealthy 
who exempted themselves from taxes.
  I want you to know that I paid 10 percent more of my income, which is 
about one-eighth of Dick Cheney's income, the Vice President's. Why? 
Because he has an extraordinary preference item, $625,000 in income 
from municipal bonds. Zero taxes. But the soldiers who are defending 
the assets of those municipal bonds, CDC is protecting the health of 
those in those municipalities, as well as Mr. Cheney's and mine.
  Not one nickel of cost in the Republican bill is paid for. Not one 
nickel. My friends on the Republican side, you are raising taxes, but 
you are slick; you are doing it by the back door. You are increasing 
the debt. As a result of increasing the debt, my kids are going to have 
to pay higher taxes.
  That is pretty slick. Why do I say it is slick? My kids happen to be 
voting; but my grandchildren, who are going to have to pay more taxes, 
are not voting, so they are not focused on what you are doing, this 
shell game you are playing of pretending you are cutting taxes.
  You are delaying taxes, is what you are doing; and you are increasing 
them at the same time. The fact is, the Democratic substitute provides 
a simpler and broader relief. It is fiscally responsible. That used to 
be the mantra of your party. Many of your folks talk about it today. 
They do not vote that way, however.
  It is ironic, Mr. Speaker, that this Republican majority, which talks 
about tax fairness and simplification, in the last 3\1/2\ years has 
only made our Tax Code much more complicated.
  Let us not perpetuate tax confusion and complexity. Let us help those 
who need help. Let us pay for what we do. That is the responsible 
policy. That would make this Congress responsible. We can do so in a 
bipartisan way. Vote for this substitute.
  Mr. ENGLISH. Mr. Speaker, I yield myself 10 seconds to thank the 
gentleman for his salute to the simplicity of the economic substance 
doctrine, and we look forward to the vote on the substitute.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut 
(Mrs. Johnson), a member of the Committee on Ways and Means.
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank my colleague for 
yielding me time to speak on what I consider to be a very important 
bill.
  I rise in support of H.R. 4227 and commend my colleague, the 
gentleman from Connecticut (Mr. Simmons), for introducing this 
legislation.
  This bill is simply about keeping promises, about keeping the promise 
made to the middle-class taxpayers that we would provide child credits 
to reduce the taxes on our young families, that we would eliminate the 
marriage penalty, and that we would expand the 10 percent bracket so 
that those low earners in America would not be burdened with tax 
liabilities.
  Unfortunately, unless we pass this legislation, we will renege on 
that promise of lower taxes and effectively increase the taxes of 11 
million taxpayers by on average $1,520. I can tell you, that is a lot 
of money to families in our country. We cut their taxes; and we need to 
remain loyal to that policy that supports families, recognizes the 
circumstances of low-income individuals and families in the 10 percent 
bracket, and eliminates the gross unfairness of the current marriage 
penalty in our code.
  So I rise in strong support of the legislation. It is temporary. I 
look forward to working with my colleagues in the administration on a 
permanent solution, but passage of this legislation is imperative.
  I also strongly oppose the substitute. First of all, it is wrong to 
fund a 1-year provision with a permanent increase in taxes. It is also 
wrong to ``clarify current law'' by muddying it. Current law has a body 
of case law behind it which has helped to define the complex issues and 
eliminate uncertainty.
  Now, the current law could be improved upon. Our Acting Assistant 
Secretary of the Treasury, Gregory Jenner, has recommended, and the 
Treasury has strongly recommended, that we increase disclosure, that we 
require more disclosure, and that by doing so, we could stop tax 
shelter transactions that were abusive. So we need to move to increase 
disclosure.
  But to add instead a new, complicated doctrine of economic substance 
will cause the kind of confusion that retards investment. People will 
be uncertain. This is a very complicated issue. They will not know what 
the government is going to do. They will slow down investment, killing 
jobs.
  When our recovery is soft, it is dumb to do something that will cost 
jobs now and cost considerable jobs over the next few years. The 
Heritage Foundation has just come forward with an analysis that says 
this would kill 3,000 jobs the first year and 15,000 jobs over 5 years. 
Remember, many of our manufacturers pay taxes and would be affected by 
this, just at the time when they are getting back on their feet.
  So what you do not need in the Tax Code is uncertainty. We have a 
problem in the Tax Code. We need to deal with it. A 1-year extension is 
the right way to go at this time.
  Mr. Speaker, I thank the gentleman and oppose the substitute.

[[Page 8445]]


  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I remind the Republican Members a year ago in the 
Committee on Ways and Means they had a chance to vote for my AMT bill, 
which would have done exactly some of the things we are proposing to do 
today.
  Mr. Speaker, I yield 3 minutes to the gentleman from Oregon (Mr. 
Blumenauer).
  Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy in 
permitting me to speak on this.
  Mr. Speaker, I find my friend from Pennsylvania's commentary somewhat 
ironic because all independent observers agree that after three rounds 
of massive tax cuts, we are getting very little benefit for the 
magnitude of the costs involved.

                              {time}  1315

  On our side of the aisle, we have had a variety of areas that would 
have put far more people to work producing far more economic benefit 
for this country at far less cost.
  It is also ironic that somehow, the blame; after 10 years of 
Republicans in control, that somehow, this inequity is the problem of 
the Democrats. In fact, under the watch of my Republican colleagues, we 
have seen the ``millionaires' tax'' that was enacted in 1969 to stop 
sheltering all income, now punishes people who pay their taxes, claim a 
child care credit, and save for their future.
  In the midst of the largest tax-cutting frenzy in our country's 
history, the Republican majority has used the $600 billion that is 
going to be extracted from people who do not deserve to pay this over 
the next 10 years, to disguise the impact of their misguided policies.
  Now, I would suggest that it is inappropriate to continue limping 
along as my Republican colleagues would do today with the enactment of 
their proposal. It just puts off the day of reckoning, gets past 
another election and, they hope, can implement more of their true 
agenda: to provide more permanent tax relief for people who need it the 
least.
  Now, I would suggest that the Democratic substitute, which is 
providing more help and not making deficits worse, is a step in the 
right direction. I join with my friend, the gentleman from Pennsylvania 
(Mr. English) and the gentleman from Massachusetts (Mr. Neal) to come 
forward to either repeal or fix the alternative minimum tax. But we 
could do that in a minute if the Committee on Ways and Means would 
return to its historic way of doing business, being bipartisan, maybe 
even considering legislation like this in committee before bringing it 
to the floor, allowing debate back and forth, allowing amendments. I 
think we would have a bipartisan majority that would put 400 votes on 
the floor to get rid of the single greatest inequity in the Tax Code.
  Instead, the drum-beat from my friends on the other side of the aisle 
is to make permanent the most egregious part of their program for the 
people who need it least, and holding hostage some 35 million to 43 
million American families with this sword of Damocles holding over 
their heads. It is just what they have done with the estate tax. 
Instead of coming forward with a bipartisan reform that we are ready to 
do and would get 300 or 400 votes, they have this bizarre thing where 
one has to be careful about what year they die, to know how many wills 
they have to have in order to play the game with this year after year.
  I think it is inappropriate and it is shameful. It is time for us to 
take a step in the right direction, with the approval of the Democratic 
substitute.
  Mr. ENGLISH. Mr. Speaker, I am delighted to yield 3 minutes to the 
gentleman from Florida (Mr. Foley), my distinguished colleague on the 
Committee on Ways and Means.
  Mr. FOLEY. Mr. Speaker, let me thank the gentleman from Pennsylvania 
for leading the debate today. I certainly want to salute my colleague, 
the gentleman from Massachusetts (Mr. Neal). He has raised this AMT 
issue at every one of our hearings on the Committee on Ways and Means. 
He has kept this issue alive. It is important for the people who are 
middle wage-earners in our country to get some relief.
  I disagree with the past speaker on suggesting we are limping along, 
suggesting that the tax cuts that we put in place have not helped this 
economy. If we tune in to any show or read any publication, whether it 
is CNBC or CNN or to read Forbes Fortune or the Wall Street Journal, 
virtually every person who studies the economy is giving credit for 
this resurgence, if you will, of opportunity due to the tax cuts we 
have enacted.
  The AMT is a burden for middle income taxpayers. We in our bill solve 
that burden, and we do so without raising corporate taxes. That is a 
good debate for a day, maybe today, maybe another day on corporate 
taxation, because we do understand a lot of companies take their plants 
and facilities overseas.
  I asked the H.J. Heinz Company why they found so many countries 
comfortable for them to move plants to and they said we want to be 
close to those who are buying our goods and services. So I do not look 
at the Heinz Company as unpatriotic for opening Heinz of Canada, Heinz 
of Ireland, Heinz of France, or Heinz of whatever countries they settle 
in. But I do recognize that at times, companies do make decisions based 
on their locations, based on the Tax Code of this country.
  All agree that our corporate taxes today are too high, and in the 
Rangel substitute, they raise them further. So we start off with a 
problem of substance in their bill that actually further punishes 
corporations who are trying to provide jobs here in America for the 
citizens of our country. So the administration and this committee, the 
Committee on Ways and Means on the Republican side, do oppose what 
would be a $15 billion tax increase.
  We also recognize that this needs to be dealt with, and we have dealt 
with it. If we look back at our history, Public Law 107-16, the 
Economic Growth and Tax Relief Reconciliation Act, we allowed the child 
credit, the adoption credit, the small savers credit to be counted 
against the AMT in 2010. We increased the exemption from 45 for 49 for 
married couple, and 33 to 35 for single individuals. In public law 107-
47, the Job Creation and Worker Assistance Act of 2002, we extended 
through 2003 the ability to claim nonrefundable tax credits against the 
AMT. Public law 108-27, the Jobs and Growth Tax Reconciliation Act of 
2003 again expanded the amounts and extended the amounts. The Tax 
Relief Act, H.R. 3521.
  So there is a consistent history of our committee in a Republican-led 
Congress moving forward on trying to minimize the grab, if you will, of 
the AMT.
  Now, I believe as we try to determine on this bill how to give people 
an understanding of how to file their taxes, how to do their taxes, 
simplicity is the best possible option, and I do look forward to the 
chance we have on our committee to talk about simplifying this very 
complicated Tax Code.
  But today we are here to oppose the Rangel substitute and genuinely 
support H.R. 4227 to provide relief for American families.
  Mr. NEAL of Massachusetts. Mr. Speaker, I am just curious, and I 
would ask the gentleman from Pennsylvania (Mr. English) or perhaps the 
gentleman from Florida (Mr. Foley), since this was never aired in the 
committee, this proposal has not been brought up in front of the 
committee, will the author of this proposal, will he be taking his 
picture with the Committee on Ways and Means later on at 2 o'clock? 
Will we have him there for the photograph for history and posterity? I 
was just wondering, since we now have nonmembers of the committee 
bringing these proposals forward.
  Mr. Speaker, I yield 3 minutes to the distinguished gentleman from 
Michigan (Mr. Levin).
  Mr. LEVIN. Mr. Speaker, the country should know there is a tax train 
wreck coming along the tracks here, and what is the Republican answer? 
Speed up the train, making tax cuts permanent, mainly, heavily, for the 
very wealthy, and they essentially try to hide the track.

[[Page 8446]]

  First of all, much of what is being given is going to be taken back 
by the AMT. Secondly, while some is being taken back now, much more 
will be in future years. So what is the answer of the Republican 
majority? The answer is, oh, blame the Democrats because of actions 
taken what, 10 years ago, 12 years ago, 15 years ago. The Republicans 
have run this place for 10 years, and their answer on the AMT is always 
wait until next year. The gentleman from Massachusetts (Mr. Neal) has 
heard that year after year.
  When the Republicans took over this place, a third of 1 percent of 
taxpayers were subject to the AMT. In 2004, that will be 7 times as 
many. So what do they do? They extend it for 1 year, even though in 
2011, the percentage will go up to 11.2, many, many, many times more 
than the number who paid the AMT when the Republicans took over.
  So why do they not act? Because it is going to cost so much money. 
The estimate is that if this bill is extended and essentially made 
permanent, during the next 10 years, it would cost $550 billion, way 
beyond 17, and if you add interest, $650 billion it would cost. So the 
Republicans say, wait until next year because they know they cannot act 
this year and be honest with the American people.
  This Republican majority simply cannot tell it straight to the 
American people. They set up a caucus, the Zero Tax Caucus. Why do they 
not just act this year instead of setting up a caucus that is nothing 
more than a smoke screen?
  The substitute is an honest attempt to do better and to pay for it. 
The Republican majority does not want to pay for any of their tax cuts, 
even those that help middle income taxpayers, but most go to high-
income taxpayers.
  Vote for the substitute. Let us begin to be honest with the American 
public.
  Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from 
Missouri (Mr. Akin).
  Mr. AKIN. Mr. Speaker, I rise today in strong opposition to the 
substitute offered by the gentleman from New York. I have heard the 
term ``bipartisan'' and ``bipartisan solution'' now for about half an 
hour, and it seems to be a synonym for tax increases. That is exactly 
what we are talking about here.
  Last week, Democrats claimed that the AMT needed to be fixed so that 
married couples could fully benefit from the repeal of this marriage 
penalty. Well, given the substitute, apparently what they really meant 
was that only certain married people and only for a period of 1 year.
  Adding insult to injury, the Democrat substitute would also 
permanently raise taxes on manufacturers and other job-creating parts 
of our economy. I cannot speak for other States, but I can assure my 
colleagues that the last thing that manufacturers in the State of 
Missouri want is to have their already slim profits taxed even further. 
I really do not understand the logic of wanting to go for a big tax 
increase on the very sector that is creating jobs in our economy. It 
seems to me that in the last couple of years, we have finally pulled 
out of a recession because of the tax cuts, and now, we want to tax 
companies and they are the ones that make the jobs. It does not make 
any sense at all.
  Mr. Speaker, the American people deserve better than another Democrat 
tax increase. We are here today because in 1993, when President Clinton 
and the Democrats passed the largest, one of the largest tax increases 
in history, they did so without indexing those taxes for inflation. As 
a result, more and more middle income Americans are now hit with a tax 
that was originally enacted to try to ensure that only the wealthiest 
among us should pay taxes.
  Now, this so-called the wealthiest 1 percent is actually paying 37 
percent of the total personal income taxes. One percent is paying 37 
percent of the total personal income taxes in this country. I am just 
not seeing the logic of the fact that we have to have another tax 
increase.
  Today, 3 million hard-working American families are hit with the AMT, 
a tax that the Congress never intended them to pay. If we do not act 
today, by 2005, 11 million American families will be burdened with the 
AMT.
  Mr. Speaker, I encourage my colleagues to reject another Democrat tax 
increase, support House Resolution 4227, which ensures that American 
families will receive the relief that they deserve.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield for the purpose of 
making a unanimous consent request to the gentlewoman from Texas (Ms. 
Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, because H.R. 4227 does nothing 
but increase taxes on the middle class, I rise enthusiastically to 
support the Democratic substitute of the alternative minimum tax relief 
of the gentleman from New York (Mr. Rangel), and I ask my colleagues to 
support it.
  Mr. Speaker, I rise today in support of the Democratic substitute 
presented here today by my distinguished colleague, Congressman Rangel.
  The democratic substitute answers the shortfalls found throughout the 
H.R. 4227. While H.R. 4227 purports to provide tax relief for our 
nation's struggling middle class, the reality is far from that. This 
bill is a mirage, a gimmick. It provides little to no relief for the 
majority of middle class Americans. This is another Republican ploy to 
try and fool the middle class that the Majority party is attempting to 
grant them tax relief. It is an attempt to cover up the vast amount of 
tax relief given to wealthy individuals and big businesses.
  Unfortunately this bill does more than just nothing, in reality it 
hurts our middle class. This bill will roll back a large portion of the 
Administration's tax relief while at the same time taking back over 
half of the benefits provide4d by last weeks marriage penalty relief 
bill. This just does not make sense. How can you claim to provide tax 
relief for the middle class by proposing a bill that cuts back tax 
relief for the middle class?
  The Democratic substitute answers these shortfalls. It provides the 
needed tax relief for our middle classes without any hidden tricks or 
misrepresentations. It provides more tax relief to more people without 
rolling back past promises of tax relief to more people without rolling 
back past promises of tax relief. In fact, it provides tax relief to 1 
million more families then the GOP version and is substantially more 
effective in providing relief for middle class families making less 
than $250,000 a year. Under the GOP plan a family of four earning a 
combined income of 95,000, residing in a high tax state, will be forced 
to pay the minimum tax. The Democratic Substitute is an easier more 
effective way to grant tax relief to the middle class and does away 
with the burdensome paperwork required under the Republican plan.
  While the IRS's National Taxpayer Advocate labeled the AMT as our 
nation's most pressing tax concern, the Democratic Substitute is a 
serious long range plan to fix the problem, while the Republican plan 
is at best a stop-gap measure. Our current tax system towards the 
middle class is a sinking ship filled with holes. The current 
Republican proposal is a bucket. We don't need a bucket we need a new 
ship. The Democratic Substitute is a step towards this goal. Please 
join me and vote in favor of the Democratic Substitute.
  Mr. NEAL of Massachusetts. Mr. Speaker, a quick reminder to the 
previous speaker. More than half of the promised benefits last week of 
the marriage tax penalty are taken back under alternative minimum tax.
  Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr. 
Hinchey).

                              {time}  1330

  Mr. HINCHEY. Mr. Speaker, under the Bush administration, 2.6 million 
jobs have been lost, long term unemployment is at a record high. We 
have gone from $5.6 trillion surplus in the Federal budget to nearly $3 
trillion in deficit; and this year, the huge budget deficit is expected 
to reach $500 billion primarily due to the economic plans of the 
President and congressional Republicans. Four million people lost their 
health insurance; 1.3 million more people have gone into poverty. 
Median income of middle class families is down $1,400. Thousands of 
schools are being forced to meet Federal education standards without 
additional Federal assistance.
  Federal transportation and infrastructure programs are on life 
support while Republicans squabble over the transportation bill. These 
are serious problems that we will not be addressing today.

[[Page 8447]]

  Reforming the alternative preliminary tax is another serious matter 
and it is something that Congress should take seriously. The Republican 
bill before us today, however, simply pushes the problem down the road. 
By the end of this decade, 33 million or 75 percent of families making 
between 75 and $100,000 will be swept up into the AMT. It is obvious 
that this needs to be fixed.
  Republicans are to be blamed for this dilemma. Their irresponsible 
tax reductions fail to include any form of the AMT despite the fact 
that they forced, and will continue to force millions of middle income 
families who live in high tax States to pay the costly alternative 
minimum tax. What the Republican bill would do today is borrow $20 
billion to provide a 1-year extension of the increased exemptions that 
middle income families currently rely on to avoid paying the AMT. This 
is not real reform. It is procrastination and it is dangerous. It adds 
to our deficit and effectively raises the Republican debt tax that has 
ballooned under President Bush.
  The Democratic substitute provides more tax relief to middle income 
families without adding a penny to our debts. It would eliminate AMT 
liability for taxpayers whose adjusted gross income is less than 
$250,000; and it would provide the framework for Congress who begin 
reforming AMT.
  We Democrats support tax relief for lower and middle income families. 
Our bill does that. Democrats also are not afraid to begin addressing 
the serious problems facing our country. We are willing to take them 
head on as evidenced by this substitute.
  It is time the House got serious about the issues facing our country 
today. Simply procrastinating, pushing off problems on to the shoulders 
of our children and grandchildren, that is the Republican plan. It is 
also unacceptable; it is immoral, and it must stop.
  Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from New Hampshire (Mr. Bradley).
  Mr. BRADLEY of New Hampshire. Mr. Speaker, once again, I salute the 
hard work of my colleague from Pennsylvania in bringing this issue to 
the attention of the full House.
  Mr. Speaker, I oppose the substitute amendment. Why? This corporate 
tax increase that is proposed would be a job killer. That is why. Right 
now at 35 percent for a corporate tax rate, we have the second highest 
corporate tax rate in the world. We have a 5.7 percent unemployment 
rate. And though we have seen progress over the last several months due 
to tax reduction, the time is not appropriate right now to raise 
corporate taxes.
  The second reason is the WTO. The WTO tariffs have increased just 
recently to 7 percent. We need to be addressing this with the FSC/ETI 
reform package, and the way that we are going to address this is 
reducing corporate taxes, not raising corporate taxes. So the message 
of the substitute motion to raise corporate taxes is a job kill and it 
will not enable us to deal with the looming crisis of the WTO issue.
  So let us pass the underlying bill, H.R. 4227, which gives a 1-year 
fix, an inflation adjustment to the alternative minimum tax. It ensures 
that couples who today are earning $58,000 will be exempt from the AMT 
or for single individuals who are earning $40,000 will be exempt, and 
not moving those brackets down to $45,000 for a couple or $33,750 for a 
single individual.
  This bill, the underlying bill, will allow us to address the long-
term issues that are a sleeping giant of the alternative minimum tax. 
The fact that today 3 million people pay it, tomorrow, if we do not 
pass the underlying bill, 11 million people pay it, and by the end of 
the decade, it will be one in every three taxpayers who will fall 
victim to the AMT.
  We need the underlying bill today. We do not need the substitute 
motion.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentleman from New York (Mr. Israel).
  Mr. ISRAEL. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise in support of this substitute. Last week when we 
debated the marriage penalty relief, I said this: That the bill that we 
were debating was not an act of Congress. It was an act of Harry 
Houdini. Here today, gone tomorrow. Give with one hand, snatch away 
with the other. And one week later here we are again, another act of 
Houdini.
  The majority's AMT bill says to middle class taxpayers, we are going 
to do a little bit today and nothing tomorrow. Their bills says to 
middle class taxpayers who are bleeding from the largest tax increase 
in the history of the middle class, take two aspirins, call us next 
year. Millions of middle class taxpayers are hurtling to a cliff, our 
cops, our teachers, our nurses, our firefighters, they will fall off 
that AMT cliff, and what you want to do is simply build them a bigger 
ramp. That is the Republican plan.
  Here is our substitute. If your adjusted earnings are $250,000 or 
less, no AMT. No filings, no calculations, no confusion, no AMT tax. 
You do not have to worry about it. We say, tax relief for the middle 
class now. You say, keep taxing them. We say we are going to get to it 
now and fix it. You say we are just going to talk about it. We say, 
protect the middle class. You say, protect the big offshore corporate 
tax shelters and havens. We say reform. You say status quo. We say, 
solve the problem now and in the future. You say, let us keep pointing 
the partisan fingers of blame at the past and not solve this problem 
for the middle class.
  They deserve better, the middle class. They deserve a real choice. 
They deserve real tax relief and meaningful reform which is why this 
substitute makes sense, and why the act that we are being given today 
is nothing more than more Harry Houdini trickery on the middle class 
taxpayers.
  Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentleman from the 
State of Pennsylvania (Mr. Shuster).
  Mr. SHUSTER. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, I rise today in strong opposition to the Rangel 
substitute and in support of H.R. 4227. I want to thank my colleague 
from Pennsylvania (Mr. English) and the gentleman from Connecticut (Mr. 
Simmons) for their leadership on this important issue.
  The AMT, created over 30 years ago to ensure the super wealthy were 
not escaping paying taxes, has grown out of control and is now trapping 
millions of middle class families in a complicated and costly tax 
system.
  Under the leadership of President Bush, the 2001 and 2003 tax relief 
bills passed by this Congress included increases in exemption amounts 
which ensured many middle income families would not be hit with this 
tax. If this Congress does not act, that relief will disappear in 2005.
  If these exemption are allowed to expire, approximately 11 million 
taxpayers will be hit with an average tax increase of over $1,500. This 
substitute is a misguided attempted to provide for AMT relief. While 
this provides temporary relief for some families, it does so by 
permanently raising taxes on the country's manufacturers and other 
corporations.
  While the economy is recovering and job creation is steadily 
increasing, now is not the time to permanently increase taxes on our 
country's job creators.
  I strongly support permanent reform of the AMT. And, in fact, I have 
introduced a bill that would index the AMT to inflation and end in a 
full repeal of this terrible system in 2010. While I believe a long-
term solution such as this is needed to address the tax system, doing 
nothing or voting to increase taxes on corporations are irresponsible 
options, in my view.
  By extending the 2003 relief through 2005, we can continue to protect 
our middle class families from this tax while Congress works on a long-
term solution of reform.
  I encourage my colleagues to vote no on increasing taxes with this 
substitute and instead vote in support of the underlying bill. H.R. 
4227 is a reasonable short term solution to the growing problem of AMT.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I remind the gentleman you cannot fix this on a long-
term

[[Page 8448]]

basis without doing something about the tax cuts that the gentleman was 
heralding a couple of minutes ago.
  Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota 
(Mr. Pomeroy).
  Mr. POMEROY. Mr. Speaker, here we are, another week, another tax 
debate. Another occasion in the House of Representatives where the GOP 
majority has offered nothing, nothing substantive about the looming 
deficit crisis that is racking up historic levels of debt in this 
country.
  I do not suppose it is a mystery they do not want to talk about it 
because when they bring their budget, whenever they can get it out of 
conference, it will include, we are told, an increase in the borrowing 
limit for our country. It will take the borrowing limit to the highest 
levels in the history of the United States. Some are saying it will 
take the borrowing limit over $10 trillion. That is $10 trillion of 
debt to be incurred under their fiscal plan for this Nation. Debt we 
will leave to our children and debt we can not responsibly pass on.
  So as we take a look at something imperative like doing something to 
respond to the AMT, let us, for goodness sake, put in place a provision 
to pay for it so we do not even drive this monstrous debt they have 
given us even deeper. That is what the substitute is about.
  It talks about clamping down on high-flying tax cheats, some of the 
worst avoidance schemes, some of the most shallow, unjustifiable 
schemes created simply to cheat the Federal Government by the high 
flyers that can afford the hundreds of thousands of dollars of legal 
and accounting bills to dream up these schemes.
  The Republican majority in this debate has become ``amen corner'' for 
tax cheats in this country. You might think the next thing we will see 
from this outfit is a resolution commending the Enron executives for 
their creative financing.
  The fact is there is a whole lot of tax avoidance illegally done in 
this country. I am very pleased with the announcement made by IRS 
Commissioner Mark Everson today about an initiative launched by the IRS 
that they believe is going to target just in 1,500 to potentially 5,000 
multi-millionaires and corporations, a crackdown on an illegal tax 
scheme that they think will generate for this Treasury 5 to $10 
billion.
  So do not stand over here and tell us that cracking down on tax 
cheats is raising taxes. Taxes are what hard working Americans pay 
because they owe it. But the tax avoidance and tax cheats that you 
salute so highly in this debate is something else again. We believe we 
ought to capture that revenue so we do not drive this debt deeper for 
our kids. That is what the substitute is about. I urge Members' 
support.
  Mr. ENGLISH. Mr. Speaker, I yield 4 minutes to the gentleman from 
Arizona (Mr. Hayworth), a member of the Committee on Ways and Means 
(Mr. Hayworth).
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Pennsylvania for 
yielding me time.
  Mr. Speaker, I rise in opposition to the Rangel substitute and in 
support of the base legislation that we are discussing here today. I 
think it is important to have a full perspective of what is being 
talked about. Part of it, of course, is the tenor of the times, where 
we are on the calendar, the fact that notwithstanding, the first 
Tuesday following the first Monday in November the people of the United 
States will make some decisions. Perhaps it is in order, Mr. Speaker, 
to remind the Nation, and certainly my colleagues in this Chamber, how 
we arrived at this point.
  A decade ago, the largest tax increase in American history increased 
the alternative minimum tax rate and did not adjust the AMT exemption 
amounts for inflation. As a result, more and more middle income 
families are forced to pay the AMT each year. Now with a change in 
majority status, when I was pleased to come here to the Congress and 
become a part of this majority, the fact is we have delivered time and 
again on relief from the alternative minimum tax.
  Public Law 107-16, the Economic Growth and Tax Relief Reconciliation 
Act of 2001; Public Law 107-47, the Job Creation and Worker Assistant 
Act of 2002; PL 108-27, Jobs and Growth Tax Relief Reconciliation Act 
of 2003; H.R. 3521, the Tax Relief Extension Act of 2003; H.R. 4227, 
the Middle Class Alternative Minimum Tax Relief Act of 2004, again 
providing alternative minimum tax relief by extending the relief 
enacted in 2003, adjusting it for inflation through 2005.
  Now, my friends on the other side of the aisle reminiscent of a 
country song, that is their story and they are sticking to it, perhaps 
need to be reminded of this fact.

                              {time}  1345

  Do my colleagues know who really ends up paying corporate taxes? Mr. 
Speaker, the fact is every American consumer ends up paying corporate 
taxes. How? Prices increase, business accommodates, oh, and just to 
help people understand because I listened with interest to my friend 
from North Dakota say that somehow we are in the amen corner, I will 
tell my colleagues what I do say amen to, Mr. Speaker. I say amen to 
more quality jobs for Americans, and the Rangel substitute will result 
in lost jobs by imposing a permanent tax hike on manufacturers and 
other job creators at a time when our economy is recovering.
  I know, Mr. Speaker, for many, given the political season, any good 
news is bad news for partisan political fortunes; but the fact is, we 
have seen an increase in orders for manufacturing. Manufacturing is on 
the upswing. Now that we are seeing real growth, quarterly economic 
growth, now that we are getting there, my friends on the left, who 
sadly have never met a tax hike they did not like, witnessed their 
inaction in the wake of the largest increase in American history a 
decade ago now let us put the kibosh on the recovery.
  How best to do that? Well, let us cost jobs to the manufacturing 
sector, let us demonize anyone who creates jobs, and let us go back to 
the time-tested bugaboo and shopworn phrase that we are only going to 
increase taxes on the rich because the rich are somehow inherently 
evil.
  No, Mr. Speaker, I reject that notion wholeheartedly because what we 
are talking about is opening doors of opportunity through job creation. 
That is why we should reject the Rangel substitute, stick with my good 
friend from Pennsylvania, and pass, yet again, relief from the 
alternative minimum tax.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2\1/2\ minutes to the 
gentleman from New York (Mr. Bishop).
  Mr. BISHOP of New York. Mr. Speaker, I rise today in support of the 
Democratic substitute. I join my colleagues in offering this amendment 
in order to bring relief to so many families, particularly Long Island 
families who have been disproportionately hit by the alternative 
minimum tax. Our substitute would not only extend the current 
exemption, but it would exempt married couples with incomes under 
$250,000 from this punitive tax. In addition, and this is very 
important, we completely pay for this tax relief to middle-income 
families by closing corporate loopholes.
  Long Island taxpayers are paying the price for this Congress' 
abdication of duty when it comes to sound tax policy. Our refusal to 
reform the AMT has had the effect of severely curtailing the promised 
Bush tax cuts from middle-income Long Island families. While the 
wealthiest families completely benefit from the tax cuts targeted 
towards the upper brackets, middle-income families were hit with the 
unwelcome surprise of higher taxes on tax day.
  I have been hearing from constituents all across Long Island who feel 
double-crossed and double-taxed by this undue tax burden. In fact, just 
yesterday I was speaking with an accountant from my hometown who told 
me that AMT filings for middle-income Long Islanders had shot through 
the roof this year, while the wealthiest were reaping tremendous tax 
benefits, some in excess of $1 million of tax savings. For example, 
married couples in my district with two children and an income 
consisting of $15,000 in wages were forced to pay the AMT due to

[[Page 8449]]

State income taxes and real estate taxes totaling over $21,000. This, 
in turn, triggered the AMT.
  More Long Islanders pay the AMT than taxpayers in any other region of 
the country, and I will do everything in my power to put an end to this 
unfair treatment. Middle-income Long Islanders bear the brunt of this 
tax because State and local income taxes, property taxes, and other 
personal deductions are added back in for the purpose of calculating 
the AMT, and anyone who lives on Long Island will tell my colleagues 
that our property taxes, in particular, are very, very high. The net 
effect of this is that we pay inordinately high property taxes, and 
then we turn around and are robbed by the AMT of our full Federal tax 
relief.
  We need a long-term solution for the AMT and not simply a short-term 
fix. The so-called fix under consideration would do nothing, and I 
repeat nothing, for the Long Islanders who found themselves paying the 
AMT this year. Our substitute sends us down the path towards a long-
term solution and makes sure that middle-income families are truly 
relieved from this tax next year. Under our substitute, two-parent 
families on Long Island making $250,000 or less would be able to rest 
assured that they would not be forced to pay the AMT. This is the right 
kind of relief for working families.
  In my opinion, we owe it to the American taxpayers to put our heads 
together and reconsider the consequences of this failed tax policy and 
reform the AMT so that it no longer hurts middle-income families.
  Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, might I inquire as to how 
much time is left.
  The SPEAKER pro tempore (Mr. Bass). The gentleman from Massachusetts 
(Mr. Neal) has 1\1/2\ minutes remaining, and the gentleman from 
Pennsylvania (Mr. English) has 4\1/4\ minutes remaining.
  Mr. NEAL of Massachusetts. Is the gentleman prepared to close?
  Mr. ENGLISH. Yes.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself the time that 
is left.
  Mr. Speaker, we have had this debate now in this House for a long 
period of time. For Members on the majority side to say, well, this was 
a Democratic proposal in 1986 and then to conveniently forget or 
suggest that during their 10 years that they have not had sufficient 
opportunity, working, by the way, with a willing minority to fix the 
issue, really does not make a great deal of sense. This issue is 
hanging out there. It is waiting for a solution. There ought to be an 
opportunity in a bipartisan manner to fix it.
  I have said flatly I am in favor of repealing the alternative minimum 
tax. Let us get rid of it. There is a revenue gap to make up, $600 
billion, that has to be found somewhere; but when we offer the 
suggestion, it goes nowhere, because it does not square, Mr. Speaker, 
with the tax cuts that the administration has offered and that the 
compliant Members of the majority have gone along with without ever, 
ever, ever asking a question.
  Forbes magazine has suggested that the tax cuts that the Republican 
majority and the administration have offered only make the alternative 
minimum tax issue worse for middle-income Americans. We have heard 
today a suggestion that issues of war in the Middle East and in 
Afghanistan are irrelevant to these discussions. How are we going to 
pay for the troops, 134,000 that are in Iraq and 12,000 that are in 
Afghanistan, and support this war effort? How are we going to pay for, 
first, the Defense budget that goes to $421 billion at the conclusion 
of this session, $41 billion for homeland security? They are off by 
$140 billion in their prescription drug bill proposal; and the answer 
is, to all of this, tax cuts.
  Mr. Speaker, we can fix the alternative minimum tax issue in a 
bipartisan manner. I am more than happy to offer my support to try to 
get that under way. Support the Democratic alternative today. It, in 
the end, is responsible tax policy, and show those people at Enron and 
show those people in Bermuda that they ought to pay like the rest of 
the American people.
  Mr. ENGLISH. Mr. Speaker, I yield myself the balance of my time, and 
first of all, thank the gentleman for his contribution and take him up 
on his offer because we in the Zero AMT Caucus would like to work for 
permanent resolution of this problem. We would like to see a permanent 
repeal of the AMT; but unfortunately, in the current political climate, 
in the current climate of gridlock and recrimination that we have in 
Washington, nothing more elaborate than the current fix appears to be 
possible.
  Let me say there are a couple of things that I need to correct at the 
outset.
  It was suggested by the gentlewoman from Texas that our bill is a tax 
increase. It is very hard to understand how she would make that point; 
but to be clear, this provides critical tax relief for a significant 
portion of the middle class.
  The gentleman from Long Island intimated that there was nothing in 
this bill to help these people. Well, as a practical matter, a place 
like Long Island would be one of the biggest beneficiaries of the 
underlying Republican bill because of the high taxes.
  Let me say that the gentleman from Michigan talked about a tax train 
wreck. I come from a part of the world where we make locomotives, and 
we recognize their dynamics; and let me say that we recognize that the 
locomotive that was started, that is threatening, the train wreck was 
started back when the other party controlled the Chamber and did not 
deal with an underlying problem by making the AMT responsive to 
increases in the cost of living.
  We have heard procedural arguments from the other side, that the 
committee has not looked closely enough at this issue; and I reject 
those because the committee clearly has been tracking this issue from 
the get-go.
  What we have instead is the core issue, which is the substitute being 
offered today and which, on the other side, they are proposing to 
dramatically increase the complexity of the Tax Code and also 
significantly raise corporate taxes on a permanent basis in order to 
provide temporary tax relief. They congratulate themselves for doing 
that, but I do not think that they are entitled to a new chapter in 
``Profiles in Courage.''
  My feeling is that the substitute is inherently a bait-and-switch and 
increasing taxes at a time when we are experiencing, we are trying to 
come out of a slow-down. We are, in a sense, embracing Herbert Hoover 
economics.
  I think that the substitute is very ill conceived. It, among other 
things, imposes a burden on the corporate community at a time when we 
worry about competitiveness; but that burden is far greater than the 
one simply indicated by the expected revenue. This is a burden which 
will permanently change behavior and affect legitimate business 
transactions. So the rhetoric of the gentleman from North Dakota that 
this only affects tax cheats is unfortunately not accurate. This is 
going to be an enormous burden for the corporate sector coming at a 
most unfortunate time.
  Ultimately, I sense that the reason why the folks on the other side 
have not been as aggressive and certainly in many cases not as 
aggressive as the gentleman from Massachusetts to deal with this 
problem is that they want to spend the money. May I suggest, in the 
end, we get to the solution on reforming the corporate AMT, not by 
undercutting the tax bill, not by undercutting the tax program which is 
revitalizing America's economy today, but ultimately by controlling our 
spending. That is how we will in the context of a growing economy get 
back to a balanced budget and I think in the long run also have room to 
deal with this AMT.
  Again, I invite our friends on the other side of the aisle to work 
with us on this issue. We have an opportunity to do this on a 
bipartisan basis. This is a part of the Tax Code that we agree on, but 
I think the solution starts today with a rejection of the ill conceived 
substitute that is being offered by the other side and passage of the 
underlying legislation.

[[Page 8450]]

  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time has expired.
  Pursuant to House Resolution 619, the previous question is ordered on 
the bill and on the amendment offered by the gentleman from 
Massachusetts (Mr. Neal).
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from Massachusetts (Mr. Neal).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. NEAL of Massachusetts. 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 197, 
nays 228, not voting 8, as follows:

                             [Roll No. 143]

                               YEAS--197

     Abercrombie
     Ackerman
     Alexander
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Ballance
     Becerra
     Bell
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Capps
     Capuano
     Cardin
     Cardoza
     Carson (IN)
     Case
     Chandler
     Clay
     Clyburn
     Conyers
     Cooper
     Costello
     Cramer
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley (CA)
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Ford
     Frank (MA)
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley (OR)
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind
     Kleczka
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Lynch
     Majette
     Maloney
     Markey
     Marshall
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Moore
     Moran (VA)
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Sandlin
     Schakowsky
     Schiff
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Turner (TX)
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--228

     Aderholt
     Akin
     Bachus
     Baker
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bereuter
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Boozman
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carson (OK)
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole
     Collins
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Feeney
     Ferguson
     Flake
     Foley
     Forbes
     Fossella
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     Matheson
     McCotter
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mollohan
     Moran (KS)
     Murphy
     Murtha
     Musgrave
     Myrick
     Nethercutt
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Upton
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--8

     Bono
     Boyd
     DeMint
     Filner
     Greenwood
     Matsui
     Solis
     Tauzin


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Bass) (during the vote). Members are 
reminded that 2 minutes remain in this vote.

                              {time}  1425

  Mr. TAYLOR of North Carolina, Mr. KNOLLENBERG, Mrs. JOHNSON of 
Connecticut, Mrs. MUSGRAVE and Mr. FEENEY changed their vote from 
``yea'' to ``nay.''
  Mr. ORTIZ changed his vote from ``nay'' to ``yea.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. FILNER. Mr. Speaker, on rollcall No. 143, I was unavoidably 
detained, and I missed the vote. Had I been present, I would have voted 
``yes.''
  Ms. SOLIS. Mr. Speaker, during rollcall vote No. 143 on the Neal 
Substitute Amendment, I was unavoidably detained. Had I been present, I 
would have voted ``yes.''
  The SPEAKER pro tempore. 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. ENGLISH. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 333, 
nays 89, not voting 11, as follows:

                             [Roll No. 144]

                               YEAS--333

     Ackerman
     Aderholt
     Akin
     Alexander
     Allen
     Baca
     Bachus
     Baker
     Baldwin
     Ballance
     Ballenger
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Bell
     Bereuter
     Berkley
     Biggert
     Bilirakis
     Bishop (GA)
     Bishop (NY)
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Boozman
     Boswell
     Boucher
     Bradley (NH)
     Brady (TX)
     Brown (OH)
     Brown (SC)
     Brown, Corrine
     Brown-Waite, Ginny
     Burgess
     Burns
     Burr
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardin
     Cardoza
     Carson (OK)
     Carter
     Castle
     Chabot
     Chandler
     Chocola
     Clay
     Coble
     Cole
     Collins
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cunningham
     Davis (AL)
     Davis (CA)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeFazio
     DeGette
     Delahunt
     DeLay
     Deutsch
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doggett
     Dooley (CA)
     Doolittle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Feeney
     Ferguson
     Flake
     Foley
     Forbes
     Ford
     Fossella
     Franks (AZ)

[[Page 8451]]


     Frelinghuysen
     Frost
     Gallegly
     Garrett (NJ)
     Gephardt
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harman
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Hooley (OR)
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kaptur
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kildee
     Kind
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kleczka
     Kline
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Langevin
     Lantos
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Lucas (OK)
     Lynch
     Majette
     Maloney
     Manzullo
     Marshall
     Matheson
     McCarthy (NY)
     McCotter
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Meehan
     Meek (FL)
     Meeks (NY)
     Mica
     Michaud
     Millender-McDonald
     Miller (FL)
     Miller (MI)
     Miller (NC)
     Miller, Gary
     Miller, George
     Moore
     Moran (KS)
     Moran (VA)
     Murphy
     Musgrave
     Myrick
     Nadler
     Nethercutt
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Ose
     Otter
     Owens
     Oxley
     Pascrell
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Porter
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Renzi
     Reyes
     Reynolds
     Rodriguez
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ruppersberger
     Ryan (OH)
     Ryan (WI)
     Ryun (KS)
     Sanchez, Loretta
     Sanders
     Sandlin
     Saxton
     Schiff
     Schrock
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Snyder
     Souder
     Stearns
     Strickland
     Stupak
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Taylor (NC)
     Terry
     Thomas
     Thompson (MS)
     Thornberry
     Tiahrt
     Tiberi
     Toomey
     Turner (OH)
     Udall (CO)
     Upton
     Van Hollen
     Vitter
     Walden (OR)
     Walsh
     Wamp
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NAYS--89

     Abercrombie
     Andrews
     Baird
     Becerra
     Berman
     Berry
     Blumenauer
     Brady (PA)
     Capps
     Capuano
     Carson (IN)
     Case
     Clyburn
     Conyers
     Cooper
     Davis (FL)
     Davis (IL)
     DeLauro
     Dicks
     Dingell
     Doyle
     Emanuel
     Fattah
     Frank (MA)
     Green (TX)
     Grijalva
     Gutierrez
     Hastings (FL)
     Hill
     Hinchey
     Holt
     Hoyer
     Inslee
     Jackson (IL)
     Kanjorski
     Kilpatrick
     Kucinich
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Markey
     Matsui
     McCarthy (MO)
     McCollum
     McDermott
     McGovern
     McNulty
     Menendez
     Mollohan
     Murtha
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Pallone
     Pastor
     Payne
     Pelosi
     Rangel
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez, Linda T.
     Schakowsky
     Scott (VA)
     Serrano
     Sherman
     Smith (WA)
     Spratt
     Stark
     Stenholm
     Taylor (MS)
     Thompson (CA)
     Tierney
     Towns
     Turner (TX)
     Udall (NM)
     Velazquez
     Visclosky
     Watson
     Watt
     Waxman
     Wexler
     Woolsey

                             NOT VOTING--11

     Bono
     Boyd
     Cummings
     DeMint
     Filner
     Greenwood
     Honda
     Jackson-Lee (TX)
     Solis
     Tauzin
     Waters


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Bass) (during the vote). Members are 
advised there are 2 minutes remaining in this vote.

                              {time}  1442

  Mr. GEORGE MILLER of California changed his 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.
  Stated for:
  Mr. FILNER. Mr. Speaker, on rollcall No. 144, I was unavoidably 
detained, and I missed the vote. Had I been present, I would have voted 
``yea.''
  Mr. HONDA. Mr. Speaker, on rollcall No. 144, had I been present, I 
would have voted ``yea.''
  Ms. SOLIS. Mr. Speaker, during rollcall vote No. 144 on final passage 
on H.R. 4227, I was unavoidably detained. Had I been present, I would 
have voted ``No.''

                          ____________________