[Congressional Record (Bound Edition), Volume 153 (2007), Part 22]
[House]
[Pages 30739-30775]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    TEMPORARY TAX RELIEF ACT OF 2007

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

                               H.R. 3996

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

     SECTION 1. SHORT TITLE, ETC.

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

Sec. 1. Short title, etc.

                          TITLE I--AMT RELIEF

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

                      TITLE II--ONE-YEAR EXTENDERS

         Subtitle A--Extenders Primarily Affecting Individuals

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

          Subtitle B--Extenders Primarily Affecting Businesses

Sec. 221. Research credit.
Sec. 222. Indian employment credit.
Sec. 223. New markets tax credit.
Sec. 224. Railroad track maintenance.
Sec. 225. Fifteen-year straight-line cost recovery for qualified 
              leasehold improvements and qualified restaurant property.
Sec. 226. Seven-year cost recovery period for motorsports racing track 
              facility.
Sec. 227. Accelerated depreciation for business property on Indian 
              reservation.
Sec. 228. Expensing of environmental remediation costs.

[[Page 30740]]

Sec. 229. Deduction allowable with respect to income attributable to 
              domestic production activities in Puerto Rico.
Sec. 230. Modification of tax treatment of certain payments to 
              controlling exempt organizations.
Sec. 231. Extension and modification of credit to holders of qualified 
              zone academy bonds.
Sec. 232. Tax incentives for investment in the District of Columbia.
Sec. 233. Extension of economic development credit for American Samoa.
Sec. 234. Enhanced charitable deduction for contributions of food 
              inventory.
Sec. 235. Enhanced charitable deduction for contributions of book 
              inventory to public schools.
Sec. 236. Enhanced deduction for qualified computer contributions.
Sec. 237. Basis adjustment to stock of S corporations making charitable 
              contributions of property.
Sec. 238. Extension of work opportunity tax credit for Hurricane 
              Katrina employees.

                      Subtitle C--Other Extenders

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

              TITLE III--MORTGAGE FORGIVENESS DEBT RELIEF

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

                  TITLE IV--ADMINISTRATIVE PROVISIONS

Sec. 401. Repeal of authority to enter into private debt collection 
              contracts.
Sec. 402. Delay of application of withholding requirement on certain 
              governmental payments for goods and services.
Sec. 403. Clarification of entitlement of Virgin Islands residents to 
              protections of limitations on assessment and collection 
              of tax.
Sec. 404. Revision of tax rules on expatriation.
Sec. 405. Repeal of suspension of certain penalties and interest.
Sec. 406. Increase in information return penalties.
Sec. 407. Unused merchandise drawback.

                          TITLE I--AMT RELIEF

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

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

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

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

                      TITLE II--ONE-YEAR EXTENDERS

         Subtitle A--Extenders Primarily Affecting Individuals

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

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

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

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

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

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

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

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

     SEC. 205. QUALIFIED CONSERVATION CONTRIBUTIONS.

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

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

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

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

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

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

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

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

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

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

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

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

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

     SEC. 212. QUALIFIED INVESTMENT ENTITIES.

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

     SEC. 213. REFUNDABLE CHILD CREDIT.

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

[[Page 30741]]



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

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

          Subtitle B--Extenders Primarily Affecting Businesses

     SEC. 221. RESEARCH CREDIT.

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

     SEC. 222. INDIAN EMPLOYMENT CREDIT.

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

     SEC. 223. NEW MARKETS TAX CREDIT.

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

     SEC. 224. RAILROAD TRACK MAINTENANCE.

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

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

       (a) In General.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2007.

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

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

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

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

     SEC. 228. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

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

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

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

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

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

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

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

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

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

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

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

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

       (a) In General.--Clause (iv) of section 170(e)(3)(C) 
     (relating to termination) is amended by striking ``December 
     31, 2007'' and inserting ``December 31, 2008''.

[[Page 30742]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2007.

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

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

     SEC. 236. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER 
                   CONTRIBUTIONS.

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

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

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

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

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

                      Subtitle C--Other Extenders

     SEC. 241. DISCLOSURE FOR COMBINED EMPLOYMENT TAX REPORTING.

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

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

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

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

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

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

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

     SEC. 245. AUTHORITY FOR UNDERCOVER OPERATIONS.

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

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

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

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

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

              TITLE III--MORTGAGE FORGIVENESS DEBT RELIEF

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

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

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

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

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

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

[[Page 30743]]



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

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

       ``(I) any portion of the 5-year period described in 
     subsection (a) which is after the last date that such 
     property is used as the principal residence of the taxpayer 
     or the taxpayer's spouse,
       ``(II) any period (not to exceed an aggregate period of 10 
     years) during which the taxpayer or the taxpayer's spouse is 
     serving on qualified official extended duty (as defined in 
     subsection (d)(9)(C)) described in clause (i), (ii), or (iii) 
     of subsection (d)(9)(A), and

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

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

                  TITLE IV--ADMINISTRATIVE PROVISIONS

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

       (a) In General.--Subchapter A of chapter 64 is amended by 
     striking section 6306.
       (b) Conforming Amendments.--
       (1) Subchapter B of chapter 76 is amended by striking 
     section 7433A.
       (2) Section 7811 is amended by striking subsection (g).
       (3) Section 1203 of the Internal Revenue Service 
     Restructuring Act of 1998 is amended by striking subsection 
     (e).
       (4) The table of sections for subchapter A of chapter 64 is 
     amended by striking the item relating to section 6306.
       (5) The table of sections for subchapter B of chapter 76 is 
     amended by striking the item relating to section 7433A.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect on the date of the enactment of this Act.
       (2) Exception for existing contracts, etc.--The amendments 
     made by this section shall not apply to any contract which 
     was entered into before July 18, 2007, and is not renewed or 
     extended on or after such date.
       (3) Unauthorized contracts and extensions treated as 
     void.--Any qualified tax collection contract (as defined in 
     section 6306 of the Internal Revenue Code of 1986, as in 
     effect before its repeal) which is entered into on or after 
     July 18, 2007, and any extension or renewal on or after such 
     date of any qualified tax collection contract (as so defined) 
     shall be void.

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

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

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

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

     SEC. 404. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--All property of a covered expatriate 
     shall be treated as sold on the day before the expatriation 
     date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence, determined without 
     regard to paragraph (3).
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be includible in the gross income of any 
     individual by reason of paragraph (1) shall be reduced (but 
     not below zero) by $600,000.
       ``(B) Adjustment for inflation.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2008, the dollar amount in 
     subparagraph (A) shall be increased by an amount equal to--

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

       ``(ii) Rounding.--If any amount as adjusted under clause 
     (i) is not a multiple of $1,000, such amount shall be rounded 
     to the nearest multiple of $1,000.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the time for payment of the 
     additional tax attributable to such property shall be 
     extended until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of extension.--The due date for payment 
     of tax may not be extended under this subsection later than 
     the due date for the return of tax imposed by this chapter 
     for the taxable year which includes the date of death of the 
     expatriate (or, if earlier, the time that the security 
     provided with respect to the property fails to meet the 
     requirements of paragraph (4), unless the taxpayer corrects 
     such failure within the time specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond which is furnished to, and accepted by, 
     the Secretary, which is conditioned on the payment of tax 
     (and interest

[[Page 30744]]

     thereon), and which meets the requirements of section 6325, 
     or
       ``(ii) it is another form of security for such payment 
     (including letters of credit) that meets such requirements as 
     the Secretary may prescribe.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer makes an irrevocable 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable.
       ``(7) Interest.--For purposes of section 6601, the last 
     date for the payment of tax shall be determined without 
     regard to the election under this subsection.
       ``(c) Exception for Certain Property.--Subsection (a) shall 
     not apply to--
       ``(1) any deferred compensation item (as defined in 
     subsection (d)(4)),
       ``(2) any specified tax deferred account (as defined in 
     subsection (e)(2)), and
       ``(3) any interest in a nongrantor trust (as defined in 
     subsection (f)(3)).
       ``(d) Treatment of Deferred Compensation Items.--
       ``(1) Withholding on eligible deferred compensation 
     items.--
       ``(A) In general.--In the case of any eligible deferred 
     compensation item, the payor shall deduct and withhold from 
     any taxable payment to a covered expatriate with respect to 
     such item a tax equal to 30 percent thereof.
       ``(B) Taxable payment.--For purposes of subparagraph (A), 
     the term `taxable payment' means with respect to a covered 
     expatriate any payment to the extent it would be includible 
     in the gross income of the covered expatriate if such 
     expatriate continued to be subject to tax as a citizen or 
     resident of the United States. A deferred compensation item 
     shall be taken into account as a payment under the preceding 
     sentence when such item would be so includible.
       ``(2) Other deferred compensation items.--In the case of 
     any deferred compensation item which is not an eligible 
     deferred compensation item--
       ``(A)(i) with respect to any deferred compensation item to 
     which clause (ii) does not apply, an amount equal to the 
     present value of the covered expatriate's accrued benefit 
     shall be treated as having been received by such individual 
     on the day before the expatriation date as a distribution 
     under the plan, and
       ``(ii) with respect to any deferred compensation item 
     referred to in paragraph (4)(D), the rights of the covered 
     expatriate to such item shall be treated as becoming 
     transferable and not subject to a substantial risk of 
     forfeiture on the day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the plan to reflect such treatment.
       ``(3) Eligible deferred compensation items.--For purposes 
     of this subsection, the term `eligible deferred compensation 
     item' means any deferred compensation item with respect to 
     which--
       ``(A) the payor of such item is--
       ``(i) a United States person, or
       ``(ii) a person who is not a United States person but who 
     elects to be treated as a United States person for purposes 
     of paragraph (1) and meets such requirements as the Secretary 
     may provide to ensure that the payor will meet the 
     requirements of paragraph (1), and
       ``(B) the covered expatriate--
       ``(i) notifies the payor of his status as a covered 
     expatriate, and
       ``(ii) makes an irrevocable waiver of any right to claim 
     any reduction under any treaty with the United States in 
     withholding on such item.
       ``(4) Deferred compensation item.--For purposes of this 
     subsection, the term `deferred compensation item' means--
       ``(A) any interest in a plan or arrangement described in 
     section 219(g)(5),
       ``(B) any interest in a foreign pension plan or similar 
     retirement arrangement or program,
       ``(C) any item of deferred compensation, and
       ``(D) any property, or right to property, which the 
     individual is entitled to receive in connection with the 
     performance of services to the extent not previously taken 
     into account under section 83 or in accordance with section 
     83.
       ``(5) Exception.--Paragraphs (1) and (2) shall not apply to 
     any deferred compensation item which is attributable to 
     services performed outside the United States while the 
     covered expatriate was not a citizen or resident of the 
     United States.
       ``(6) Special rules.--
       ``(A) Application of withholding rules.--Rules similar to 
     the rules of subchapter B of chapter 3 shall apply for 
     purposes of this subsection.
       ``(B) Application of tax.--Any item subject to the 
     withholding tax imposed under paragraph (1) shall be subject 
     to tax under section 871.
       ``(C) Coordination with other withholding requirements.--
     Any item subject to withholding under paragraph (1) shall not 
     be subject to withholding under section 1441 or chapter 24.
       ``(e) Treatment of Specified Tax Deferred Accounts.--
       ``(1) Account treated as distributed.--In the case of any 
     interest in a specified tax deferred account held by a 
     covered expatriate on the day before the expatriation date--
       ``(A) the covered expatriate shall be treated as receiving 
     a distribution of his entire interest in such account on the 
     day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the account to reflect such treatment.
       ``(2) Specified tax deferred account.--For purposes of 
     paragraph (1), the term `specified tax deferred account' 
     means an individual retirement plan (as defined in section 
     7701(a)(37)) other than any arrangement described in 
     subsection (k) or (p) of section 408, a qualified tuition 
     program (as defined in section 529), a Coverdell education 
     savings account (as defined in section 530), a health savings 
     account (as defined in section 223), and an Archer MSA (as 
     defined in section 220).
       ``(f) Special Rules for Nongrantor Trusts.--
       ``(1) In general.--In the case of a distribution (directly 
     or indirectly) of any property from a nongrantor trust to a 
     covered expatriate--
       ``(A) the trustee shall deduct and withhold from such 
     distribution an amount equal to 30 percent of the taxable 
     portion of the distribution, and
       ``(B) if the fair market value of such property exceeds its 
     adjusted basis in the hands of the trust, gain shall be 
     recognized to the trust as if such property were sold to the 
     expatriate at its fair market value.
       ``(2) Taxable portion.--For purposes of this subsection, 
     the term `taxable portion' means, with respect to any 
     distribution, that portion of the distribution which would be 
     includible in the gross income of the covered expatriate if 
     such expatriate continued to be subject to tax as a citizen 
     or resident of the United States.
       ``(3) Nongrantor trust.--For purposes of this subsection, 
     the term `nongrantor trust' means the portion of any trust 
     that the individual is not considered the owner of under 
     subpart E of part I of subchapter J. The determination under 
     the preceding sentence shall be made immediately before the 
     expatriation date.
       ``(4) Special rules relating to withholding.--For purposes 
     of this subsection--
       ``(A) rules similar to the rules of subsection (d)(6) shall 
     apply, and
       ``(B) the covered expatriate shall be treated as having 
     waived any right to claim any reduction under any treaty with 
     the United States in withholding on any distribution to which 
     paragraph (1)(A) applies.
       ``(5) Application.--This subsection shall apply to a 
     nongrantor trust only if the covered expatriate was a 
     beneficiary of the trust on the day before the expatriation 
     date.
       ``(g) Definitions and Special Rules Relating to 
     Expatriation.--For purposes of this section--
       ``(1) Covered expatriate.--
       ``(A) In general.--The term `covered expatriate' means an 
     expatriate who meets the requirements of subparagraph (A), 
     (B), or (C) of section 877(a)(2).
       ``(B) Exceptions.--An individual shall not be treated as 
     meeting the requirements of subparagraph (A) or (B) of 
     section 877(a)(2) if--
       ``(i) the individual--

       ``(I) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(II) has been a resident of the United States (as defined 
     in section 7701(b)(1)(A)(ii)) for not more than 10 taxable 
     years during the 15-taxable year period ending with the 
     taxable year during which the expatriation date occurs, or

       ``(ii)(I) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(II) the individual has been a resident of the United 
     States (as so defined) for not more than 10 taxable years 
     before the date of relinquishment.
       ``(C) Covered expatriates also subject to tax as citizens 
     or residents.--In the case of any covered expatriate who is 
     subject to tax as a citizen or resident of the United States 
     for any period beginning after the expatriation date, such 
     individual shall not be treated as a covered expatriate 
     during such period for purposes of subsections (d)(1) and (f) 
     and section 2801.
       ``(2) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes his 
     citizenship, and
       ``(B) any long-term resident of the United States who 
     ceases to be a lawful permanent resident of the United States 
     (within the meaning of section 7701(b)(6)).
       ``(3) Expatriation date.--The term `expatriation date' 
     means--

[[Page 30745]]

       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date on which the individual ceases to be a 
     lawful permanent resident of the United States (within the 
     meaning of section 7701(b)(6)).
       ``(4) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(5) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(6) Early distribution tax.--The term `early distribution 
     tax' means any increase in tax imposed under section 72(t), 
     220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
       ``(h) Other Rules.--
       ``(1) Termination of deferrals, etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(A) any time period for acquiring property which would 
     result in the reduction in the amount of gain recognized with 
     respect to property disposed of by the taxpayer shall 
     terminate on the day before the expatriation date, and
       ``(B) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(2) Step-up in basis.--Solely for purposes of determining 
     any tax imposed by reason of subsection (a), property which 
     was held by an individual on the date the individual first 
     became a resident of the United States (within the meaning of 
     section 7701(b)) shall be treated as having a basis on such 
     date of not less than the fair market value of such property 
     on such date. The preceding sentence shall not apply if the 
     individual elects not to have such sentence apply. Such an 
     election, once made, shall be irrevocable.
       ``(3) Coordination with section 684.--If the expatriation 
     of any individual would result in the recognition of gain 
     under section 684, this section shall be applied after the 
     application of section 684.
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Tax on Gifts and Bequests Received by United States 
     Citizens and Residents From Expatriates.--
       (1) In general.--Subtitle B (relating to estate and gift 
     taxes) is amended by inserting after chapter 14 the following 
     new chapter:

           ``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

     ``SEC. 2801. IMPOSITION OF TAX.

       ``(a) In General.--If, during any calendar year, any United 
     States citizen or resident receives any covered gift or 
     bequest, there is hereby imposed a tax equal to the product 
     of--
       ``(1) the highest rate of tax specified in the table 
     contained in section 2001(c) as in effect on the date of such 
     receipt (or, if greater, the highest rate of tax specified in 
     the table applicable under section 2502(a) as in effect on 
     the date), and
       ``(2) the value of such covered gift or bequest.
       ``(b) Tax To Be Paid by Recipient.--The tax imposed by 
     subsection (a) on any covered gift or bequest shall be paid 
     by the person receiving such gift or bequest.
       ``(c) Exception for Certain Gifts.--Subsection (a) shall 
     apply only to the extent that the value of covered gifts and 
     bequests received by any person during the calendar year 
     exceeds $10,000.
       ``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax 
     imposed by subsection (a) on any covered gift or bequest 
     shall be reduced by the amount of any gift or estate tax paid 
     to a foreign country with respect to such covered gift or 
     bequest.
       ``(e) Covered Gift or Bequest.--
       ``(1) In general.--For purposes of this chapter, the term 
     `covered gift or bequest' means--
       ``(A) any property acquired by gift directly or indirectly 
     from an individual who, at the time of such acquisition, is a 
     covered expatriate, and
       ``(B) any property acquired directly or indirectly by 
     reason of the death of an individual who, immediately before 
     such death, was a covered expatriate.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Such term shall not include--
       ``(A) any property shown on a timely filed return of tax 
     imposed by chapter 12 which is a taxable gift by the covered 
     expatriate, and
       ``(B) any property included in the gross estate of the 
     covered expatriate for purposes of chapter 11 and shown on a 
     timely filed return of tax imposed by chapter 11 of the 
     estate of the covered expatriate.
       ``(3) Transfers in trust.--
       ``(A) Domestic trusts.--In the case of a covered gift or 
     bequest made to a domestic trust--
       ``(i) subsection (a) shall apply in the same manner as if 
     such trust were a United States citizen, and
       ``(ii) the tax imposed by subsection (a) on such gift or 
     bequest shall be paid by such trust.
       ``(B) Foreign trusts.--
       ``(i) In general.--In the case of a covered gift or bequest 
     made to a foreign trust, subsection (a) shall apply to any 
     distribution attributable to such gift or bequest from such 
     trust (whether from income or corpus) to a United States 
     citizen or resident in the same manner as if such 
     distribution were a covered gift or bequest.
       ``(ii) Deduction for tax paid by recipient.--There shall be 
     allowed as a deduction under section 164 the amount of tax 
     imposed by this section which is paid or accrued by a United 
     States citizen or resident by reason of a distribution from a 
     foreign trust, but only to the extent such tax is imposed on 
     the portion of such distribution which is included in the 
     gross income of such citizen or resident.
       ``(iii) Election to be treated as domestic trust.--Solely 
     for purposes of this section, a foreign trust may elect to be 
     treated as a domestic trust. Such an election may be revoked 
     with the consent of the Secretary.
       ``(f) Covered Expatriate.--For purposes of this section, 
     the term `covered expatriate' has the meaning given to such 
     term by section 877A(g)(1).''.
       (2) Clerical amendment.--The table of chapters for subtitle 
     B is amended by inserting after the item relating to chapter 
     14 the following new item:

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

       (c) Definition of Termination of United States 
     Citizenship.--
       (1) In general.--Section 7701(a) is amended by adding at 
     the end the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(g)(4).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 877(e) is amended to read as 
     follows:
       ``(1) In general.--Any long-term resident of the United 
     States who ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)) 
     shall be treated for purposes of this section and sections 
     2107, 2501, and 6039G in the same manner as if such resident 
     were a citizen of the United States who lost United States 
     citizenship on the date of such cessation or commencement.''.
       (B) Paragraph (6) of section 7701(b) is amended by adding 
     at the end the following flush sentence:
     ``An individual shall cease to be treated as a lawful 
     permanent resident of the United States if such individual 
     commences to be treated as a resident of a foreign country 
     under the provisions of a tax treaty between the United 
     States and the foreign country, does not waive the benefits 
     of such treaty applicable to residents of the foreign 
     country, and notifies the Secretary of the commencement of 
     such treatment.''.
       (C) Section 7701 is amended by striking subsection (n) and 
     by redesignating subsections (o) and (p) as subsections (n) 
     and (o), respectively.
       (d) Information Returns.--Section 6039G is amended--
       (1) by inserting ``or 877A'' after ``section 877(b)'' in 
     subsection (a), and
       (2) by inserting ``or 877A'' after ``section 877(a)'' in 
     subsection (d).
       (e) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.
       (f) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (as defined in section 877A(g) of the Internal Revenue Code 
     of 1986, as added by this section) whose

[[Page 30746]]

     expatriation date (as so defined) is on or after the date of 
     the enactment of this Act.
       (2) Gifts and bequests.--Chapter 15 of the Internal Revenue 
     Code of 1986 (as added by subsection (b)) shall apply to 
     covered gifts and bequests (as defined in section 2801 of 
     such Code, as so added) received on or after the date of the 
     enactment of this Act, regardless of when the transferor 
     expatriated.

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

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

     SEC. 406. INCREASE IN INFORMATION RETURN PENALTIES.

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

     SEC. 407. UNUSED MERCHANDISE DRAWBACK.

       (a) In General.--Section 313(j)(2) of the Tariff Act of 
     1930 (19 U.S.C. 1313(j)(2)) is amended by adding at the end 
     the following: ``For purposes of subparagraph (A) of this 
     paragraph, wine of the same color shall be deemed to be 
     commercially interchangeable.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to House Resolution 809, the 
amendment in the nature of a substitute printed in the bill is adopted 
and the bill, as amended, is considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 3996

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

     SECTION 1. SHORT TITLE, ETC.

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

Sec. 1. Short title, etc.

                          TITLE I--AMT RELIEF

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

               TITLE II--ADDITIONAL INDIVIDUAL TAX RELIEF

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

                     TITLE III--ONE-YEAR EXTENDERS

         Subtitle A--Extenders Primarily Affecting Individuals

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

          Subtitle B--Extenders Primarily Affecting Businesses

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

                      Subtitle C--Other Extenders

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

               TITLE IV--MORTGAGE FORGIVENESS DEBT RELIEF

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

                   TITLE V--ADMINISTRATIVE PROVISIONS

Sec. 501. Repeal of authority to enter into private debt collection 
              contracts.
Sec. 502. Delay of application of withholding requirement on certain 
              governmental payments for goods and services.

[[Page 30747]]

Sec. 503. Clarification of entitlement of Virgin Islands residents to 
              protections of limitations on assessment and collection 
              of tax.
Sec. 504. Revision of tax rules on expatriation.
Sec. 505. Repeal of suspension of certain penalties and interest.
Sec. 506. Unused merchandise drawback.

                      TITLE VI--REVENUE PROVISIONS

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

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

   Subtitle B--Provisions Related to Certain Investment Partnerships

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

                      Subtitle C--Other Provisions

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

                          TITLE I--AMT RELIEF

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

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

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

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

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

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

               TITLE II--ADDITIONAL INDIVIDUAL TAX RELIEF

     SEC. 201. REFUNDABLE CHILD CREDIT.

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

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

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

                     TITLE III--ONE-YEAR EXTENDERS

         Subtitle A--Extenders Primarily Affecting Individuals

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

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

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

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

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

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

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

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

     SEC. 305. QUALIFIED CONSERVATION CONTRIBUTIONS.

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

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

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

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

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

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

       (a) In General.--Subclause (II) of section 32(c)(2)(B)(vi) 
     (defining earned income) is

[[Page 30748]]

     amended by striking ``January 1, 2008'' and inserting 
     ``January 1, 2009''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 2007.

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

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

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

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

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

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

     SEC. 312. QUALIFIED INVESTMENT ENTITIES.

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

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

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

          Subtitle B--Extenders Primarily Affecting Businesses

     SEC. 321. RESEARCH CREDIT.

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

     SEC. 322. INDIAN EMPLOYMENT CREDIT.

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

     SEC. 323. NEW MARKETS TAX CREDIT.

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

     SEC. 324. RAILROAD TRACK MAINTENANCE.

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

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

       (a) In General.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2007.

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

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

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

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

     SEC. 328. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

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

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

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

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

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

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

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

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

       (a) Designation of Zone.--
       (1) In general.--Subsection (f) of section 1400 is amended 
     by striking ``2007'' both places it appears and inserting 
     ``2008''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to periods beginning after December 31, 2007.
       (b) Tax-Exempt Economic Development Bonds.--
       (1) In general.--Subsection (b) of section 1400A is amended 
     by striking ``2007'' and inserting ``2008''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to bonds issued after December 31, 2007.
       (c) Zero Percent Capital Gains Rate.--
       (1) In general.--Subsection (b) of section 1400B is amended 
     by striking ``2008'' each place it appears and inserting 
     ``2009''.
       (2) Conforming amendments.--
       (A) Section 1400B(e)(2) is amended--
       (i) by striking ``2012'' and inserting ``2013'', and

[[Page 30749]]

       (ii) by striking ``2012'' in the heading thereof and 
     inserting ``2013''.
       (B) Section 1400B(g)(2) is amended by striking ``2012'' and 
     inserting ``2013''.
       (C) Section 1400F(d) is amended by striking ``2012'' and 
     inserting ``2013''.
       (3) Effective dates.--
       (A) Extension.--The amendments made by paragraph (1) shall 
     apply to acquisitions after December 31, 2007.
       (B) Conforming amendments.--The amendments made by 
     paragraph (2) shall take effect on the date of the enactment 
     of this Act.
       (d) First-Time Homebuyer Credit.--
       (1) In general.--Subsection (i) of section 1400C is amended 
     by striking ``2008'' and inserting ``2009''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property purchased after December 31, 2007.

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

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

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

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

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

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

     SEC. 336. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER 
                   CONTRIBUTIONS.

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

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

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

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

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

                      Subtitle C--Other Extenders

     SEC. 341. DISCLOSURE FOR COMBINED EMPLOYMENT TAX REPORTING.

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

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

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

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

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

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

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

     SEC. 345. AUTHORITY FOR UNDERCOVER OPERATIONS.

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

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

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

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

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

               TITLE IV--MORTGAGE FORGIVENESS DEBT RELIEF

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

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

[[Page 30750]]



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

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

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

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

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

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

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

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

                   TITLE V--ADMINISTRATIVE PROVISIONS

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

       (a) In General.--Subchapter A of chapter 64 is amended by 
     striking section 6306.
       (b) Conforming Amendments.--
       (1) Subchapter B of chapter 76 is amended by striking 
     section 7433A.
       (2) Section 7811 is amended by striking subsection (g).
       (3) Section 1203 of the Internal Revenue Service 
     Restructuring Act of 1998 is amended by striking subsection 
     (e).
       (4) The table of sections for subchapter A of chapter 64 is 
     amended by striking the item relating to section 6306.
       (5) The table of sections for subchapter B of chapter 76 is 
     amended by striking the item relating to section 7433A.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect on the date of the enactment of this Act.
       (2) Exception for existing contracts, etc.--The amendments 
     made by this section shall not apply to any contract which 
     was entered into before July 18, 2007, and is not renewed or 
     extended on or after such date.
       (3) Unauthorized contracts and extensions treated as 
     void.--Any qualified tax collection contract (as defined in 
     section 6306 of the Internal Revenue Code of 1986, as in 
     effect before its repeal) which is entered into on or after 
     July 18, 2007, and any extension or renewal on or after such 
     date of any qualified tax collection contract (as so defined) 
     shall be void.

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

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

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

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

     SEC. 504. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--All property of a covered expatriate 
     shall be treated as sold on the day before the expatriation 
     date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.

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

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

       ``(ii) Rounding.--If any amount as adjusted under clause 
     (i) is not a multiple of $1,000, such amount shall be rounded 
     to the nearest multiple of $1,000.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the time for payment of the 
     additional tax attributable to such property shall be 
     extended until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in

[[Page 30751]]

     whole or in part, until such other date as the Secretary may 
     prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of extension.--The due date for payment 
     of tax may not be extended under this subsection later than 
     the due date for the return of tax imposed by this chapter 
     for the taxable year which includes the date of death of the 
     expatriate (or, if earlier, the time that the security 
     provided with respect to the property fails to meet the 
     requirements of paragraph (4), unless the taxpayer corrects 
     such failure within the time specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond which is furnished to, and accepted by, 
     the Secretary, which is conditioned on the payment of tax 
     (and interest thereon), and which meets the requirements of 
     section 6325, or
       ``(ii) it is another form of security for such payment 
     (including letters of credit) that meets such requirements as 
     the Secretary may prescribe.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer makes an irrevocable 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable.
       ``(7) Interest.--For purposes of section 6601, the last 
     date for the payment of tax shall be determined without 
     regard to the election under this subsection.
       ``(c) Exception for Certain Property.--Subsection (a) shall 
     not apply to--
       ``(1) any deferred compensation item (as defined in 
     subsection (d)(4)),
       ``(2) any specified tax deferred account (as defined in 
     subsection (e)(2)), and
       ``(3) any interest in a nongrantor trust (as defined in 
     subsection (f)(3)).
       ``(d) Treatment of Deferred Compensation Items.--
       ``(1) Withholding on eligible deferred compensation 
     items.--
       ``(A) In general.--In the case of any eligible deferred 
     compensation item, the payor shall deduct and withhold from 
     any taxable payment to a covered expatriate with respect to 
     such item a tax equal to 30 percent thereof.
       ``(B) Taxable payment.--For purposes of subparagraph (A), 
     the term `taxable payment' means with respect to a covered 
     expatriate any payment to the extent it would be includible 
     in the gross income of the covered expatriate if such 
     expatriate continued to be subject to tax as a citizen or 
     resident of the United States. A deferred compensation item 
     shall be taken into account as a payment under the preceding 
     sentence when such item would be so includible.
       ``(2) Other deferred compensation items.--In the case of 
     any deferred compensation item which is not an eligible 
     deferred compensation item--
       ``(A)(i) with respect to any deferred compensation item to 
     which clause (ii) does not apply, an amount equal to the 
     present value of the covered expatriate's accrued benefit 
     shall be treated as having been received by such individual 
     on the day before the expatriation date as a distribution 
     under the plan, and
       ``(ii) with respect to any deferred compensation item 
     referred to in paragraph (4)(D), the rights of the covered 
     expatriate to such item shall be treated as becoming 
     transferable and not subject to a substantial risk of 
     forfeiture on the day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the plan to reflect such treatment.
       ``(3) Eligible deferred compensation items.--For purposes 
     of this subsection, the term `eligible deferred compensation 
     item' means any deferred compensation item with respect to 
     which--
       ``(A) the payor of such item is--
       ``(i) a United States person, or
       ``(ii) a person who is not a United States person but who 
     elects to be treated as a United States person for purposes 
     of paragraph (1) and meets such requirements as the Secretary 
     may provide to ensure that the payor will meet the 
     requirements of paragraph (1), and
       ``(B) the covered expatriate--
       ``(i) notifies the payor of his status as a covered 
     expatriate, and
       ``(ii) makes an irrevocable waiver of any right to claim 
     any reduction under any treaty with the United States in 
     withholding on such item.
       ``(4) Deferred compensation item.--For purposes of this 
     subsection, the term `deferred compensation item' means--
       ``(A) any interest in a plan or arrangement described in 
     section 219(g)(5),
       ``(B) any interest in a foreign pension plan or similar 
     retirement arrangement or program,
       ``(C) any item of deferred compensation, and
       ``(D) any property, or right to property, which the 
     individual is entitled to receive in connection with the 
     performance of services to the extent not previously taken 
     into account under section 83 or in accordance with section 
     83.
       ``(5) Exception.--Paragraphs (1) and (2) shall not apply to 
     any deferred compensation item which is attributable to 
     services performed outside the United States while the 
     covered expatriate was not a citizen or resident of the 
     United States.
       ``(6) Special rules.--
       ``(A) Application of withholding rules.--Rules similar to 
     the rules of subchapter B of chapter 3 shall apply for 
     purposes of this subsection.
       ``(B) Application of tax.--Any item subject to the 
     withholding tax imposed under paragraph (1) shall be subject 
     to tax under section 871.
       ``(C) Coordination with other withholding requirements.--
     Any item subject to withholding under paragraph (1) shall not 
     be subject to withholding under section 1441 or chapter 24.
       ``(e) Treatment of Specified Tax Deferred Accounts.--
       ``(1) Account treated as distributed.--In the case of any 
     interest in a specified tax deferred account held by a 
     covered expatriate on the day before the expatriation date--
       ``(A) the covered expatriate shall be treated as receiving 
     a distribution of his entire interest in such account on the 
     day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the account to reflect such treatment.
       ``(2) Specified tax deferred account.--For purposes of 
     paragraph (1), the term `specified tax deferred account' 
     means an individual retirement plan (as defined in section 
     7701(a)(37)) other than any arrangement described in 
     subsection (k) or (p) of section 408, a qualified tuition 
     program (as defined in section 529), a Coverdell education 
     savings account (as defined in section 530), a health savings 
     account (as defined in section 223), and an Archer MSA (as 
     defined in section 220).
       ``(f) Special Rules for Nongrantor Trusts.--
       ``(1) In general.--In the case of a distribution (directly 
     or indirectly) of any property from a nongrantor trust to a 
     covered expatriate--
       ``(A) the trustee shall deduct and withhold from such 
     distribution an amount equal to 30 percent of the taxable 
     portion of the distribution, and
       ``(B) if the fair market value of such property exceeds its 
     adjusted basis in the hands of the trust, gain shall be 
     recognized to the trust as if such property were sold to the 
     expatriate at its fair market value.
       ``(2) Taxable portion.--For purposes of this subsection, 
     the term `taxable portion' means, with respect to any 
     distribution, that portion of the distribution which would be 
     includible in the gross income of the covered expatriate if 
     such expatriate continued to be subject to tax as a citizen 
     or resident of the United States.
       ``(3) Nongrantor trust.--For purposes of this subsection, 
     the term `nongrantor trust' means the portion of any trust 
     that the individual is not considered the owner of under 
     subpart E of part I of subchapter J. The determination under 
     the preceding sentence shall be made immediately before the 
     expatriation date.
       ``(4) Special rules relating to withholding.--For purposes 
     of this subsection--
       ``(A) rules similar to the rules of subsection (d)(6) shall 
     apply, and
       ``(B) the covered expatriate shall be treated as having 
     waived any right to claim any reduction under any treaty with 
     the United States in withholding on any distribution to which 
     paragraph (1)(A) applies.
       ``(5) Application.--This subsection shall apply to a 
     nongrantor trust only if the covered expatriate was a 
     beneficiary of the trust on the day before the expatriation 
     date.
       ``(g) Definitions and Special Rules Relating to 
     Expatriation.--For purposes of this section--
       ``(1) Covered expatriate.--
       ``(A) In general.--The term `covered expatriate' means an 
     expatriate who meets the requirements of subparagraph (A), 
     (B), or (C) of section 877(a)(2).
       ``(B) Exceptions.--An individual shall not be treated as 
     meeting the requirements of subparagraph (A) or (B) of 
     section 877(a)(2) if--
       ``(i) the individual--

       ``(I) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(II) has been a resident of the United States (as defined 
     in section 7701(b)(1)(A)(ii)) for not more than 10 taxable 
     years during the 15-taxable year period ending with the 
     taxable year during which the expatriation date occurs, or

       ``(ii)(I) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(II) the individual has been a resident of the United 
     States (as so defined) for not more than 10 taxable years 
     before the date of relinquishment.
       ``(C) Covered expatriates also subject to tax as citizens 
     or residents.--In the case of any covered expatriate who is 
     subject to tax as

[[Page 30752]]

     a citizen or resident of the United States for any period 
     beginning after the expatriation date, such individual shall 
     not be treated as a covered expatriate during such period for 
     purposes of subsections (d)(1) and (f) and section 2801.
       ``(2) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes his 
     citizenship, and
       ``(B) any long-term resident of the United States who 
     ceases to be a lawful permanent resident of the United States 
     (within the meaning of section 7701(b)(6)).
       ``(3) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date on which the individual ceases to be a 
     lawful permanent resident of the United States (within the 
     meaning of section 7701(b)(6)).
       ``(4) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

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

           ``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

     ``SEC. 2801. IMPOSITION OF TAX.

       ``(a) In General.--If, during any calendar year, any United 
     States citizen or resident receives any covered gift or 
     bequest, there is hereby imposed a tax equal to the product 
     of--
       ``(1) the highest rate of tax specified in the table 
     contained in section 2001(c) as in effect on the date of such 
     receipt (or, if greater, the highest rate of tax specified in 
     the table applicable under section 2502(a) as in effect on 
     the date), and
       ``(2) the value of such covered gift or bequest.
       ``(b) Tax To Be Paid by Recipient.--The tax imposed by 
     subsection (a) on any covered gift or bequest shall be paid 
     by the person receiving such gift or bequest.
       ``(c) Exception for Certain Gifts.--Subsection (a) shall 
     apply only to the extent that the value of covered gifts and 
     bequests received by any person during the calendar year 
     exceeds $10,000.
       ``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax 
     imposed by subsection (a) on any covered gift or bequest 
     shall be reduced by the amount of any gift or estate tax paid 
     to a foreign country with respect to such covered gift or 
     bequest.
       ``(e) Covered Gift or Bequest.--
       ``(1) In general.--For purposes of this chapter, the term 
     `covered gift or bequest' means--
       ``(A) any property acquired by gift directly or indirectly 
     from an individual who, at the time of such acquisition, is a 
     covered expatriate, and
       ``(B) any property acquired directly or indirectly by 
     reason of the death of an individual who, immediately before 
     such death, was a covered expatriate.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Such term shall not include--
       ``(A) any property shown on a timely filed return of tax 
     imposed by chapter 12 which is a taxable gift by the covered 
     expatriate, and
       ``(B) any property included in the gross estate of the 
     covered expatriate for purposes of chapter 11 and shown on a 
     timely filed return of tax imposed by chapter 11 of the 
     estate of the covered expatriate.
       ``(3) Transfers in trust.--
       ``(A) Domestic trusts.--In the case of a covered gift or 
     bequest made to a domestic trust--
       ``(i) subsection (a) shall apply in the same manner as if 
     such trust were a United States citizen, and
       ``(ii) the tax imposed by subsection (a) on such gift or 
     bequest shall be paid by such trust.
       ``(B) Foreign trusts.--
       ``(i) In general.--In the case of a covered gift or bequest 
     made to a foreign trust, subsection (a) shall apply to any 
     distribution attributable to such gift or bequest from such 
     trust (whether from income or corpus) to a United States 
     citizen or resident in the same manner as if such 
     distribution were a covered gift or bequest.
       ``(ii) Deduction for tax paid by recipient.--There shall be 
     allowed as a deduction under section 164 the amount of tax 
     imposed by this section which is paid or accrued by a United 
     States citizen or resident by reason of a distribution from a 
     foreign trust, but only to the extent such tax is imposed on 
     the portion of such distribution which is included in the 
     gross income of such citizen or resident.
       ``(iii) Election to be treated as domestic trust.--Solely 
     for purposes of this section, a foreign trust may elect to be 
     treated as a domestic trust. Such an election may be revoked 
     with the consent of the Secretary.
       ``(f) Covered Expatriate.--For purposes of this section, 
     the term `covered expatriate' has the meaning given to such 
     term by section 877A(g)(1).''.
       (2) Clerical amendment.--The table of chapters for subtitle 
     B is amended by inserting after the item relating to chapter 
     14 the following new item:

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

       (c) Definition of Termination of United States 
     Citizenship.--
       (1) In general.--Section 7701(a) is amended by adding at 
     the end the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(g)(4).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 877(e) is amended to read as 
     follows:
       ``(1) In general.--Any long-term resident of the United 
     States who ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)) 
     shall be treated for purposes of this section and sections 
     2107, 2501, and 6039G in the same manner as if such resident 
     were a citizen of the United States who lost United States 
     citizenship on the date of such cessation or commencement.''.
       (B) Paragraph (6) of section 7701(b) is amended by adding 
     at the end the following flush sentence:
     ``An individual shall cease to be treated as a lawful 
     permanent resident of the United States if such individual 
     commences to be treated as a resident of a foreign country 
     under the provisions of a tax treaty between the United 
     States and the foreign country, does not waive the benefits 
     of such treaty applicable to residents of the foreign 
     country, and notifies the Secretary of the commencement of 
     such treatment.''.
       (C) Section 7701 is amended by striking subsection (n) and 
     by redesignating subsections (o) and (p) as subsections (n) 
     and (o), respectively.
       (d) Information Returns.--Section 6039G is amended--
       (1) by inserting ``or 877A'' after ``section 877(b)'' in 
     subsection (a), and
       (2) by inserting ``or 877A'' after ``section 877(a)'' in 
     subsection (d).
       (e) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.
       (f) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (as defined in section 877A(g) of the Internal Revenue Code 
     of 1986, as added by this section) whose expatriation date 
     (as so defined) is on or after the date of the enactment of 
     this Act.

[[Page 30753]]

       (2) Gifts and bequests.--Chapter 15 of the Internal Revenue 
     Code of 1986 (as added by subsection (b)) shall apply to 
     covered gifts and bequests (as defined in section 2801 of 
     such Code, as so added) received on or after the date of the 
     enactment of this Act, regardless of when the transferor 
     expatriated.

     SEC. 505. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND 
                   INTEREST.

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

     SEC. 506. UNUSED MERCHANDISE DRAWBACK.

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

                      TITLE VI--REVENUE PROVISIONS

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

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

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

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

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

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

   Subtitle B--Provisions Related to Certain Investment Partnerships

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

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

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

       ``(a) Treatment of Distributive Share of Partnership 
     Items.--For purposes of this title, in the case of an 
     investment services partnership interest--
       ``(1) In general.--Notwithstanding section 702(b)--
       ``(A) any net income with respect to such interest for any 
     partnership taxable year shall be treated as ordinary income 
     for the performance of services, and
       ``(B) any net loss with respect to such interest for such 
     year, to the extent not disallowed under paragraph (2) for 
     such year, shall be treated as an ordinary loss.
       ``(2) Treatment of losses.--
       ``(A) Limitation.--Any net loss with respect to such 
     interest shall be allowed for any partnership taxable year 
     only to the extent that such loss does not exceed the excess 
     (if any) of--
       ``(i) the aggregate net income with respect to such 
     interest for all prior partnership taxable years, over
       ``(ii) the aggregate net loss with respect to such interest 
     not disallowed under this subparagraph for all prior 
     partnership taxable years.
       ``(B) Carryforward.--Any net loss for any partnership 
     taxable year which is not allowed by reason of subparagraph 
     (A) shall be treated as an item of loss with respect to such 
     partnership interest for the succeeding partnership taxable 
     year.
       ``(C) Basis adjustment.--No adjustment to the basis of a 
     partnership interest shall be made on account of any net loss 
     which is not allowed by reason of subparagraph (A).
       ``(D) Exception for basis attributable to purchase of a 
     partnership interest.--In the case of an investment services 
     partnership interest acquired by purchase, paragraph (1)(B) 
     shall not apply to so much of any net loss with respect to 
     such interest for any taxable year as does not exceed the 
     excess of--
       ``(i) the basis of such interest immediately after such 
     purchase, over
       ``(ii) the aggregate net loss with respect to such interest 
     to which paragraph (1)(B) did not apply by reason of this 
     subparagraph for all prior taxable years.

     Any net loss to which paragraph (1)(B) does not apply by 
     reason of this subparagraph shall not be taken into account 
     under subparagraph (A).
       ``(E) Prior partnership years.--Any reference in this 
     paragraph to prior partnership

[[Page 30754]]

     taxable years shall only include prior partnership taxable 
     years to which this section applies.
       ``(3) Net income and loss.--For purposes of this section--
       ``(A) Net income.--The term `net income' means, with 
     respect to any investment services partnership interest, for 
     any partnership taxable year, the excess (if any) of--
       ``(i) all items of income and gain taken into account by 
     the holder of such interest under section 702 with respect to 
     such interest for such year, over
       ``(ii) all items of deduction and loss so taken into 
     account.
       ``(B) Net loss.--The term `net loss' means with respect to 
     such interest for such year, the excess (if any) of the 
     amount described in subparagraph (A)(ii) over the amount 
     described in subparagraph (A)(i).
       ``(b) Dispositions of Partnership Interests.--
       ``(1) Gain.--Any gain on the disposition of an investment 
     services partnership interest shall be treated as ordinary 
     income for the performance of services.
       ``(2) Loss.--Any loss on the disposition of an investment 
     services partnership interest shall be treated as an ordinary 
     loss to the extent of the excess (if any) of--
       ``(A) the aggregate net income with respect to such 
     interest for all partnership taxable years, over
       ``(B) the aggregate net loss with respect to such interest 
     allowed under subsection (a)(2) for all partnership taxable 
     years.
       ``(3) Disposition of portion of interest.--In the case of 
     any disposition of an investment services partnership 
     interest, the amount of net loss which otherwise would have 
     (but for subsection (a)(2)(C)) applied to reduce the basis of 
     such interest shall be disregarded for purposes of this 
     section for all succeeding partnership taxable years.
       ``(4) Distributions of partnership property.--In the case 
     of any distribution of appreciated property by a partnership 
     with respect to any investment services partnership interest, 
     gain shall be recognized by the partnership in the same 
     manner as if the partnership sold such property at fair 
     market value at the time of the distribution. For purposes of 
     this paragraph, the term `appreciated property' means any 
     property with respect to which gain would be determined if 
     sold as described in the preceding sentence.
       ``(5) Application of section 751.--In applying section 
     751(a), an investment services partnership interest shall be 
     treated as an inventory item.
       ``(c) Investment Services Partnership Interest.--For 
     purposes of this section--
       ``(1) In general.--The term `investment services 
     partnership interest' means any interest in a partnership 
     which is held by any person if such person provides (directly 
     or indirectly) a substantial quantity of any of the following 
     services with respect to the assets of the partnership in the 
     conduct of the trade or business of providing such services:
       ``(A) Advising as to the advisability of investing in, 
     purchasing, or selling any specified asset.
       ``(B) Managing, acquiring, or disposing of any specified 
     asset.
       ``(C) Arranging financing with respect to acquiring 
     specified assets.
       ``(D) Any activity in support of any service described in 
     subparagraphs (A) through (C).

     For purposes of this paragraph, the term `specified asset' 
     means securities (as defined in section 475(c)(2) without 
     regard to the last sentence thereof), real estate, 
     commodities (as defined in section 475(e)(2))), or options or 
     derivative contracts with respect to securities (as so 
     defined), real estate, or commodities (as so defined).
       ``(2) Exception for certain capital interests.--
       ``(A) In general.--If--
       ``(i) a portion of an investment services partnership 
     interest is acquired on account of a contribution of invested 
     capital, and
       ``(ii) the partnership makes a reasonable allocation of 
     partnership items between the portion of the distributive 
     share that is with respect to invested capital and the 
     portion of such distributive share that is not with respect 
     to invested capital,

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

     Such term shall not include a partnership interest and shall 
     not include stock in a taxable corporation.
       ``(B) Taxable corporation.--The term `taxable corporation' 
     means--
       ``(i) a domestic C corporation, or
       ``(ii) a foreign corporation subject to a comprehensive 
     foreign income tax (as defined in section 457A(d)(4)).
       ``(C) Investment management services.--The term `investment 
     management services' means a substantial quantity of any of 
     the services described in subsection (c)(1) which are 
     provided in the conduct of the trade or business of providing 
     such services.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as are necessary or appropriate to carry out the 
     purposes of this section, including regulations to--
       ``(1) prevent the avoidance of the purposes of this 
     section, and
       ``(2) coordinate this section with the other provisions of 
     this subchapter.
       ``(f) Cross Reference.--For 40 percent no fault penalty on 
     certain underpayments due to the avoidance of this section, 
     see section 6662.''.
       (b) Application to Real Estate Investment Trusts.--
     Subsection (c) of section 856 is amended by adding at the end 
     the following new paragraph:
       ``(8) Exception from recharacterization of income from 
     investment services partnership interests.--
       ``(A) In general.--Paragraphs (2), (3), and (4) shall be 
     applied without regard to section 710 (relating to special 
     rules for partners providing investment management services 
     to partnership).
       ``(B) Special rule for partnerships owned by reits.--
     Section 7704 shall be applied without regard to section 710 
     in the case of a partnership which meets each of the 
     following requirements:
       ``(i) Such partnership is treated as publicly traded under 
     section 7704 solely by reason of interests in such 
     partnership being convertible into interests in a real estate 
     investment trust which is publicly traded.
       ``(ii) 50 percent or more of the capital and profits 
     interests of such partnership are owned, directly or 
     indirectly, at all times during the taxable year by such real 
     estate investment trust (determined with the application of 
     section 267(c)).
       ``(iii) Such partnership meets the requirements of 
     paragraphs (2), (3), and (4) (applied without regard to 
     section 710).''.
       (c) Imposition of Penalty on Underpayments.--
       (1) In general.--Subsection (b) of section 6662 is amended 
     by inserting after paragraph (5) the following new paragraph:
       ``(6) The application of subsection (d) of section 710 or 
     the regulations prescribed under section 710(e) to prevent 
     the avoidance of the purposes of section 710.''.
       (2) Amount of penalty.--
       (A) In general.--Section 6662 is amended by adding at the 
     end the following new subsection:
       ``(i) Increase in Penalty in Case of Property Transferred 
     for Investment Management Services.--In the case of any 
     portion of an underpayment to which this section applies by 
     reason of subsection (b)(6), subsection (a) shall be applied 
     with respect to such portion by substituting `40 percent' for 
     `20 percent'.''.
       (B) Conforming amendments.--Subparagraph (B) of section 
     6662A(e)(2) is amended--
       (i) by striking ``section 6662(h)'' and inserting 
     ``subsection (h) or (i) of section 6662'', and

[[Page 30755]]

       (ii) by striking ``gross valuation misstatement penalty'' 
     in the heading and inserting ``certain increased underpayment 
     penalties''.
       (3) Reasonable cause exception not applicable.--Subsection 
     (c) of section 6664 is amended--
       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively,
       (B) by striking ``paragraph (2)'' in paragraph (4), as so 
     redesignated, and inserting ``paragraph (3)'', and
       (C) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Exception.--Paragraph (1) shall not apply to any 
     portion of an underpayment to which this section applies by 
     reason of subsection (b)(6).''.
       (d) Conforming Amendments.--
       (1) Subsection (d) of section 731 is amended by inserting 
     ``section 710(b)(4) (relating to distributions of partnership 
     property),'' before ``section 736''.
       (2) Section 741 is amended by inserting ``or section 710 
     (relating to special rules for partners providing investment 
     management services to partnership)'' before the period at 
     the end.
       (3) Paragraph (13) of section 1402(a) is amended--
       (A) by striking ``other than guaranteed'' and inserting 
     ``other than--
       ``(A) guaranteed'',
       (B) by striking the semi-colon at the end and inserting ``, 
     and'', and
       (C) by adding at the end the following new subparagraph:
       ``(B) any income treated as ordinary income under section 
     710 received by an individual who provides investment 
     management services (as defined in section 710(d)(2));''.
       (4) Paragraph (12) of section 211(a) of the Social Security 
     Act is amended--
       (A) by striking ``other than guaranteed'' and inserting 
     ``other than--
       ``(A) guaranteed'',
       (B) by striking the semi-colon at the end and inserting ``, 
     and'', and
       (C) by adding at the end the following new subparagraph:
       ``(B) any income treated as ordinary income under section 
     710 of the Internal Revenue Code of 1986 received by an 
     individual who provides investment management services (as 
     defined in section 710(d)(2) of such Code);''.
       (5) The table of sections for part I of subchapter K of 
     chapter 1 is amended by adding at the end the following new 
     item:

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

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

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

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

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

                      Subtitle C--Other Provisions

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

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

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

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

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

       ``(ii) Exception for wash sales.--Except as otherwise 
     provided by the Secretary, the customer's adjusted basis 
     shall be determined without regard to section 1091 (relating 
     to loss from wash sales of stock or securities) unless the 
     transactions occur in the same account with respect to 
     identical securities.
       ``(3) Covered security.--For purposes of this subsection--
       ``(A) In general.--The term `covered security' means any 
     specified security acquired on or after the applicable date 
     if such security--

[[Page 30756]]

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

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

       ``(a) Furnishing of Information.--Every applicable person 
     which transfers to a broker (as defined in section 
     6045(c)(1)) a security which is a covered security (as 
     defined in section 6045(g)(3)) in the hands of such 
     applicable person shall furnish to such broker a written 
     statement in such manner and setting forth such information 
     as the Secretary may by regulations prescribe for purposes of 
     enabling such broker to meet the requirements of section 
     6045(g).
       ``(b) Applicable Person.--For purposes of subsection (a), 
     the term `applicable person' means--
       ``(1) any broker (as defined in section 6045(c)(1)), and
       ``(2) any other person as provided by the Secretary in 
     regulations.
       ``(c) Time for Furnishing Statement.--Any statement 
     required by subsection (a) shall be furnished not later than 
     the earlier of--
       ``(1) 45 days after the date of the transfer described in 
     subsection (a), or
       ``(2) January 15 of the year following the calendar year 
     during which such transfer occurred.''.
       (2) Assessable penalties.--Paragraph (2) of section 6724(d) 
     (defining payee statement) is amended by redesignating 
     subparagraphs (I) through (CC) as subparagraphs (J) through 
     (DD), respectively, and by inserting after subparagraph (H) 
     the following new subparagraph:
       ``(I) section 6045A (relating to information required in 
     connection with transfers of covered securities to 
     brokers).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6045 the 
     following new item:

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

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

       ``(a) In General.--According to the forms or regulations 
     prescribed by the Secretary, any issuer of a specified 
     security shall make a return setting forth--
       ``(1) a description of any organizational action which 
     affects the basis of such specified security of such issuer,
       ``(2) the quantitative effect on the basis of such 
     specified security resulting from such action, and
       ``(3) such other information as the Secretary may 
     prescribe.
       ``(b) Time for Filing Return.--Any return required by 
     subsection (a) shall be filed not later than the earlier of--
       ``(1) 45 days after the date of the action described in 
     subsection (a), or
       ``(2) January 31 of the year following the calendar year 
     during which such action occurred.
       ``(c) Statements To Be Furnished to Holders of Specified 
     Securities or Their Nominees.--According to the forms or 
     regulations prescribed by the Secretary, every person 
     required to make a return under subsection (a) with respect 
     to a specified security shall furnish to the nominee with 
     respect to the specified security (or certificate holder if 
     there is no nominee) a written statement showing--
       ``(1) the name, address, and phone number of the 
     information contact of the person required to make such 
     return,
       ``(2) the information required to be shown on such return 
     with respect to such security, and
       ``(3) such other information as the Secretary may 
     prescribe.
     The written statement required under the preceding sentence 
     shall be furnished to the holder on or before January 31 of 
     the year following the calendar year during which the action 
     described in subsection (a) occurred.
       ``(d) Specified Security.--For purposes of this section, 
     the term `specified security' has the meaning given such term 
     by section 6045(g)(3)(B). No return shall be required under 
     this section with respect to actions described in subsection 
     (a) with respect to a specified security which occur before 
     the applicable date (as

[[Page 30757]]

     defined in section 6045(g)(3)(C) with respect to such 
     security.
       ``(e) Public Reporting in Lieu of Return.--The Secretary 
     may waive the requirements under subsections (a) and (c) with 
     respect to a specified security, if the person required to 
     make the return under subsection (a) makes publicly 
     available, in such form and manner as the Secretary 
     determines necessary to carry out the purposes of this 
     section--
       ``(1) the name, address, phone number, and email address of 
     the information contact of such person, and
       ``(2) the information described in paragraphs (1), (2), and 
     (3) of subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (defining information return) is amended by redesignating 
     clauses (iv) through (xix) as clauses (v) through (xx), 
     respectively, and by inserting after clause (iii) the 
     following new clause:
       ``(iv) section 6045B(a) (relating to returns relating to 
     actions affecting basis of specified securities),''.
       (B) Paragraph (2) of section 6724(d) of such Code (defining 
     payee statement), as amended by subsection (c)(2), is amended 
     by redesignating subparagraphs (J) through (DD) as 
     subparagraphs (K) through (EE), respectively, and by 
     inserting after subparagraph (I) the following new 
     subparagraph:
       ``(J) subsections (c) and (e) of section 6045B (relating to 
     returns relating to actions affecting basis of specified 
     securities).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code, as 
     amended by subsection (b)(3), is amended by inserting after 
     the item relating to section 6045A the following new item:

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

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

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

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

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

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

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

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

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

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

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

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

                              {time}  1145

  And they pay 35 percent in taxes because it's their income, the same 
way

[[Page 30758]]

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


                Announcement By the Speaker Pro Tempore

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

[[Page 30759]]

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

                              {time}  1200

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

[[Page 30760]]

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

[[Page 30761]]


  Mr. POMEROY. I thank the gentleman for yielding.
  Mr. Speaker, I find this debate absolutely incredible. If you pull it 
up on the Treasury Department's own Web site, the national debt of our 
Nation this past week went over $9 trillion.
  And the bright dividing line between the parties in the debate today 
is that our friends on the minority side want to drive that debt even 
deeper and that our friends on the majority side say enough additional 
debt for our children.
  We either find a way to pay for this AMT fix or 23 million people get 
a tax increase or we pass the debt on to the children. Now, I am glad 
about the bipartisan agreement that we should do something to stop the 
23 million from getting the AMT tax hit. But we cannot just run that 
credit card balance even higher, just lay this debt onto our kids.
  It's time we face the music and we begin paying for the costs that we 
are incurring. We have got to put this budget in order, and we need to 
start with this bill.
  Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from 
Texas, the distinguished ranking member of the Social Security 
Subcommittee (Mr. Sam Johnson).
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I rise today to oppose the 
permanent tax hike to pay for a 1-year extension of current law.
  The alternative minimum tax is a taxing machine, put into law 40 
years ago by a Democrat Congress to tax 155 of the wealthiest families 
in America.
  The AMT patch before the House today will prevent a tax increase on 
families who make just over $66,000 a year. These aren't the 
superwealthy. In fact, in my congressional district, a family of four 
making $66,000 a year is considered a moderate income. Apparently, the 
Democrats in the House consider the rest of my constituents 
superwealthy.
  Even this paltry relief will be offset with permanent tax increases. 
The tax increase on real estate partnerships is among the most 
destructive taxes that could be devised. At a time when most of us in 
the Congress are concerned about the real estate market, our colleagues 
who vote for this bill today are waging an attack on free enterprise.
  We must vote ``no'' on this huge tax increase.
  Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent to 
enter into the Record a colloquy between myself and Mr. Watt.
  The SPEAKER pro tempore. Colloquys may not be entered into the Record 
by unanimous consent; they must be spoken.
  Mr. NEAL of Massachusetts. Then I will ask the gentleman from North 
Carolina to remain here and perhaps we can do it face to face.
  Mr. Speaker, at this time I would like to yield 1 minute to the 
gentleman from Connecticut (Mr. Larson).
  Mr. LARSON of Connecticut. Mr. Speaker, I rise in strong support of 
this legislation.
  Our colleague Artur Davis on the committee, in direct inquiry, in 
talking and eliciting a response, said the following: 138 million 
Americans will be filing taxes. Under 50,000, under 50,000 of them, 
will be filing with carried interest. And you know what? They are going 
to make, I believe, $936 billion. With this act that we are passing 
today, we are going to impact 23 million people, many of whom are going 
to be earning as little as $40,000.

                              {time}  1215

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


                             General Leave

  Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent that 
all Members may have 5 legislative days in which to revise and extend 
their remarks and include extraneous material on H.R. 3996.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. NEAL of Massachusetts. Mr. Speaker, at this time, I would like to 
recognize the gentleman from Illinois (Mr. Emanuel) for 1 minute.
  Mr. EMANUEL. Mr. Speaker, President Kennedy once said, ``to govern is 
to choose.'' Both parties are presenting different choices: 
Republicans, another decade of debt and tax breaks for the well off; 
Democrats, an end to the red ink and middle-class tax cuts.
  The Republican Congress and President Bush ran up $4 trillion of new 
debt in the shortest period of time in American history. All the while, 
economic insecurity is at an all-time high for the middle class, 
incomes are stagnating, and homes are losing their value. Since 2000, 
the cost of health insurance has risen 80 percent, college costs up 44 
percent, prices at the pump up 89 percent.
  Democrats promised to bring tax fairness to the Tax Code, and we 
promised to help every American secure the pillars of a middle-class 
life, raising a family, buying a home, paying for college, and saving 
for retirement. Today we have a chance to make good on our promises.
  This bill protects 23 million families from the AMT, gives 30 million 
homeowners the ability to deduct property taxes, helps 12 million 
children with a larger tax credit, and provides 4.5 million families 
help to pay for rising college costs, all without adding a penny to 
President Bush's $9 trillion debt.
  The choice is clear and the choice is simple.
  Mr. McCRERY. Mr. Speaker, at this time, I yield 2\1/2\ minutes to a 
distinguished member of the Ways and Means Committee, the gentleman 
from New York (Mr. Reynolds).
  Mr. REYNOLDS. I thank the gentleman from Louisiana.
  Mr. Speaker, I listened very carefully to the chairman of the Ways 
and Means

[[Page 30762]]

Committee, as he opened up, on what we agreed on and maybe what we 
disagreed on, and I have listened to a number of speakers. First of 
all, on the Ways and Means Committee members before me, I want to be 
associated with the observations and comments that they've brought to 
the floor today.
  We opened this year, as the ranking member of the subcommittee, Mr. 
English, mentioned, with hope and optimism that we were going to repeal 
AMT; not reform it, not push it around, not raise taxes on it, but 
repeal it. As time ticked on, we had hearings, and hope faded. Hope 
then got cloudy, then hope wasn't real.
  As we're sitting here in November, the Secretary of Treasury has 
responded to my letter and letters written by Mr. McCrery and Mr. 
Grassley, and in that, answering the fact that we have missed some 
dates, missing one right now on November 6, that the IRS is going to 
print the 1040 forms, and next week, on November 16, they're going to 
print all the other forms. Now, I take that a little personal because 
last year, the 1-year patch, without a tax increase, was passed on an 
initiative that I introduced and was put into a bill in May, May of 
last year, without a tax increase. And you know what? This body passed 
it 414-4; didn't have tax increases, didn't have a lot of gimmicks, 
just got the job done.
  I want to remind my colleagues on the other side of the aisle, you're 
not just touching 23 million Americans by this delay in the failure and 
the shortcoming of getting an agreement between the two bodies and the 
White House; you're making it about 49 million, because the letter also 
said, from the Secretary, that others are impacted by this needless 
delay.
  Now, I don't mind having a constitutional message about our 
prerogative in the House to initiate anything we want in Ways and Means 
relative to taxes, but there comes a time, even for a new majority of 
the other side, to understand when pragmatism sets in, that we didn't 
get a permanent fix, we didn't even get a repeal, we didn't even get a 
1-year patch, however you wanted it. What we got is, today, a failed 
approach.
  And to the new Members who have never served in this body before on 
either side of the aisle, you're going to hear ``tax gap,'' ``tax 
fairness,'' ``tax equity.'' I promise you that results right here in 
this bill as a tax increase.
  Vote ``no'' on this bill, and let's get the work done before we go 
home for Thanksgiving.
  Mr. NEAL of Massachusetts. Let me quickly decipher what my friend the 
gentleman from New York said. He said, ``Let's borrow the money.''
  I yield 1 minute to Mrs. Tubbs Jones, the gentlewoman from Ohio, 
former District Attorney.
  Mrs. JONES of Ohio. I thank my chairman for giving me this 
opportunity to be heard.
  You know, my friend from New York, I tried to feel what he was saying 
to me. And it was emotional and everything, but it did not speak to the 
issue that we're talking about.
  I went to law school, and I wanted to be a civil rights lawyer. I 
thought that if I was a great civil rights lawyer, I could really help 
the people of America, the people that live in my community. But I 
should have been a tax lawyer, because had I been a tax lawyer, then I 
would have better understood how I could help middle-class families by 
fixing the AMT. If I had been a tax lawyer, I would have understood how 
I could help people purchase homes and get a benefit from it. Had I 
been a tax lawyer, I would have understood how fairness operates in the 
United States of America through the Tax Code, because by the Tax Code, 
poor people might have a chance, working people might have a chance.
  I say to my colleagues today, vote for this, vote for this bill. It 
may not be all that we wanted. And if you think about it, if we hadn't 
spent so many trillions of dollars in Iraq, maybe there would be a pay-
for in this legislation.
  Mr. Speaker, I am pleased to see that today, the House is taking up 
tax relief for the 23 million Americans who otherwise would be saddled 
with the onerous alternative minimum tax. In addition, we are also 
providing relief for 7.4 million low-income workers by increasing the 
Earned Income Tax Credit.
  Families across America will this weekend sit down at the dinner 
table take an accounting of their personal finances and balance their 
checkbook. The Government is charged with balancing the checkbook of 
the United States. While I enthusiastically support the efforts of 
private equity and hedge fund managers, I am very aware that service 
income is just that and should be taxed that way--at ordinary income 
rates. It is the responsible thing to do because we must not mortgage 
our future by continuing to borrow from foreign countries such as 
China.
  We are also, Mr. Speaker, enabling more than 6.5 million working 
families to use the refundable Child Tax Credit. This is allowing more 
families to remove themselves from the depths of poverty. This 
legislation is helping Americans help themselves. It is okay to ask 
people to pull themselves up by their bootstraps, but if they don't 
have boots, we are asking too much. H.R. 3996, the Temporary Tax Relief 
Act is sound legislation, progressive tax policy and the right 
direction for America.
  When a member of Congress hails from one of the poorest congressional 
districts in America as I do, there is a special responsibility to 
ensure that the interests of constituents are being addressed. That is 
why I am pleased to see that while we are pursuing a patch for the AMT, 
we are also increasing the Earned Income Tax Credit for an additional 
7.4 million low-income workers.
  The alternative minimum tax is an important issue for the American 
middle class taxpayer who does not get to take advantage of 
sophisticated tax planning and legal loopholes in the tax code. It is 
time that we addressed this issue once and for all to relieve the 
American taxpayer from the agony and pain that arise from having to 
figure out their taxes twice in order to come up with their tax 
liability.
  It is particularly ironic that a tax that was meant for a few wealthy 
individuals has become the bane of existence for millions of American 
taxpayers, who could be affected. Indeed the AMT has become a menace. 
Over 7,000 hardworking Ohioans in my district had the grim task of 
filing a return with AMT implications in the 2005 tax year. Those are 
families with children, healthcare costs, unemployment issues, housing 
costs and the other money matters with which American taxpayers must 
cope. Relief is due.
  We should consider alternatives to this alternative that might 
include a complete repeal. Relief is due. ``Taxes are what we pay to 
live in civilized society,'' but dealing with the AMT has become a bit 
uncivil.
  On the one hand we have people that have to live paycheck-to-paycheck 
and on the other hand we have partners in partnerships, whether they be 
real estate or private equity who sippeth from the public trough. I am 
cognizant that many of these partners work diligently to bring 
companies to market and to grease the wheels of capitalism from which 
we all benefit, from East Cleveland to East L.A. to East Harlem. As I 
mentioned after the introduction of Representative Levin's H.R. 2834, 
we must applaud the efforts of American capitalists and the strides 
that they make in fostering growth in our economy and, the global 
economy to wit. Yet we must also tax compensation income as 
compensation income and capital gains thusly.
  We must also be mindful of the effect that our tax policy has on 
potential reinvestment in low-income and minority communities. It is 
important to note that women and minorities are often the last to the 
table and just when they are getting ready to participate in the large-
scale ``financial festival'' that is private equity and hedge funds, 
etc, the rules appear to be changing. It is incumbent upon members of 
the aforementioned parties that fair and equitable tax policy should 
not be confused with the opening up of capital markets and the 
extension of new opportunity.
  The tenets of sound tax policy begin with the notions of equity, 
efficiency and simplicity. Relying on that traditional framework I am 
sure that we have come to a rational consensus.
  Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished 
member of the Ways and Means Committee, Mr. Brady from Texas.
  Mr. BRADY of Texas. Mr. Speaker, make no mistake, there are good 
things in this bill.
  I think it's important that we address the AMT. It was created in 
1969 by a Democrat Congress for the wealthy. Now it's affecting our 
teachers and our firefighters and just average families.
  There is a State and local sales tax deduction in this bill, very 
important for families because sales taxes really

[[Page 30763]]

add up fast. But these tax increases are troubling and risky. Like AMT, 
there are unintended consequences that will damage our economy.
  We are launching an assault on the real estate and housing industry, 
increasing taxes on second homes and leveling a potentially devastating 
tax increase on real estate partnerships.
  Now, these real estate partnerships, there are a lot of them. People 
say, oh, it's just corporations. There are 1.1 million partnerships who 
have done nothing wrong in America but build apartments in our 
communities, shopping centers, office buildings and industrial parks. 
This tax is seen as the most potentially devastating tax on them since 
1986, which launched massive loan defaults and foreclosures. These are 
traditional real estate partnerships.
  And people say, well, we are aiming at Wall Street. Well, they are 
aiming at Wall Street, but they're going to hit Main Street America, 
and the result is lower property values, fewer construction jobs, and 
risky lending in real estate partnerships who have done nothing wrong.
  And finally, this bill levies a $2 billion tax increase on families 
who have scrimped their whole lives to get a second home. These are not 
wealthy people. The average income is about $82,000 for those who buy a 
second time. And 40 percent, four out of 10 sales last year were second 
home buyers, people who scrimped on their first home so they might have 
a cabin or a place by a lake or something for their family to retire 
to. These higher taxes are going to damage their investments. They're 
going to lower property values. It's going to hurt every community 
across this country that relies upon these second homes. Whether you're 
at the lakes, the river, or out in the parks, these tax increases are 
dangerous.
  Mr. NEAL of Massachusetts. There shouldn't be any confusion, Mr. 
Speaker, this bill cuts taxes for tens of millions of people.
  At this time, I yield 1 minute to the gentleman from Washington State 
(Mr. McDermott).
  Mr. McDERMOTT. Mr. Speaker, I just want to say what the real issue 
here is. The Republicans are willing to say that 50,000 rich fat cats 
are more important than 21 million middle-class folks in this country.
  Now, the people they're defending are people who have an adjusted 
gross income of $1 million, or more, who knows, and those folks are 
paying a 15 percent tax rate. That means they have to pay $150,000 in 
taxes. Oh, my God, they have to get by on $850,000. What we're saying 
is, let's tax them like the fireman who pays 30 percent. Thirty percent 
of $1 million is $300,000. Those poor people, they'll only have 
$700,000 to get by on. That's what it's about, folks.
  Congress has an opportunity to demonstrate real leadership today by 
supporting a visionary proposal put forward by Ways and Means Chairman 
Charles Rangel of New York.
  First, we're going to help millions of middle class Americans by 
passing the tax extenders that are included in this legislation; 
without them, 23 million Americans would be harmed by a tax provision 
called AMT that was never intended to affect and hurt the middle class.
  As part of the extensions in the bill, I included a provision that 
will extend the deduction for payment of local sales tax. Yes, people 
in my State of Washington will benefit, but so will taxpayers in the 
eight other States where there is no State income tax.
  I am pleased that Mr. Brady joined me in this important matter. It is 
another sign that we have produced legislation that is bi-partisan.
  This is only a 1-year extension, but I think we will have an 
opportunity to make it permanent when the House begins considering tax 
reform, and the visionary proposal put forward by Chairman Rangel.
  Fact is, we are restoring fiscal discipline and so even good 
proposals that rightly benefit people cannot be fully implemented all 
at once because of the need to find ways to actually pay for what we 
propose to spend or return. And that may be the most important point of 
all.
  Chairman Rangel has produced an honest proposal based on dollars and 
sense.
  What's different today, Mr. Speaker, is that this House has decided 
to pay for this tax relief.
  We are going to save middle America from the alternative minimum tax, 
and do so by closing the big tax loopholes that billionaires have been 
driving their Hummers through.
  On Wednesday, the Department of the Treasury informed the Nation that 
we are 9 trillion dollars in debt. Last month President Bush signed the 
fifth debt-limit increase since the beginning of his term.
  He talks about being a fiscal conservative but his Republican 
Congress emptied your wallets and borrowed astronomical sums of money 
on credit.
  As a result of this fiscal mismanagement, the dollar is on the brink 
of collapse and the Chinese are suggesting they'd prefer to hold debt 
in Euros instead of the greenback. It's not just the credit markets on 
Wall Street that are in trouble. Our public credit market is in 
jeopardy, too.
  So what does the Bush Administration and his rubber-stampers in the 
minority suggest? They want to extend these tax cuts, but borrow the 
money to pay for them.
  That's not the kind of leadership America needs. I urge support of 
this bill.
  Mr. McCRERY. Mr. Speaker, may I inquire as to the time remaining for 
each side.
  The SPEAKER pro tempore. The gentleman from Louisiana has 11 minutes 
remaining. The gentleman from Massachusetts has 9\1/2\ minutes 
remaining.
  Mr. McCRERY. Mr. Speaker, I yield 2 minutes to the distinguished 
ranking member of the Budget Committee and a member of the Ways and 
Means Committee, Mr. Ryan from Wisconsin.
  Mr. RYAN of Wisconsin. I thank the gentleman for yielding.
  You know, I want to clear up a couple of facts. The other side has 
been saying this provides tax relief, reducing taxes for 10 million, 
millions of people. No, it's not. People's taxes are not going to go 
down. If this bill passes, 23 million people will not see lower taxes 
next year. They may not see a tax increase.
  This is not about cutting people's taxes. This does not provide tax 
relief. This prevents tax increases on some and raises taxes on others. 
So let's be very clear here; what the majority is trying to do and what 
their new rules do is they say, if you want to bring a bill to the 
floor to address the alternative minimum tax, you better raise taxes, 
because that's the only legislation we'll accept.
  What the majority is doing is they're saying, by not raising taxes on 
people, we're giving them a tax cut. Holy cow. That is new logic. We 
are simply saying, let's not raise taxes. That's it. Period. End of 
story.
  This tax law was never meant to be. It was never designed to tax all 
of these people. We all agree on this. And so I find it kind of 
puzzling that we're bringing this bill to the floor, which we know will 
not pass law. The other body won't even bring it up for a vote, so it 
just shows how bound and determined the majority is to raise taxes, how 
bound and determined they are to put on this new glide path of going to 
taxing our economy, our society, our workers, our families more than we 
have in the history of our country.

                              {time}  1230

  They are saying, we don't like the alternative minimum tax, but we 
want those tax revenues. So instead of taxing people this way, we are 
going to tax people that way and get all this new money into the 
Federal Government.
  Mr. Speaker, the problem in Washington is not revenues; the problem 
is spending. Both sides could do a better job on spending. I freely 
admit that. Let's focus on controlling spending and not raise taxes.
  Mr. NEAL of Massachusetts. Mr. Speaker, we appreciate that epiphany, 
that after 6 years of a Republican Congress and a Republican President, 
they are blaming spending on the Democratic Party.
  Mr. Speaker, I yield 1 minute to the gentleman from Oregon (Mr. 
Blumenauer), a thoughtful member of the Ways and Means Committee.
  Mr. BLUMENAUER. Mr. Speaker, my Republican friends are shocked, 
shocked that a tax that they have ignored for 7 years is suddenly going 
to come into effect. Mr. Neal, Mr. Rangel, and others on our side of 
the aisle have been claiming this for years. Instead of specious tax 
cuts for a few, let's deal with the real meaningful problem: they 
ignored it. The red line

[[Page 30764]]

that my friend Mr. Ryan had on his chart is the red line that is 
assumed by the Republican administration to justify their budget.
  This proposal is not a tax increase. Over the next 10 years there 
will be exactly the same amount of money collected by the Federal 
Government. What is different is that there are three provisions that 
most Americans would say are modest technical provisions, including 
adjustments to carried interest rates. In exchange for that we will 
protect 23 million middle-class families from paying the AMT; provide 
30 million homeowners with property tax relief; help 12 million 
children, by expanding the child tax credit; benefit 11 million 
families through the State and local tax deduction. That is the 
difference and that is why you should vote for it.
  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the gentleman's enthusiasm for his point of view doesn't 
make his point of view correct. In fact, Republicans time and time 
again protected taxpayers, middle-class taxpayers, from the application 
of the AMT. That is why there's a patch in place today; that is why 
last year those 21 million taxpayers didn't pay the AMT. In 1999, I 
would tell the Speaker to inform the gentleman, the Republican Congress 
repealed the AMT and, unfortunately, President Clinton vetoed that 
repeal. So I would take issue with the gentleman's characterization of 
the Republican Congress's actions with respect to this issue.
  At this time, Mr. Speaker, I yield 2 minutes to the distinguished 
member of the Ways and Means Committee, the gentleman from Virginia 
(Mr. Cantor).
  Mr. CANTOR. Mr. Speaker, I rise in opposition to the Democrats' 
approach to try and patch the AMT, on several grounds. First of all, I 
want to associate myself with the remarks of the gentleman from 
Wisconsin to the application of the Democrats' PAYGO rule because it 
has turned into ``we cannot do anything in this body without raising 
taxes.'' Someone has likened this approach to tax hikes on speed dial, 
and I heartily agree.
  But I also rise in opposition because I believe that this particular 
bill in the context of the larger bill being proposed by the chairman 
of the Ways and Means Committee is nothing but a job-killer. One of the 
statements made by my colleague on the other side of the aisle was that 
somehow this tax hike targets only some of the wealthiest individuals 
in the world. You know, that is probably what the Congress said back in 
1969 when they were passing the AMT: We only want to tax the wealthy.
  But when you look at it, this provision, the provision of carried 
interest impacts not just those famed partnerships in the money centers 
of this country but it impacts the real estate partnerships, the ``mom 
and pop'' investment partnerships across this country that, frankly, 
fuel seven out of ten jobs across America. Where in the world do we 
think these small businesses are going to come up with the money to pay 
these taxes? They are going to come up with the money by not creating 
new jobs; they are going to come up with the money by not offering 
health benefits to their employees. Let's face it, money does not come 
out of thin air.
  The next allegation is no one is going to stop investing in this 
economy, no one is going on economic strike if we raise the price of 
investment in this country. Well, have you looked at what is going on 
in our financial markets today? Look at the announcement from China, 
shifting $1.4 trillion of their reserves out of the U.S. dollar. Have 
you looked at the fact that people are not investing in housing any 
more, the subprime mortgage crunch?
  Mr. Speaker, I would say it is an understatement to say that this is 
a job-killer.
  Mr. NEAL of Massachusetts. Mr. Speaker, 94,000 teachers in Virginia 
are going to benefit from this proposal today and 133,000 families are 
going to take advantage of the college tuition deduction in the State 
of Virginia.
  Mr. Speaker, I yield 1 minute to the distinguished gentleman from New 
Jersey (Mr. Pascrell), a member of the Ways and Means Committee.
  Mr. PASCRELL. Mr. Speaker, I want to associate my words with the 
gentleman, my good friend from Wisconsin, also. You say ``tomato,'' he 
says ``tomato.'' You call it tax relief; you call it tax cut. You make 
the choice. You think that the Bush administration and their 
congressional allies would be in support of this measure. Instead, 
Republicans are hysterically crying because this bill asks private 
equity managers to pay the same rate in taxes as most folks in this 
room. Why should the richest of all Americans pay only 15 percent in 
taxes when a doctor or lawyer pays 35 percent? Why should the kings of 
Wall Street only pay 15 percent on their contingency fees when most 
teachers and police officers pay 25 and 30 percent?
  I have heard repeatedly in this debate that private equity managers 
are involved in a risky business so they should be rewarded with the 
lowest tax rates around. But the risk they carry is on other peoples' 
money, not their own. When you want to talk about risk, how about the 
firefighter that rushes into a burning building? Are Republican 
priorities so skewed that they will spend all their time and effort 
ensuring that financiers pay less in taxes than first responders? No 
way.
  It is another day, and another example of prudent, sound, fiscally 
responsible legislation from the Democratic majority. Unfortunately, 
it's also another day of cheap rhetoric and skewed facts from the 
Republican side of the aisle. Indeed, the debate today says a great 
deal about the misplaced priorities and values of the other side.
  Democrats are bringing to the floor a bill that will prevent the 
Alternative Minimum Tax from hitting 23 million taxpayers this year 
while also upholding our commitment to fiscal responsibility by 
complying with Pay-Go rules. You'd think that the Bush Administration 
and their congressional allies would be in support of such a measure. 
But no. Instead, Republicans are hysterically crying because this bill 
asks private equity managers to pay the same rate in taxes as everyone 
else.
  Why should the richest of all Americans pay only 15 percent in taxes 
when a doctor or lawyer pays 35 percent? Why should the Kings of Wall 
Street only pay 15 percent on their contingency fees when most teachers 
and police officers pay 25 to 30 percent?
  I've heard repeatedly in this debate that private equity managers are 
involved in a risky business, so they should be rewarded with the 
lowest tax rates around. But the risk they carry is on other people's 
money--not their own.
  And you want to talk about risk? How about the firefighter that 
rushes into a burning building? Are Republican priorities so skewed 
that they'll spend all their time and effort ensuring that financiers 
pay less in taxes than first responders?
  This legislation is wise and it is fair. It will give tax relief to 
23 million hard working Americans while ensuring fairness in the tax 
code. And if it wasn't for the campaign contributions from Wall Street 
this bill would pass unanimously.
  Mr. McCRERY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from Texas (Mr. Hensarling).
  Mr. HENSARLING. Mr. Speaker, this bill is very cleverly entitled the 
Temporary Tax Relief Act of 2007. But there's no tax relief here; no 
tax relief at all. All they do is for one year postpone a huge 
automatic tax increase on some people and they combine that with a $76 
billion tax increase on others. So maybe the ``temporary'' is accurate, 
the ``tax relief'' is not. All they are doing is rearranging the deck 
chairs on the Titanic tax ship. That is what this bill is all about. 
AMT ought to stand for ``automatic major taxation.''
  When I hear my Democratic friends decry it, they have had opportunity 
to get rid of this bill in the past, and perhaps there are some 
freshmen here, if they haven't had an opportunity, I would invite them 
to cosponsor the Taxpayer Choice Act, which would permanently repeal 
this huge automatic tax increase.
  But, wait, our Democrat friends say, well, you have got to have 
something that is revenue-neutral. Well, guess what? Fully repealing 
the AMT is revenue-neutral. It is revenue-neutral to the taxpayer, the 
one who counts; not revenue-neutral to the Federal Government, but 
revenue-neutral to the hardworking taxpayer, the teacher, the

[[Page 30765]]

fireman, the person who's trying to send their kid to college, pay for 
their mortgage payment. And you take that away. That is wrong. Vote 
this bill down.
  Mr. NEAL of Massachusetts. Mr. Speaker, 284,000 teachers in the State 
of Texas will benefit from the proposal that is before us today.
  Mr. Speaker, I yield 1 minute to the gentlewoman from Nevada (Ms. 
Berkley), another member of the Ways and Means Committee.
  Ms. BERKLEY. Mr. Speaker, I rise today in support of this bill that 
provides tax relief to parents and teachers, college students, 
homeowners and to millions of other middle-income Americans. If this 
legislation is not passed, more than 128,000 Nevada taxpayers will be 
slammed by the alternative minimum tax. This includes more than 30,000 
people in my district alone.
  I believe the alternative minimum tax should be eliminated, but this 
bill provides a necessary temporary solution to protect over 20 million 
Americans who will be hit by the AMT in 2007. Nevada residents will 
benefit from the extension of the deduction for State and local sales 
taxes contained in this bill. For homeowners, this bill extends the tax 
deduction for private mortgage insurance, and it provides relief to 
those who lose the roof over their heads by eliminating the foreclosure 
tax.
  This bill ensures that more hardworking parents will be able to 
benefit from the child tax credit. But, most important, the tax relief 
in this bill is fully offset and will not add a single dollar to the 
national debt.
  Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from New 
Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. Mr. Speaker, earlier we heard from the 
other side of the aisle that President Kennedy once said: ``To govern 
is to choose.'' Well, so it is, and we have seen how the Democrat 
majority of this House has decided to choose when it comes to the issue 
of tax and spend. They always choose tax.
  In the very opening comments from the Democrat chairman of the Ways 
and Means Committee, he said that one of the options they could have 
considered was cutting spending in the United States Government for 
once, but they immediately dismissed that, saying that that was simply 
politically undoable for the Democrat Caucus.
  So instead what they do they do? They raise taxes. Their proposal, 
they say, is to tax the rich. But really what they are saying is try to 
rob Peter to pay Paul and then go and try to convince Paul that Peter 
is paying and convince Peter that Paul is paying. But the American 
taxpayer knows that all of middle-class America will be paying for this 
tax increase.
  This tax increase, a $76 billion tax increase over 10 years, follows 
a litany of other tax increases. I was on the floor last night and I 
went through about a dozen Democrat bills which, combined, totaled 
about $110 billion in tax increases on top of the largest tax increase 
in their budget. Vote ``no'' on this.
  Mr. NEAL of Massachusetts. Mr. Speaker, 619 businesses in the State 
of New Jersey will take advantage of the research and development tax 
credit.
  Mr. Speaker, I yield 1 minute to the distinguished gentleman from 
Maryland (Mr. Van Hollen), a member of the Ways and Means Committee.
  Mr. VAN HOLLEN. Mr. Speaker, this bill provides tax relief to more 
than 24 million American families and corrects a huge inequity where 
many people have been forced to pay taxes on phantom income, income 
they never earned. Today, we gather to fix two big problems left behind 
by the Republican Congress under President Bush. One is a huge middle-
class tax increase that they left hanging over the heads of the 
American people, a tsunami, that if we don't act today, will crash down 
on 124 million American taxpayers.
  The Republican Congress under President Bush could have addressed 
this problem. They chose not to. It just was not a priority for them. 
They instead spent their time providing tax increases that went to the 
very wealthiest Americans and left the rest of the country holding the 
bag of $9 trillion debt, a debt that costs the American taxpayer $3,300 
each year to pay the service on that debt, the debt that they ran up.
  Mr. Speaker, today we can pass tax relief in a fiscally responsible 
manner. Let's get it done.
  Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. Campbell).
  Mr. CAMPBELL of California. Mr. Speaker, let's look at what this bill 
does. It basically leaves the alternative minimum tax the same as it is 
now. That is not a tax cut. But to ``pay'' for leaving some taxpayers' 
taxes alone, they are going to raise other people's taxes. Now, I'm 
sure that in a moment the gentleman from Massachusetts will give some 
number of taxpayers in California he says will benefit from this. Those 
taxpayers will benefit from having their taxes the same as they are 
now. What the gentleman will not say is the number of taxpayers in 
California whose taxes will be increased by this bill, and there will 
be many. So some people's taxes stay the same and others go up.
  Mr. Speaker, this bill is a straight-up, direct, unadulterated tax 
increase. It will not be the last straight-up tax increase brought to 
you by this Congress.
  Mr. NEAL of Massachusetts. Once again, what the gentleman said is we 
should borrow the money.
  Mr. Speaker, I yield 1 minute to the gentleman from Alabama (Mr. 
Davis), a distinguished member of the Ways and Means Committee.
  Mr. DAVIS of Alabama. Mr. Speaker, my colleague from California and 
my friend from Texas are right, this bill is not burden-free. This is 
who bears the burden: 36,000 to 50,000 individuals who took a deduction 
for carried interest, less than two-hundredths of a percent of the 
taxpaying population, and what was their combined income in the last 
year? Mr. Speaker, it was $935 billion. That is who will bear the 
burden.
  When Mr. Van Hollen and I came to the Congress, here's who bore the 
burden every time they brought tax bills to the floor: college students 
who were pushed into paying higher loans, families on Medicaid who were 
pushed into paying higher premiums, people who were pushed into having 
their benefits taken away when they need them, and soldiers who lost 
the earned income tax credit for some of their families.

                              {time}  1245

  Under this majority, the people who bear the burden when we have to 
make difficult choices will not be the people who are working and 
sustaining this country day in and day out. Yes, someone will bear the 
burden; a very, small narrow category of the super-rich.
  Mr. McCRERY. Mr. Speaker, I yield 1 minute to the gentleman from New 
York (Mr. Fossella).
  Mr. FOSSELLA. I thank the gentleman for yielding. It is great, 
because in other countries, sometimes opposition candidates get put 
under house arrest. Here in this great institution we have the debate 
in plain view. And as has been mentioned repeatedly, there is just a 
clear distinction on how to solve this problem.
  Personally, I think I speak for many, the AMT is a problem, and it is 
a problem for 52,000 people living in Staten Island and Brooklyn, many 
of whom, by the way, are small business owners, are those firemen and 
police officers and teachers who are working sometimes two, three and 
four jobs to put food on the table. We should abolish it. Abolish it 
once and for all, as has been suggested.
  Put simply, this is a wolf in sheep's clothing. We know what it will 
do. This is the first installment on what will be the largest tax 
increase in American history. My concern is more than just being an 
American citizen here. My equal concern is what will it do to New 
York's economy.
  People talk about how we are going to pay for firefighters and police 
officers. We know that this bill will punish investment, punish 
capital, kill jobs that in large part go to fund the salaries of those 
firefighters and police officers and teachers who do a great job every 
day. It is a clear distinction, a clear disagreement on where we are 
going. Kill this bill.
  Mr. NEAL of Massachusetts. Mr. Speaker, there are 1,462 businesses in

[[Page 30766]]

the State of New York who will take advantage of the research and 
development tax credit that we extend today.
  Mr. Speaker, with that, I yield 1 minute to the gentleman from 
Maryland (Mr. Hoyer), the distinguished majority leader.
  Mr. HOYER. I thank the gentleman for yielding.
  Mr. Speaker, this debate must be somewhat confusing for the American 
public. First of all, almost every one of us stands and says that we 
want the alternative minimum tax fixed. We want it fixed because of the 
presumption of the alternative minimum tax, which I support and which I 
will not vote to repeal unless we pay for it. I want you to know that I 
speak as the father of three daughters, as the grandfather of three 
grandchildren, and as the great-grandfather of one great-granddaughter. 
I have listened to this debate. I am going to speak about this debate, 
and I am going to refer to history. My friend Mr. Ryan knows what I am 
going to say because I have said it before, but I believe the American 
people need to know this.
  Let me place it in context. I have served in this body for 26 years. 
During that time, Republican Presidents have served for 18 of those 
years. A Democratic President, President Clinton, served for 8 of those 
years. During the Presidencies of President Reagan, President George 
Bush and the present President Bush, we have accumulated deficits in 
America of $4.1 trillion of deficit spending.
  Now, there is only one person in America who can stop spending in its 
tracks. Just one. Not me, not anybody on this floor. We need 217 other 
people to do that with us. But one person can stop spending in its 
tracks. And in the 26 years that I have been in the Congress of the 
United States, no President has had a veto of a spending bill that 
spent too much overridden. Not one.
  This President has vetoed no spending bills under Republican 
Congresses. Not one. No matter how much they spent. And, by the way, 
ladies and gentlemen of this House, they spent at twice the rate of 
growth that the Democrats under President Clinton spent.
  Now, Republicans were in charge of Congress, but they were in charge 
of everything during the first 6 years of this century. Everything. 
House, Senate, Presidency.
  My friend made the observation that neither side had done too well. I 
would suggest my side has done a lot better. Because under my side in 
those 8 years of the Clinton administration, we had a $62.9 billion net 
surplus after 8 years, and we didn't have to raise the national debt 
one time in the last 4 years after we got the deficits created under 
the Reagan administration and the first Bush administration down, from 
a $292 billion operating deficit when we took over to surpluses during 
the last 4 years, and a straight line of reduction every one of the 
first 4 years of the Clinton administration.
  Why? Because we Democrats believe in spend and pay. You simply 
believe in spend and borrow. You believe that it is a politically wise 
policy to pursue that ``don't tax the voters, tax the children.'' Tax 
the children. Delay the ramifications of spending until tomorrow and 
tomorrow and tomorrow, when the children will have to pay the bill, 
because, after all, they are not voting.
  I have heard a lot of wringing of hands about PAYGO. I know you are 
all waiting to hear me read a quote, so I will read it to you. ``With 
the other body unable to pass even a budget this year,'' that was 
referring to a Republican Senate, by the way, ``we were obviously 
unable to reach an agreement on legislation to extend PAYGO and other 
budget rules. It is my hope that this can be done next year as part of 
a normal budget process. I would close by reminding our colleagues and 
Members that the PAYGO rule contributed to taming of deficits over the 
past seven years, and it is my hope that a successor to PAYGO can be 
developed and coupled with caps on discretionary appropriations.'' That 
quote, of course, comes from Jim Nussle.
  As a matter of fact, President Bush's administration also said that 
they were for PAYGO, until they found out that PAYGO applied to cutting 
revenues. And because they didn't want to stop buying, I say to my 
friends on the Republican side of the aisle, and you knew that you 
would be constrained in buying if PAYGO applied to your tax cuts, which 
I supported for the middle-class but not for the skewing of taxes that 
I saw in your proposals, that you would have to stop spending, because 
you couldn't pay for it. So you jettisoned PAYGO, a premise that was 
overwhelmingly adopted by Republicans and I voted for in the 1997 
Budget Act, because I believe in balancing our budget.
  I have served in legislative bodies for almost 40 years, and I have 
found people who like to vote for spending but don't like to vote for 
paying. It takes no courage whatsoever, I tell my friends, to take my 
credit card out of my pocket and put it in there, sign the little slip 
and think I will never have to pay for it, because, by the way, I will 
be dead and gone by then and my children will have to pay the debt. 
That has been referred to by Mr. Portman as an immoral policy, Rob 
Portman, the former Director of the OMB, a former member of the Ways 
and Means Committee.
  Mr. Speaker, I rise in very, very strong support in favor of this tax 
cut for millions of Americans. Will there be an offset? There will be. 
And, as I said, I will not vote to fix the AMT unless we pay for it. 
Because if we fix the AMT without paying for it, what we will say to 
people like Steny Hoyer and every Member of this House, maybe we have a 
conflict of interest, because every Member of this House is going to be 
affected by this if we don't repeal the AMT, for those of us at this 
income level.
  So maybe we have a conflict of interest. Maybe we want to save 
ourselves a little money, but we don't want to pay for it, because 
raising revenues takes political courage. There is no courage 
whatsoever in plunging our country into debt, spending and not paying. 
It is, as Rob Portman said, an immoral policy, lacking in courage and 
lacking in fiscal responsibility.
  My friends, we need to pass this bill and give millions of Americans 
a tax cut and ensure that millions of Americans will not get a tax 
increase. PAYGO is a policy that demands responsibility.
  Many of you voted for the bankruptcy bill, as I did. I was criticized 
by some because we thought that individuals ought to exercise fiscal 
responsibility in the managing of their finances. I think corporately 
as a government we ought to do the same.
  Mr. Speaker, let no one be mistaken. This is precisely what this 
legislation offered by Chairman Rangel was designed to do, give a tax 
cut to millions of Americans and preclude millions of Americans from 
paying more, and asking other Americans to pay their fair share so 
those at the bottom of the rung don't have to pay more to defend our 
country, to educate our children, to keep our families healthy.
  Mr. Speaker, this tax cut will provide 30 million homeowners with 
property tax relief. It will help 12 million children by expanding the 
child tax credit. It will help 4.5 million families better afford 
college with tuition deductions. It will save 3.4 million teachers 
money with deductions for classroom expenses.
  My wife was a teacher. She died 10\1/2\ years ago. She was one of the 
best people that I have ever met in my life, if not the best. Every 
year, we would spend a couple of hundred dollars, and we could afford 
it, maybe even a little more than that, to make sure that her kids in 
her classroom had things that they needed but were not provided. We are 
going to give teachers a tax cut to do that. Our children will be 
served and our teachers will be served.
  In short, this bill will extend tax credits and deductions that will 
benefit a wide array of Americans and the American economy. And, yes, 
this legislation helps to restore tax fairness and once again 
demonstrates that this Democratic majority is committed to fiscal 
responsibility.
  Let me restate that figure: 18 years of Republican Presidents, $4.1 
trillion of deficit spending. Under Bill Clinton,

[[Page 30767]]

8 years, $62.9 billion net surplus. No indebtedness. No indebtedness in 
the last 4 years.
  We are now over $9 trillion in debt. This administration has gone 
from $5.7 trillion to over $9 trillion. Republicans were in control of 
everything, and spending escalated at twice the rate it did when Bill 
Clinton was President.
  My friends, this bill is a fair bill. This bill is responsible. This 
bill gives tax cuts to millions of Americans and asks some few 
Americans to pay their fair share. Vote for this bill. It is good for 
America, it is good for our people, it is the right, and as Rob Portman 
said, the moral thing to do.

                              {time}  1300

  Mr. McCRERY. Mr. Speaker, I yield myself 1 minute.
  There has been a lot said here on the floor today and a lot of it is 
one person or one party's spin on the facts or on history. The 
distinguished majority leader put his spin on history. I would just 
like to point out to the House that for the last 6 years of the Clinton 
administration, which was bragged about so by the majority leader, 
there was a Republican-controlled Congress. Under the Constitution, the 
Congress controls the purse strings of the country and develops fiscal 
policy. And under our fiscal policy, we balanced the budget and created 
a surplus.
  Then when President Bush came into office, he inherited a recession, 
a short-lived recession, admittedly, but still a recession. And then we 
had 9/11 which was a shock to the economy and then we had war. Every 
time in this Nation's history that we have had either a recession or a 
war, we have had a deficit. This time is no different. But, under our 
policies, we are producing this year 18.6 percent of GDP for Federal 
revenues and that is above the historic average. Why do we need more, 
Mr. Speaker? This bill would add to that. We don't need to.
  Mr. NEAL of Massachusetts. Mr. Speaker, we are not surprised that the 
Wall Street Journal reported 3 weeks ago that the American people, with 
a two-thirds majority, give Bill Clinton high marks for his Presidency.
  With that, I yield 1 minute to the gentleman from Georgia (Mr. 
Scott).
  Mr. SCOTT of Georgia. Mr. Speaker, I stand in strong support of this 
most important piece of legislation. This is the most important piece 
of legislation to stimulate our economy in this entire session.
  What we have before us in this House today is a choice: Will you 
stand with the few, as my friends on the right are doing? Will you 
stand with the few multibillionaires who are not paying their fair 
share while the rest of America is paying a 35 percent rate on their 
income? Will you stand over there on that side with multibillionaires 
who are paying just 15 percent? Will you stand with 30 million American 
families who will get property tax relief? Or will you stand with those 
who have not, who are hiding behind capital gains, when they know very 
well that they are not putting capital in. That's why we have capital 
gains at 15 percent. But these fund managers are not. They are being 
compensated for ordinary income. Why should they be different than the 
housewife and the fireman?
  Make the right choice today. Stand with America and let's vote for 
this bill.
  Mr. McCRERY. Mr. Speaker, to close the debate for our side, I 
recognize for the remaining time the gentleman from Ohio (Mr. Boehner), 
the distinguished minority leader.
  Mr. BOEHNER. Let me thank my colleague from Louisiana for yielding.
  Let me say with all the gratitude I have, I love the chairman of the 
Ways and Means Committee. He knows I do. I think he and the gentleman 
from Louisiana, the ranking Republican on the committee, do a marvelous 
job together. But as much as I love our chairman, there is one thing 
about his chairmanship that we have a big disagreement over, and that 
is the issue of raising taxes.
  So far this year we have had $100 billion of new tax increases that 
have been passed by this House. Thankfully, none of them have become 
law. And, hopefully, none of them will become law. This is $81 billion 
in another tax increase. This is a warmup for the $3.5 trillion tax 
increase that is coming that was introduced this last week. And so, Mr. 
Rangel, as much as I love you and think the world of you, when it comes 
to the issue of taxes, I am opposed.
  I came to Washington because I thought government was too big, it 
spent too much, and took too much out of the pockets of the American 
people. So I don't vote for tax increases. I think it is wrong. If you 
look at what has happened in our economy over the last 4 years, think 
about this: we cut tax rates in 2001, we cut tax rates in 2003. And 
what has happened in the last 4 years, Federal revenues, total revenues 
to the Federal Government have increased at over 10 percent per year in 
each of the last 4 years. As a matter of fact, it is over 11 percent in 
each of the last 4 years. This year we expect Federal revenues to rise 
another 7 or 8 percent.
  So anybody who believes that we have a revenue problem I think is 
mistaken. We have a spending problem, and we will not stand up and take 
on the spending challenges that we have. We all know we have to step up 
and do it, we just can't quite find the courage to get it done.
  What is even more irritating about the bill that is on the floor 
today is that it is a temporary tax patch to prevent a tax increase 
from going into effect for 1 year, paid for by a permanent tax 
increase. I am sure that the chairman of the committee would rather not 
do it this way, but that's what this bill does. All we are doing again 
is putting a permanent tax increase into law.
  Now this law and this bill that we are debating is never going to 
become law. It is never going to become law because the Senate has made 
it pretty clear they are not going to do this bill this way. They are 
not going to have this tax increase in this bill. The White House has 
made it clear that they are not going to sign a bill that raises taxes.
  So here we are playing political games once again and running out the 
clock. Running out the clock on whom? Running out the clock on the IRS 
and running out the clock on those 50 million Americans who are going 
to get a refund next year because, as we all know, this bill will 
probably not be done until Christmas. And the confusion that is going 
to reign next January, February, and March as people are trying to fill 
out their taxes, not knowing whether the alternative minimum tax is 
going to apply to them, is going to be confusion enough.
  And it gets worse because what is going to happen is that the refunds 
that Americans, 50 million of them, are going to expect, are going to 
show up 2 or 3 months later than what they expect. And at a time when 
our economy is slowing and people are trying to hold onto their homes, 
a delay in their refund is going to put a real crimp on American 
families.
  Now why are we having this big disagreement? This whole issue of 
PAYGO, how is it that we are going to extend the current tax rates, the 
current tax system for another year, and yet we have to have an $81 
billion tax increase to pay for it?
  The tax system we have today is going to be the same tax system we 
have next year, and yet we have to find some way under these crazy 
rules to pay for it.
  Now, this is nothing more than a tax increase. For those who believe 
bigger government and higher taxes and believe government is the answer 
to virtually everything, I can understand why you want to raise taxes. 
But I don't believe the American people want their taxes increased.
  At the end of the day what I am really confused about is if the 
Senate is not going to have this tax increase, and the White House is 
not going to sign it and it is not going to become law, why do you want 
to take your Members and walk them out on this plank only so it can be 
sawed off behind them? I wouldn't do that to my Members; I would hope 
you wouldn't do it to your Members.
  American middle-class families are already under the gun. They are 
paying

[[Page 30768]]

higher energy costs and higher health care costs, higher gasoline 
prices at a time when their incomes are not rising. The last thing they 
need is another tax increase from Washington, DC.
  I would hope my colleagues would join me in voting ``no'' on this 
bill, making it clear to the American people that we understand the 
pain that they are dealing with and we should be here to help them, not 
to hurt them with higher taxes.
  Mr. NEAL of Massachusetts. Mr. Speaker, we hold the same regard for 
the distinguished minority leader on this side that they hold for 
Chairman Rangel, as well. But the difference is essentially this: the 
Republican Party once again proposes to borrow the money to pay for tax 
relief. We intend to pay for tax relief.
  With that, it is an honor for me to recognize the gentlewoman from 
California, the distinguished Speaker of the House, Ms. Pelosi, for the 
balance of my time.
  Ms. PELOSI. I thank the gentleman for his leadership on the Ways and 
Means Committee. I commend the distinguished chairman of the Ways and 
Means Committee, and respect the leadership also of the distinguished 
ranking member of that committee.
  Thank you, Mr. Rangel, for your leadership in bringing this important 
legislation to the floor. It enables us as Members of Congress to plant 
a flag for fiscal responsibility, to plant a flag for the middle class 
in our country, and to plant a flag for competitiveness, to keep 
America number one.
  Mr. Speaker, this legislation is important because it provides long 
overdue middle-class tax relief, preventing a tax increase that will 
fall upon the middle class come this next year. The bill is about tax 
fairness; it is about fiscal responsibility; and, again, it is about 
keeping America competitive.
  When we talk about fiscal responsibility, unfortunately, it always 
seems necessary, after listening to my Republican colleagues, to set 
the record straight.
  The Democratic Party is the party of fiscal responsibility. When 
President Clinton was President, his four final budgets were in 
surplus. He left office with our budget on a trajectory of $5.6 
trillion in surplus. Sadly, the Bush administration reversed that 
taking us to over $3 trillion in deficit, a swing. Now we are at a 
swing of about $10 trillion, a swing that is greater than anyone has 
ever seen in history in terms of fiscal irresponsibility.
  And what did the Congressional Budget Office under the Republican 
leadership say was the leading cause for that? Tax cuts for the 
wealthy. Don't blame it on the war; don't blame it on anything other 
than what it really was: tax cuts for the wealthy.
  And so today we see a change. Tax cuts for the wealthy under the Bush 
administration and a Republican Congress paid for by the middle class. 
Today we reverse that: tax cuts for the middle class, paid for by the 
wealthiest people in our country.
  And as we give this tax break, who is getting it? Think of it, 23 
million middle-class families are protected from higher taxes due to 
the alternative minimum tax. Thirty million homeowners will receive 
property tax relief. Twelve million children will benefit from the 
expanded child tax credit, and 4.5 million families will get help 
affording college education. This is in addition to our earlier 
investment of the largest expansion of college affordability since the 
GI Bill in 1944. Thousands of our men and women in uniform will receive 
tax relief under the earned income tax credit. They were prohibited 
from qualifying for that because our Republican colleagues would not 
disregard combat pay in that consideration.
  So fiscal responsibility, tax cuts for the middle class, and 
competitiveness for our country. This weekend as we go into observing 
Veterans Day, we all know the great debt of gratitude we owe our 
veterans for their service to our country, their sacrifice, their 
patriotism and the sacrifices they and their families are willing to 
make.
  What veterans have done over the generations is to protect our 
democracy. Essential to the success of a democracy, though, is a 
thriving middle class, in our country and in countries throughout the 
world, a thriving middle class. And this legislation is in furtherance 
of supporting that middle class and therefore supporting our democracy.
  In keeping with our pay-as-you-go rules with no new deficit spending, 
this legislation will ensure that our children will not inherit a 
legacy of debt. In terms of competitiveness, this legislation extends 
the R&D tax credit and new markets tax credits, among other things; but 
I mention those 2 because they are directly related to our Innovation 
Agenda, our commitment to competitiveness to keep America number one.
  So, again: Fiscal responsibility, favoring the middle class, keeping 
America competitive and number one. Democrats are committed to putting 
middle-class families first. The choice is simple: Tax relief for 
millions of middle-class families or protecting tax loopholes, the Wall 
Street loophole, that allows a privileged few to pay a lower rate than 
America's teachers, firefighters, nurses, doctors, police, and our men 
and women in uniform fighting in Iraq and Afghanistan. It is about the 
people who are the backbone of America.
  The choice is a simple one. Today we Democrats say join us in voting 
in favor of America's middle class.
  I urge the passage of this legislation and again commend the 
distinguished chairman and distinguished Chair of the subcommittee, Mr. 
Neal, for their leadership.
  I am proud of the courage that my colleagues have shown to protect 
our middle class and to do so in a fiscally sound way and in a way 
that, again, keeps America competitive, honoring the service of our men 
and women in uniform, to build a future worthy of their sacrifice.
  Mr. LANGEVIN. Mr. Speaker, I rise today to voice my strong support 
for the Temporary Tax Relief Act, H.R. 3996. This comprehensive 
legislation will provide fiscally responsible tax relief for hard-
working, middle-class Americans, help stimulate our Nation's small 
businesses and provide financial support to public servants nationwide.
  The Temporary Tax Relief Act represents a new direction in tax policy 
that will offer assistance to thousands of Rhode Island middle-class 
families. I am particularly pleased that this legislation includes a 1-
year patch to keep millions of hard-working, middle-class Americans 
outside the ever-widening net of the alternative minimum tax, AMT. 
Congress first enacted the AMT in 1969 to ensure that 155 wealthy 
taxpayers paid their fair share of the Federal income tax, but because 
they neglected to index the tax for inflation, it has since become 
outdated and unfair. If left unfixed, this year over 23 million 
Americans--and 75,000 Rhode Islanders--will be forced to pay nearly 
$2,000 in additional taxes.
  The bill before us will also expand the refundable child tax credit 
by reducing the minimum income eligibility level from $11,000 to 
$8,500, thereby allowing more Rhode Island families to take advantage 
of this important credit. In addition, this legislation will help stem 
the rising cost of higher education by extending the above-the-line tax 
deduction for qualified education expenses up to $4,000. H.R. 3996 also 
provides much-needed tax relief to homeowners who do not itemize their 
deductions by permitting married couples to deduct up to $500, and 
single taxpayers to deduct up to $250, in property taxes, in addition 
to their standard deductions.
  It's not just middle-class taxpayers who will reap the benefits of 
this bill. The Temporary Tax Relief Act contains a number of provisions 
that will help stimulate our Nation's small businesses, including a 1-
year extension of the Research and Development, R&D, tax credit, which 
will keep American companies competitive and spur businesses to invest 
in the future and create jobs. Also included is a provision that will 
grant small businesses a tax incentive for committing to invest in 
local community development.
  Finally, H.R. 3996 directs well-deserved financial assistance to our 
Nation's public servants. Under this legislation, more than 3 million 
teachers will be able to deduct out-of-pocket expenses, including books 
and other school supplies, for their classrooms.
  I am also proud to support a provision to provide tax relief for 
thousands of American troops in combat under the Earned Income Tax 
Credit.
  Perhaps most importantly, this measure is fully paid for and will not 
add a penny to our national debt. We made a commitment to the

[[Page 30769]]

American people to abide by pay-as-you-go rules so that our children 
and grandchildren will not bear the cost of the decisions we make. 
Today we reaffirm our commitment to fiscal responsibility, while 
maintaining our promise to helping middle-class families and small 
businesses nationwide. I would like to thank Chairman Rangel for his 
leadership in crafting a balanced, responsible and urgently needed 
bill, and I urge my colleagues to join me in supporting this important 
legislation.
  Mr. CONYERS. Mr. Speaker, the middle class is the economic backbone 
of America. But they are increasingly under pressure due to rising 
costs in housing, healthcare, and education. To make matters worse, the 
Alternative Minimum Tax, AMT, will reach a significant percentage of 
them this coming fiscal year. The Congress needs to act. Today, we will 
vote on H.R. 3996, the Temporary Tax Relief Act of 2007, which would 
ensure that no additional taxpayers pay the AMT this year while also 
extending popular tax credits and deductions that expire at the end of 
the year.
  The Congress created the AMT in 1969 to ensure that the wealthiest 
were not finding loopholes in the tax code and thus avoiding paying any 
taxes at all. However, because the AMT was not adjusted for inflation 
and the tax itself has significantly grown in recent years, it will 
affect a large percentage of the middle class. Unless the bill is 
enacted, 23 million middle income Americans, who were never intended to 
be subjected to this tax, will be taxed at a higher rate than before.
  I am pleased to support my friend, Representative Charles Rangel, who 
wrote this revenue neutral bill. H.R. 3996 will extend and expand many 
popular tax credits and deductions such as the mortgage insurance 
deduction, the child tax credit, small business investment write-offs, 
a deduction for teachers who use their own money to buy classroom 
materials, and the additional property tax deduction, which will 
benefit at least 30 million Americans. Furthermore, it will exclude 
phantom income deduction from discharged home mortgages, and will also 
prevent the Internal Revenue Service from entering into private debt 
collection contracts.
  Of course, any large tax reform necessarily entails some hard 
choices. Recent economic growth has been enjoyed disproportionately by 
the top one percent of Americans, who also continue to benefit from 
loopholes in the tax code. This bill will take a step towards ensuring 
that the wealthy pay their fair share by increasing taxes on private 
equity managers, who actually pay lower taxes on carried interest, and 
on multinational corporations who offshore their businesses for the 
express purpose of tax avoidance.
  It is simply unfair for 23 million hard-working middle income 
Americans to pay additional taxes while many wealthy private equity and 
hedge fund managers enjoy a much lower rate of taxation. H.R. 3996, 
restores America's tradition of progressive taxation. What we are doing 
here today is a fair and reasonable tax increase on the highest income 
earners in the country, who can easily afford it, to benefit millions 
of working families.
  Ms. HIRONO. Mr. Speaker, I rise in strong support of H.R. 3996, the 
Temporary Tax Relief Act.
  This bill will provide 23 million American middle-class families--
including more than 90,000 families in Hawai`i--with tax relief 
totaling $50 billion. Without this legislation, these families will end 
up paying higher taxes under the alternative minimum tax, AMT.
  Our middle-class families are struggling with higher health care 
costs, higher college costs, higher energy costs and higher housing 
costs and, basically, have not been helped by the 7 years of the Bush 
administration. Passing this bill will provide some welcome relief for 
our middle class.
  This legislation is important in promoting fairness and justice in 
the tax system. Why should the richest of the rich avoid among us 
paying their fair share in taxes? Today with this bill we are saying 
that individuals who earn millions of dollars on Wall Street should pay 
their fair share in taxes so that hard-working middle-class Americans 
including teachers, police officers and firefighters, won't have to pay 
more than their fair share.
  The bottom line is, without this bill, 23 million families will have 
a tax increase. With this bill, they will be spared from paying more 
under the AMT.
  I am proud that the Democratic majority is supporting our middle-
class families with this tax relief, and I urge my colleagues to 
support this legislation.
  Mr. FALEOMAVAEGA. Mr. Speaker, given that American Samoa's private-
sector economy is more than 80 percent open dependent either directly 
or indirectly on the U.S. tuna processing and fishing industries, I 
rise in support of H.R. 3996 which includes a provision to extend IRS 
30A tax credits to American Samoa.
  While I asked for a 10-year extension of our tax credits, I 
understand that all tax extenders included in this bill received the 
same extension of 1-year only. Chairman Rangel has also promised to 
continuing to work with me on a more permanent solution for American 
Samoa once our local canneries agree on what incentives work best for 
them.
  It is unfortunate that StarKist and Chicken of the Sea could not 
reach agreement in a timely manner regarding whether or not 30A is the 
best option for them to remain and invest in American Samoa. Earlier 
this year, both canneries agreed that 30A was the way forward. By mid-
year, our canneries were at odds.
  Our canneries have also been unable to provide Chairman Rangel with a 
clear indication of whether or not they will stay in American Samoa if 
they are provided with tax credits. During last Congress, our canneries 
also failed to provide Chairman Thomas of the Ways and Means Committee 
with assurances of their commitment to American Samoa.
  Regardless, I still support 30A tax credits for American Samoa, and 
especially for our tuna fishing and processing industries. I also 
support opening up 30A for new investors, too, and I will continue to 
work with Chairman Rangel to make this, or a similar initiative happen.
  In the interim, I appreciate Chairman Rangel's support in extending 
tax credits for American Samoa for an additional year while our 
canneries go back to the drawing board in an effort to reach agreement.
  Mr. MORAN of Virginia. Mr. Speaker, I rise today in strong support of 
H.R. 3996, the Temporary Tax Relief Act of 2007. This bill will bring 
relief to tens of millions of hardworking American families, including 
nearly 100,000 in my district alone.
  It makes responsible, sensible changes to the tax code to make it 
more efficient and more equitable, changes that are sound both morally 
and economically. Most importantly, H.R. 3996 will be the first tax 
relief bill of this millennium that did not increase the deficit.
  This bill would lower the tax burden on 95 percent of the people 
affected by it--which is about as close to perfect as we're able to get 
with the tax code. I'd like to commend Chairman Rangel and his staff 
for their work on this excellent bill, which I am proud to support 
today.
  Mr. Speaker, we are at something of an impasse. The President's 
budget assumes the revenue next year from a vast expansion of the AMT, 
and the President has offered no alternative to either eliminate the 
AMT or patch it, likely in recognition of the immense cost to the 
treasury. Yet nearly everyone agrees that we must pass some form of AMT 
relief this year and that we must do it soon. The Congressional Budget 
Office and Joint Committee on Taxation have spelled out specifically 
what the cost of a one-year AMT patch would be. It cannot, whatever 
tooth fairies we might wish to believe in, be accomplished for free.
  What we seem to disagree on is how to reconcile these two truths. We 
don't have many choices, Mr. Speaker, and other Members are correct in 
pointing out that many of them are difficult. The consequences of 
choosing wrong, however, are far too drastic for us to avoid 
confronting the problem head on.
  If we are to pass an AMT ``patch,'' we can do one of three things: we 
can cut benefits in Social Security and Medicare to comply with Pay-Go, 
we can raise additional revenue to comply with Pay-Go, or we can waive 
Pay-Go and continue financing tax cuts by increasing the federal 
deficit and the national debt. That is, we can just irresponsibly pass 
the buck to our children and grandchildren.
  Mr. Speaker, I do not think it would be possible for me to oppose 
waiving Pay-Go in sufficiently strong terms. As the gentleman from 
Massachusetts, Mr. Capuano, told us yesterday, this Administration has 
increased U.S. government debt by an average of $15,644.93 per second 
since they took office.
  Pretending that sexual activity among teenagers does not exist will 
not reduce the number of new sexually transmitted infections; it will 
not reduce the number of teenage girls who become pregnant; and it will 
not reduce the number of abortions performed every year.
  I want to thank Chairman Obey for including language in this 
Conference Report to ensure that programs will not be funded that are 
medically inaccurate. I hope that in the future, we can continue to 
work together to ensure that our children receive high quality, 
science-based, age-appropriate sex education that is medically sound 
and free from ideological or religious bias. Despite my concerns about 
this program, Mr. Speaker, I am proud to support this important bill 
and urge my colleagues to do the same, so that we can get needed funds 
to these critical programs as soon as possible.
  Mr. SPRATT. Mr. Speaker, three times in recent months, officials of 
the Bush administration have come before our committee, and

[[Page 30770]]

when asked about the AMT and its impact on middle-income Americans, for 
whom it was never intended, they have insisted that they could fix the 
AMT with changes in the tax code, such that there would be no change in 
revenues.
  In February 2006, Josh Bolten was the Director of OMB. He told the 
Budget Committee that the AMT could be ``corrected in the context of 
overall revenue-neutral tax reform.''
  In February 2007, Rob Portman was the Director of OMB. He told the 
Budget Committee that ``our budget assumes that we will have a revenue-
neutral correction to the AMT.''
  Rob Portman was followed by Hank Paulson, Secretary of the Treasury, 
and he said essentially the same thing.
  The difference between these officials and Chairman Rangel is that 
Charlie Rangel has delivered. Mr. Rangel has put a revenue-neutral bill 
on the table, and to boot, extended a few popular tax concessions about 
to expire, such as the R & E tax credit, while adding few new ones, 
such as the exclusion of gains on the foreclosure of taxpayers' homes.
  Mr. Rangel and his committee deserve credit for bringing this bill to 
the floor, and for preventing the AMT from coming down on 23 million 
taxpayers, mostly middle-income; and they deserve credit also for 
sticking to the pay-go principles that we have steadfastly applied for 
the last 9 to 10 months.
  Our Republican colleagues ask why we have to fix the AMT in way that 
is compliant with our pay-go rule. If you really need an answer to that 
question, consider these facts: The Bush administration inherited a 
$236 billion surplus and by the year 2004, turned it into a $413 
billion deficit. As a result, the national debt of the United States 
reached $9 trillion last week. $3.2 trillion of that debt has been 
incurred on the watch of this administration, and by the time it leaves 
office, the total debt accumulated will hit $4 trillion.
  That's why we apply pay-go and require offsets: it's one way to slow 
down the build-up of debt while working off enormous deficits.
  So, this bill is fiscally responsible, and fair for two reasons: it 
brings tax relief to middle-income Americans, and it does not pass the 
tab on to our children and grandchildren as a mountain of debt.
  So, vote responsibly. Vote Rangel.
  Mr. POMEROY. Mr. Speaker, I rise today to support this responsible 
tax relief package.
  The bill before us today:
  protects 23 million middle-class tax payers from the Alternative 
Minimum Tax, including nearly 35,000 North Dakotans.
  provides tax relief for millions more American families who want a 
better life for their families by putting more money in their pockets, 
and
  protects future generations from tax increases by not adding to our 
national debt.
  The president and my colleagues across the aisle say we should not 
have to pay for this package of tax relief. They are still acting as 
though they're living in a mythical Alice in Wonderland--in an America 
where borrowing $9 trillion in debt and running record budget deficits 
for years doesn't matter.
  But deficits and debt do matter because every dollar we borrow places 
a ``debt tax'' on future generations who will have to pay for the 
decisions we make today. At $9 trillion, each of our children will be 
responsible for paying $30,000 of that debt, and that is before 
interest gets added on.
  We crossed that 9 trillion dollar mark in the amount of outstanding 
public debt owed by this Treasury just earlier this week.
  We saw that anxiety over that level of debt can have a short-term 
impact in the markets on Wednesday when a low level Chinese official 
suggested that the government may slow purchasing Treasury bonds. In 
reaction, the dollar fell sharply and the stock market plummeted by 361 
points. That is one day.
  A huge persistent debt has greater cost for the economy. So, the 
moral issue today is passing a fiscally responsible bill that protects 
future generations by not asking them to finance current tax cuts. Each 
day the average daily interest payment on the debt adds more than $1 
billion to the tab we leave behind.
  My colleagues across the aisle would rather we pay for today's tax 
relief--tomorrow. Would that leave the cost to our children, who might 
just end up having to repay the Chinese holders of U.S. Treasury Notes 
with EUROs?
  I try to teach my two kids important values. Among those values is 
teaching them that things worth doing are worth paying for.
  That same core principle is behind PAYGO. Not paying for this 
important tax relief signals high disregard for this basic principle 
that we teach our kids and that motivated Congress to reinstate PAYGO 
rules.
  With the massive fiscal challenges the Nation faces in coming 
decades, it is irresponsible to foist the cost of tax relief today on 
future taxpayers. Today, this Congress again should face up to that 
challenge and pay the cost now.
  Reverse years of failed Republican policies that have mortgaged our 
grandchildren's future with additional foreign-owned debt.
  Let's set an example for our kids--we do not let them eat dessert 
before they eat all their vegetables. Congress should not rush to 
dessert either.
  I urge my colleagues to responsibly pay for middle-class tax relief.
  I also want to express my appreciation to Chairman Rangel of several 
important provisions in H.R. 3996 that provide millions of American 
families tax relief and business in our rural communities.
  The bill helps 4.5 million taxpayers to meet the cost of paying for 
their children to get the ticket to a better future--a college 
education. We extend the tax deduction for the cost of college tuition 
for another year.
  Also this bill extends for one year the current-law provision that 
allows taxpayers over age 70 and a half to make tax-free distributions 
from their individual retirement accounts (IRAs) for gifts to 
charities. In the few short months when senior citizens could use these 
Charitable IRA rollovers to donate nearly $112 million to help the work 
of worthy charities it is important that this tool for giving, mostly 
in small amounts of a few thousand dollars or less, remains available 
to taxpayers.
  The bill extends for one year an important tax credit that allows: 
short line railroads that serve many of our rural communities to 
upgrade the track on these important links that get our products to the 
marketplace.
  Unfortunately, fiscal constraint embodied in H.R. 3996 only allowed 
us to consider extending these expiring tax provisions generally in 
their current form. We were not able to make these important tax 
provisions permanent and make needed improvements.
  For example, the Public Good IRA Rollover Act (H.R. 1419), which I 
introduced and which has 90 cosponsors, would broaden the charitable 
IRA rollover to allow younger retirees to get a lifetime income and 
provided for charities and to allow distributions to donor-advised 
funds and would strengthen other aspects of the present-law provision.
  I remain committed to the enactment of these improvements and would 
urge my colleagues to work with me in that regard.
  I urge my colleagues to pass this bill.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today in strong support 
of H.R. 3996, the Temporary Tax Relief Act of 2007, introduced by my 
distinguished colleague from New York, Representative Charles Rangel. I 
would like to thank Chairman Rangel for his extraordinary leadership on 
the Ways and Means Committee and for introducing this important 
legislation that promotes tax fairness and fiscal responsibility, a new 
fiscal direction that the American people have demanded and deserve.
  Mr. Speaker, the Bush administration has not done an adequate job in 
allocating this country's resources. However, this Congress remains 
committed to providing a fiscal new direction for the American people. 
This important legislation will protect some 23 million Americans from 
the Alternative Minimum Tax and will extend tax credits to those who 
need it most, our Nation's students, teachers, children and homeowners. 
The Alternative Minimum Tax is currently riddled with loopholes, and 
this legislation is a fiscally responsible alternative to the practice 
of borrowing tens of billions of dollars each year, in which the GOP 
has engaged. It closes the legislative loophole that has allowed a 
privileged few exceptions at the expense of other Americans.
  As Chair of the Congressional Children's Caucus, I particularly 
welcome this legislation for the assistance it will provide to our 
Nation's children. Today's bill will increase eligibility for the child 
tax credit, consequently helping an additional 12 million children in 
low-income families. This bill will lower the eligibility threshold in 
2008 to $8,500. The National Women's Law Center recently released a 
statement detailing the organization's sincere support for this 
legislation, commenting that ``For a single mother working fulltime in 
a minimum wage job, the bill would mean a difference between a child 
tax credit of just $35 and a credit of $568.'' We must work to ensure 
that all of our Nation's children are provided for, and I feel this 
legislation is an important step toward reaching this crucial goal.
  In addition, Mr. Speaker, this legislation will benefit our Nation's 
teachers and students. It will help 3.4 million teachers by allowing 
them to save money through deductions for classroom expenses. It will 
further ensure that the future leaders of America will receive the 
education they deserve, by helping 4.5 million families afford college 
through tuition deductions. It will help our Nation's families by 
providing 30 million homeowners with property

[[Page 30771]]

tax relief and benefit approximately 11 million families through State 
and local sales tax reduction. Mr. Speaker, these benefits cannot be 
ignored and this legislation would help those who truly deserve it.
  Furthermore, this fiscally-responsible bill will not cost American 
taxpayers any additional money. The Alternate Minimum Tax was 
established in 1969, and it has since then been used to exempt an 
exceptionally wealthy few from paying their share of this Nation's 
taxes. Instead of costing America additional funds to mend this 
antiquated tax, or borrowing heavily and exponentially increasing the 
national debt as my Republican colleagues have done, this legislation 
seeks to restore tax fairness. Instead of merely circumscribing the 
problem and providing a ``quick fix,'' this legislation will close tax 
loopholes that have persisted in allowing an extremely wealthy 
privileged few to pay a lower tax rate on their income than the 
billions of hard-working Americans who are just trying to get by. This 
legislation protects our future generations by not asking them to pay 
for the proposed tax cuts.
  This legislation goes beyond simply ensuring that future generations 
will not be forced to finance tax reductions today. This legislation 
will actually help the American economy grow. It will extend the R&D 
tax credit to promote innovation and high-paying jobs that make America 
one the world's leaders in innovation and technological progress. It 
will also ensure long-term economic growth by adhering to the ``pay-as-
you-go'' budget rules that helped produce the record budget surpluses 
and robust economy of the 1990s by mandating no new deficit spending.
  Mr. Speaker, the American people elected this Congress because they 
wanted to see a new direction and a meaningful change. This legislation 
does precisely that and helps the most deserving American people while 
causing our economy to grow and breaking our reliance on deficit 
spending. It will ease the burden felt by millions of middle-class 
families, through tax cuts, while helping our economy grow without 
increasing the national debt. The benefits of the Temporary Tax Relief 
Act will be felt immediately by the 23 million middle-class families, 
who will be saved from paying higher taxes in April. It also closes 
unfair tax loopholes, requiring Wall Street millionaires to pay their 
share of taxes.
  I strongly urge my colleagues to join me in supporting this extremely 
important legislation.
  Mr. UDALL of Colorado. Mr. Speaker, I will vote for this bill because 
of the urgent need to protect middle-income families from a massive tax 
increase that will hit them if we do not act to adjust the Alternative 
Minimum Tax, or AMT.
  In technical terms, the bill would extend for one year AMT relief for 
nonrefundable personal credits and increase the AMT exemption amount to 
$66,250 for joint filers and $44,350 for individuals.
  In real-world terms, that means it will prevent a tax increase for 
more than 302,600 Colorado households that otherwise would be required 
to pay more in Federal income tax when returns are due next year.
  In addition, it will let taxpayers who do not itemize deductions take 
advantage of an additional standard deduction of up to $700 (for 
couples who file jointly) for State and local real property taxes--
something that will greatly help many thousands of Coloradans affected 
by those property taxes. And it also will increase the eligibility for 
the refundable child tax credit.
  Further, the bill will extend many important tax-law provisions 
scheduled to expire this year.
  These include an extension of the deductibility of certain tuition 
and related expenses, which helps many to gain an education, and an 
extension of the ability of teachers to deduct the money they spend 
from their own pockets for supplies used in their classrooms.
  The bill will help our men and women in uniform and our veterans in 
several ways, including extension of the ability of those receiving 
combat pay to count it for purposes of the earned income credit; 
extension of the special rules that help veterans qualify for State-
operated, tax-exempt mortgage revenue bond programs for access to low-
interest mortgages; and the extension of rules that allow reservists 
called to active duty to make penalty-free withdrawals from their 
retirement plans if they need to do so.
  Other important provisions will allow people to continue to make 
charitable contributions from their individual retirement accounts, 
IRAs, without incurring tax penalties and will allow Colorado ranchers 
and other landowners to benefit from favorable tax treatment of their 
actions to protect open space through conservation easements.
  The bill also will delay implementation of a requirement, passed when 
our friends on the other side of the aisle were in the majority, that 
requires local governments (and others) to assume the burden of 
withholding part of the money going to those under contract to provide 
goods and services. This requirement is strongly opposed by county 
commissioners and other local officials across Colorado as well as by 
many companies that build roads or do other work under contracts with 
our State and local governments.
  In addition, the bill includes provisions to directly address the 
problems facing many people affected by the problems besetting the 
housing market. One of these is a permanent repeal of the current law's 
requirement that people pay income tax on the phantom ``income'' they 
supposedly receive when they are no longer required to pay on a 
mortgage because they have lost their homes to foreclosure or they are 
able to work out arrangements to avoid that result. Another will extend 
through 2014 the current ability of people to deduct the part of their 
mortgage payment that pays for mortgage insurance.
  The bill also extends provisions that encourage research and 
development activities that are crucial to our country's economic 
future. It will allow restaurants and other small businesses to 
continue to take advantage of a realistic write-off period for 
improvements to their facilities. And it will retain the current law 
that encourages restaurants and other companies to donate unused food 
from their inventories to help feed people who need that assistance.
  Mr. Speaker, all these are good provisions, and the bill overall is 
properly focused on tax relief for middle class families--a goal I 
strongly support.
  But I do have some reservations about how the bill seeks to provide 
that relief without making our Federal deficit worse.
  The bill's authors propose to pay for these provisions with a change 
in the current law that gives a substantial tax break to some 
investment fund managers by letting them treat part of their overall 
compensation as if were a capital gain on an investment. Another is a 
change to delay further a provision currently scheduled to take in 
effect next year regarding the rules for allocating certain expenses of 
companies that operate overseas. And a third is a change in the rules 
about taxation of deferred compensation.
  Since this bill was introduced, there has been considerable debate 
about these provisions. I am not convinced that these provisions are 
the best or only way to offset the revenue costs of providing a 
temporary fix to the AMT--but the bill's opponents have suggested no 
alternative except to cut unspecified amounts of spending in 
unspecified parts of the budget or to further add to the ``debt tax'' 
that has already been imposed on our children (and their children) by 
the irresponsible policies of the last seven years.
  The Senate will have to consider the legislation further, and if it 
makes changes a conference will have to resolve differences between 
their version and the bill now before us. So, it is possible that these 
provisions will be revised.
  Mr. Speaker, I must note that I do not believe that it is wise to 
include in this bill, designed to address the AMT problem and to extend 
expiring tax-law provisions, such an unrelated matter as a restriction 
on Internal Revenue Service (IRS) audits of individuals living in the 
Virgin Islands. I think that if that issue is to be addressed, it 
should be done separately, perhaps in connection with a review of how 
IRS audits are conducted in Colorado and other locations as well. I 
will not oppose the legislation before us on that ground alone, but I 
think we do a disservice to the public debate on AMT reform by 
attempting to attach such a provision, and in any event I am not 
convinced it is wise to interfere with the IRS auditing process.
  But, finally, the bottom line is that today we have the opportunity 
to provide tax relief to hundreds of thousands of middle-class families 
in Colorado. I think that is something I think the House can and should 
do without delay, and that is why I am voting for this bill.
  Mr. BACA. Mr. Speaker, I ask for unanimous consent to revise and 
extend my remarks.
  I rise today to voice my strong support for H.R. 3996, the Temporary 
Tax Relief Act.
  This bill provides much needed tax relief to 23 million middle class 
families across the Nation, including over 20,000 families in my own 
Congressional district.
  Families in California and throughout the United States have seen the 
cost of health care, gasoline and a college education soar--while at 
the same time their homes have lost value.
  They deserve a helping hand. This legislation protects them from 
being hit by the Alternative Minimum Tax.
  The bill also gives tax relief to working families by providing 30 
million homeowners with

[[Page 30772]]

property tax relief, and expanding the child tax credit for 12 million 
children.
  Instead of tax breaks for the wealthiest few, Democrats are restoring 
fiscal sanity and giving the hard-working men and women of America the 
relief they deserve.
  I urge my colleagues to cast a vote for economic fairness and 
equality, and to support H.R. 3996.
  Mr. VAN HOLLEN. Mr. Speaker, this bill provides tax relief for more 
than 24 million middle-income families. It also corrects a huge 
inequity where many people were forced to pay taxes on phantom income--
income they never had.
  Today, we must fix two big messes the Republican leadership left 
behind when they were voted out last November. One is the huge middle 
class tax increase the Republicans left hanging over millions of 
unsuspecting Americans. This Republican tax tsunami will crash down on 
top of 24 million Americans if we don't take action today.
  The Republicans could have stopped this middle class tax hit on their 
watch. Instead, for 6 years with President Bush, they spent their time 
and energy giving tax cuts to the very wealthiest Americans. On their 
watch, the wealthiest 1 percent of Americans got more than half the 
Bush tax cuts. That was their priority, and they left the rest of the 
American taxpayers holding the bag of a mushrooming national debt--a $9 
trillion debt that costs every taxpayer $3,300 per year. That is the 
debt tax American taxpayers are paying to service the debt President 
Bush and the Republicans have run up on our national credit card.
  Today, Republicans are proposing to increase the debt tax--to make 
Americans pay more in the end. Once again, they are willing to require 
our children to pay more debt tax in order to protect special shelters 
for about 50,000 of the wealthiest Americans.
  Let's provide middle class Americans with tax relief in a fiscally 
responsible way. Let's pass this bill.
  Mr. GOODLATTE. Mr. Speaker, our current tax system has spiraled out 
of control. Today's tax code is unfair, discourages savings and 
investment, and is impossibly complex. There is no part of the tax code 
that demonstrates this more than the Alternative Minimum Tax (AMT). The 
AMT is a nefarious policy enacted to prevent a small number of wealthy 
taxpayers from using legitimate deductions to reduce their taxes, and 
thus taxing them at a higher rate. However, the AMT was never indexed 
to inflation, and without reform, it threatens to ensnarl middle class 
taxpayers.
  When the AMT was first created, it affected fewer than 20,000 
taxpayers. Today it affects 4.2 million, and this number could rise. 
Without action by Congress, 20 million more taxpayers would be forced 
to pay on average $3,000 more in taxes, this year alone. In my district 
this egregious tax would engulf more than 55,000 taxpayers.
  Congress must find a permanent solution to this offensive tax; in 
fact, a solution is long overdue. However, what we are presented with 
today is not a permanent solution or even a solution. This ill-
conceived legislation puts in place permanent tax increases, on some of 
the driving forces of our economy, to pay for a temporary patch to the 
AMT.
  It is wrong for AMT relief to be subject to Pay-Go rules. The AMT was 
never intended to affect this many people and is working as a massive 
tax increase each year. The $50.6 billion that could be paid, without 
relief, because of the ever encroaching AMT was never intended to be 
collected. Yet, this bill seeks to collect this $50.6 billion in new 
taxes, and it collects it by raising taxes on investors in our economy. 
For Democrats the AMT simply serves their purpose of bait and switch on 
the American taxpayer.
  The permanent tax increases in this bill include job-killing tax 
hikes on entrepreneurs and risk-takers who invest and create jobs for 
working families. While these tax increases were written in a way to 
seemingly affect only wealthy hedge fund executives, much like the ill-
conceived AMT, these tax increases would reach much further. The taxes 
would affect real estate, venture capital, private equity, and retail. 
Penalizing these industries with higher taxes will dampen investment, 
constrict money needed for small-business ventures, and cost American 
jobs. While these taxes are egregious on their own, they are even more 
egregious in that they would be permanent while the relief they provide 
is temporary.
  It was a mistake on the part of Congress to not index the original 
AMT to inflation. It is a mistake that Congress must fix in order to 
prevent the AMT from engulfing millions of more taxpayers. We must work 
to find a permanent solution to this nefarious tax. I urge my 
colleagues to reject this ill-conceived plan, and let's work together 
to find a real solution for the American people.
  Mr. KAGEN. Mr. Speaker, whose side are we on? The Hard Working people 
in northeast Wisconsin want to know.
  This measure is not difficult to understand--someone has to pay the 
bills, and democrats believe in paying-as-we-go, and we do want to pass 
off our bills to the next generation.
  The democratic leadership of the house has promised to keep their 
word to the American people by remaining fiscally responsible and 
socially progressive.
  All of us should play by the same rules, and that means everyone 
should pay their fair share, including hedge fund managers--who have 
managed to pass the buck to the middle class time and time again.
  Enough is enough. Let's just tell it like it is.
  This bill cuts taxes for the middle class: property tax relief for 
Wisconsin homeowners; tax deductions of $4,000 for college tuition; 
helps small businesses by continuing the tax credits for research and 
development.
  People in northeast Wisconsin need to hear that this bill will 
benefit 62,000 households who would otherwise if fall into the AMT tax 
trap.
  This bill delivers. It finally gives the American middle class a tax 
cut.
  My friends, whose side are you on?
  I urge you to join me by standing up for taxpayers in the middle 
class, not only in Wisconsin, but across America.
  It is time we deliver tax cuts to the little guys.
  Ms. WOOLSEY. Mr. Speaker, it's clear that the Alternative Minimum 
Tax, AMT, needs to be fixed. Year after year, we play this game of 
``chicken'' with the end of the year, leaving millions of hard working 
American families fearful that they will be captured in a tax that was 
never meant to touch them. The good news is that the difference between 
this year's AMT patch and the ones that we did under the previous 
majority is that this time we are actually going to pay for it.
  In my district alone, H.R. 3996 will save over 59,000 taxpayers from 
being subject to the AMT and it's my hope that this will be a first 
step to a responsible solution to permanently fixing this tax policy.
  Also included in this bill is an extension and expansion of the Child 
Tax Credit, CTC, refund-ability. With economic disparity at its highest 
level since the Great Depression, expansion of this tax credit will 
help low-income families raise their children and help them get ahead. 
Finally, we are addressing the growing problem of the increasing gap 
between the wealthiest and the rest of America through a more equitable 
tax code. Thank you to Chairman Rangel and Chairman Neal for all of 
their hard work on this bill, closing loopholes, extending essential 
tax credits, and balancing the tax code.
  Ms. SCHWARTZ. Mr. Speaker, I want to thank Chairman Rangel for his 
leadership on this bill, and I rise today in support of tax relief for 
hard-working American families.
  This Congress is committed to moving our country in a new direction. 
We recognize that families across this country are struggling with 
everyday living expenses, and with this bill we are going to help 
millions of Americans get tax relief.
  Our work will protect 23 million Americans--including over 60,000 of 
my constituents--from the unexpected and difficult cost of the 
Alternative Minimum Tax.
  The Alternative Minimum Tax, the AMT, was originally intended to 
ensure that the very wealthiest taxpayers pay their fair share of 
taxes. But the AMT is increasingly being paid by middle-income 
families, and in fact, next year tens of millions of these hard-working 
taxpayers will be engulfed by the AMT if this Congress does not act.
  This bill provides tens of millions of middle-income homeowners with 
immediate property tax relief.
  It expands the child tax deduction, helping millions of families.
  And it ensures that parents, who often work tirelessly to send their 
children to college, will get tax deductions for college tuition.
  This middle-class tax relief is based on the principle of tax 
fairness. And it is paid for. Unlike tax efforts under the Republican 
Congress, our bill will not add to the national debt. It will not leave 
debt to be paid for by our children and grandchildren. It will not add 
to the debt that weakens the dollar and undermines our economy.
  The Democratic majority is unambiguous. We are committed to fiscal 
responsibility, to paying as we go, to making the tough decisions 
required to refocus national priorities, and to giving middle-income 
families the break they deserve.
  A vote for this bill is a vote for tax relief and tax fairness. It is 
a vote for economic growth. And it is a vote for honest budgeting.
  Mr. Speaker--our constituents didn't send us here to make easy 
decisions--they sent us here to make responsible ones.

[[Page 30773]]

  And today, the Democratic majority will make the responsible decision 
of providing tax relief to millions of working families.
  Mr. LEVIN. Mr. Speaker, this legislation reflects the priorities of 
the new majority in Congress: middle-class tax relief, fiscal 
discipline, and tax equity.
  Income inequality is dramatically increasing in our country. Between 
2004 and 2005, the average annual income of the top 1 percent increased 
by $120,000, while the average income for all the other 90 percent of 
households increased by just $550.
  In the face of this, we need to be able to look our constituents in 
the eye and tell them we are working to make the Tax Code fair and 
equitable.
  The principle in taxing private investment fund managers or ``carried 
interest'' is basic.
  If you are investing your own money, you should receive the capital 
gains tax rate; if you are providing the service of managing other 
people's money, you should pay the ordinary income tax rate.
  Some argue that fund managers deserve capital gains treatment to 
align their interests with investors or because ``carried interest'' is 
risky. Many other forms of compensation are risky, and they are taxed 
at the ordinary income tax rate. When a company gives its CEO stock 
options, he or she pays ordinary income tax rates when they exercise 
those options. Real estate agents only make money if they actually sell 
a house. Authors receive a portion of their book's profits. Waiters get 
tips based on the quality of the service they provide. All of these 
people pay ordinary income tax rates on their compensation.
  Estimates are that there is currently around $130 billion in carried 
interest at stake. Investment managers currently take home $110 billion 
and when we close the tax advantage, they will take home $85 billion--a 
pretty significant reward for their services.
  A fund manager's paying a more appropriate tax rate will not curtail 
economic activity, innovation, or real estate development. Since 
investors are not affected, there is no reason to believe that the 
amount of capital available for investments in real estate development 
or start-up companies would be reduced.
  This bill has the right priorities: It brings tax relief to tens of 
millions of middle-class families, it's paid for, and it makes our Tax 
Code more equitable. I urge my colleagues to support it.
  Mr. KIND. Mr. Speaker, I rise today in support of H.R. 3996, the 
Temporary Tax Relief Act of 2007. As a member of the Ways and Means 
Committee, I am proud to have helped craft this very important tax bill 
that will give much needed relief to millions of American taxpayers.
  Unfortunately, over the last several years we have seen tax bills 
pushed through Congress and signed by the President under the guise of 
``relief' for the middle class and the poorest in the country. I think 
many in this chamber have now come to recognize that many of these 
measures presented as tax relief for the middle class were in fact more 
tax breaks for the richest in society. Today we finally have before us 
a bill that will give real relief to millions of taxpayers, many of 
whom are hard-working middle-class families.
  Specifically, H.R. 3996 provides for a 1-year patch for the 
Alternative Minimum Tax, AMT. The AMT was developed in the 1970s to 
ensure that America's wealthiest could not take advantage of the tax 
code in a way that would allow them to avoid paying taxes altogether. 
The AMT was not indexed for inflation, however, and without this 
legislation it will reach into the pocketbooks of middle-class families 
it was never intended to hit. In my district alone, the AMT could 
affect 50,000 additional western Wisconsin families this year, many of 
whom have no idea they face a tax increase. Without this legislation, 
it is estimated that the AMT will hit an additional 437,000 taxpayers 
in Wisconsin and 23 million nationally. It is hard for me to think of 
something more important than protecting 23 million Americans from a 
tax that was never intended for them.
  Additionally, this bill extends several popular expiring tax 
provisions. In particular, the bill will provide property tax relief 
for 30 million Americans, help for more than 12 million children 
through an expanded child tax credit, tax relief for more than 11 
million families through state and local sales tax deduction, help for 
more than 4.5 million families to cover the cost of education through 
the tuition deduction, and relief for more than 3.5 million teachers 
who will be reimbursed for out-of-pocket expenses for their classrooms.
  Finally, and most importantly, this bill is fully offset and complies 
with pay-go rules that the Democratic majority restored at the 
beginning of this Congress. The tax benefits provided are fully paid 
for by closing loopholes and eliminating narrowly-targeted tax breaks 
for corporations. These changes establish fairness in the tax code and 
show that we can provide tax relief without sending the debt on to our 
children. After 6 years of fiscal recklessness--deficit-financed tax 
cuts for the wealthy and out-of-control government spending--this bill 
sets a precedent of fiscally responsible tax reform.
  Again, Mr. Speaker, I am happy to support this sensible and fair tax 
bill before us today. Protecting millions of taxpayers from being 
caught by the AMT is of the utmost importance. I urge my colleagues to 
support H.R. 3996.
  Mr. MORAN of Virginia. Mr. Speaker, this bill will bring relief to 
tens of millions of hard-working American families, including nearly 
100,000 in my district alone.
  It makes the tax code more efficient and more equitable, changes that 
are sound both morally and economically. Most importantly, H.R. 3996 
will be the first tax relief bill of this millennium that did not 
increase the deficit.
  This will would lower the tax burden on 95 percent of the people 
affected by it--which is about as close to perfect as we're able to get 
with the tax code. I'd like to commend Chairman Rangel and Mr. Neal and 
their staff for their work on this excellent bill, which I am proud to 
support today.
  Mr. Speaker, the President's budget assumes the revenue next year 
from a vast expansion of the AMT, and the President has offered no 
alternative to either eliminate the AMT or patch it, likely in 
recognition of the immense cost to the Treasury. Yet nearly everyone 
agrees that we must pass some form of AMT relief this year, and that we 
must do it soon. The Congressional Budget Office and Joint Committee on 
Taxation have spelled out specifically what the cost of a 1-year AMT 
patch would be. It cannot be accomplished for free.
  If we are to pass an AMT ``patch,'' we can do one of three things: we 
can cut benefits in Social Security and Medicare to comply with PAYGO, 
we can raise additional revenue to comply with PAYGO, or we can waive 
PAYGO as the Republican party has done for the last 7 years and 
continue financing tax cuts by increasing the Federal deficit and the 
national debt. That is, we can continue to irresponsibly pass the buck 
to our children and grandchildren.
  Mr. Speaker, as the gentleman from Massachusetts, Mr. Capuano, told 
us yesterday, this administration has increased U.S. Government debt by 
an average of $15,644.93 per second since they took office.
  This money does not exist merely on paper; it is real money, which we 
are borrowing from countries whose interests are contrary to our own, 
countries like China that have accumulated sovereign wealth funds at 
alarming rates over the past 6 years. And we are leaving this legacy of 
fiscal wreckage to our children, and our children's children, 
mortgaging away their future at a rate of more than $15,000 per second.
  Since 2001, China's accumulation of foreign reserves, mostly U.S. 
dollars, have increased from $46.6 billion to $1.066 trillion--that is, 
every new dollar we borrow makes us ever more dependent on China--which 
has profoundly different strategic aims than we do.
  The idea that we should not pay for this AMT fix is unconscionable. 
The idea that we should sacrifice the futures of our children and our 
grandchildren in order to have our cake and eat it too, to continue 
giving enormous tax preferences to the richest of the rich in this 
country is morally bankrupt and fiscally unsound.
  Mr. Speaker, even if we accept that there should be a distinction 
between the taxation of labor and capital income, income received as 
payment for the service of investing other people's money is not 
capital income under even the loosest of possible understandings. The 
idea that a hedge fund manager earning $500 million a year should be 
taxed at a lower rate than his secretary, who earns $40,000 a year is 
preposterous in both moral and economic terms and should embarrass us 
all.
  This bill is about making a choice between what is right and what is 
easy. I applaud Chairman Rangel for standing firm in the face of 
overwhelming pressure to do the easy thing, for demanding that we pass 
a bill which is true to our principles. We were not elected to make 
easy choices--we were elected to do right by our constituents, their 
children, and their children's children. I am proud to support this 
bill today, and I urge my colleagues to do the same.
  Mr. DINGELL. Mr. Speaker, I rise to support the Temporary Tax Relief 
Act, a much-needed piece of legislation that will provide relief to 
millions of working families across the country.
  The tax bill before us is a far cry from the irresponsible tax cuts 
my Republican colleagues have supported in the past. While their tax 
plan permitted hundreds of wealthy

[[Page 30774]]

Americans to construct new wings for their summer homes and add new 
sports cars to their garages, our tax plan provides financial relief to 
millions of working-class Americans. The alternative minimum tax was 
never meant to harm the hard-working middle-class families of America, 
but unfortunately, years of wage inflation and economic change have 
placed an enormous burden on the shoulders of these families. While my 
Republican colleagues have spent the past decade providing the 
wealthiest Americans with new yachts, these middle-class families have 
been crying out for help, a cry that this Congress will finally address 
here today.
  Without this legislation, 23 million working-class families will be 
subjugated to the Alternative Minimum Tax. My colleagues have made a 
proposal that will not only provide relief to these Americans, but will 
do it in a responsible manner. Unlike the reckless tax cuts that were 
brazenly supported by the President, this tax proposal will not burden 
our children and grandchildren with debt. This tax bill is completely 
revenue-neutral.
  I urge my colleagues to stand before the American people and 
demonstrate where this Congress' priorities lie. Are we fighting for a 
handful of wealthy millionaires while the middle-class families 
languish with an incredible tax burden? Or are we with 23 million hard-
working American families across the country, including more than 
61,000 in Michigan's 15th Congressional District? I urge my colleagues 
to support the middle-class families and support this bill.
  Mrs. MALONEY of New York. Mr. Speaker, I rise in support of H.R. 
3996, the Temporary Tax Relief Act of 2007.
  The Temporary Tax Relief Act will provide immediate tax relief for 
working families by preventing 23 million middle class families from 
paying higher taxes this April. Without this legislation, these 23 
million families will be subjected to the alternative minimum tax, 
including almost 111,000 of my constituents.
  When the AMT was enacted, it was meant to ensure the wealthiest among 
us paid their fair share of a tax that was never designed to hit the 
pocketbooks of middle-class families. While this is only a temporary 
fix, I want to be clear that I hope we can move forward in the near 
future to provide a long-term solution to this problem. I am proud that 
Chairman Rangel has brought this fix to the floor today while still 
adhering to the pay-as-you-go promise this Democratic controlled 
Congress has promised the American people.
  While fixing the AMT is of outmost importance, we cannot afford to 
mortgage our children's and grandchildren's future to pay for this tax 
relief. Our country is currently burdened with over $9 trillion of 
national debt, each American's share at nearly $30,000.
  We simply cannot afford to keep adding to this. In addition to the 
AMT fix, this bill would increase the eligibility for the refundable 
child tax credit, it extends research and development tax credits to 
promote innovative and high-paying jobs, and we are providing tax 
relief to millions of homeowners suffering from the current subprime 
mortgage crisis.
  One concern that I do have with this legislation is the potential 
that the change to the taxation of ``carried interest'' may have the 
unintended consequence of capturing certain real estate partnerships.
  We should not treat capital gains in real estate partnerships as 
ordinary income. These partnerships invest their own capital and should 
continue to be taxed at the capital gains rate.
  I have joined a group of my colleagues asking for report language to 
clarify this issue and I hope that this concern will be addressed 
before final implementation of this legislation.
  Mr. Speaker, the Democrats in Congress are providing common sense tax 
relief for middle class American families and we are doing it in a 
fiscally responsible way. I urge this bill's adoption.
  Mr. HERGER. Mr. Speaker, although I have serious concerns with the 
underlying bill, H.R. 3996, there are several provisions of this bill 
that extend necessary business and individual tax relief set to expire 
this year.
  One provision in H.R. 3996 would extend important tax relief for 
individuals who choose to make distributions from their Individual 
Retirement Accounts, IRAs, to charities. Charitable IRA rollovers 
greatly help the work of worthy charities, and it is important that 
this tool for giving remains available to taxpayers. I have introduced 
stand-alone legislation with Congressman Earl Pomeroy of North Dakota, 
which has 90 cosponsors that would broaden the charitable IRA rollover 
rule to allow distributions to donor-advised funds and would strengthen 
other aspects of the present-law provision. I remain committed to the 
enactment of the improvements included in the Public Good IRA Rollover 
Act, H.R. 1419, that would work to encourage billions in new giving to 
those who need it most.
  This legislation also includes a provision that extends the Research 
and Development Tax Credit for an additional year. Firms in California 
already conduct nearly one-quarter of all our Nation's R&D activities 
by dollar value, making this credit critical to California's leadership 
in high tech innovation. I am a strong supporter of this provision, and 
am a cosponsor of stand alone legislation that would make important 
improvements in the R&D credit and extend it permanently, H.R. 2138.
  H.R. 3996 also includes a 1-year delay of the 3 percent withholding 
burden on contractors that work with governments, which is scheduled to 
take effect starting in 2011. Earlier this year I introduced 
legislation with Representative Kendrick Meek of Florida that would do 
away with this added withholding requirement before it starts. 
Together, we have worked to inform other representatives about the 
potentially damaging effects of this new cost of doing business with 
governments, and our legislation has attracted over 230 cosponsors, 
H.R. 1023.
  Despite my opposition to the overarching legislation, I sincerely 
hope members of both parties can continue to work in a bipartisan 
fashion--as we have done on these three issues to-date. It is important 
that we move ahead with this important individual and business tax 
relief through legislation members from both parties can support, and 
not in the context of controversial new tax increases on the American 
people.
  Mr. WATT. Mr. Speaker, I rise in strong support of H.R. 3996, which 
will address one of the most unfair provisions in the tax code that 
imposes an alternative minimum tax on so many of my constituents to 
whom it was never intended to apply. To some of my constituents, 
including the retired couple that lives across the street from me, this 
is among the most critical issues they face.
  There is one specific tax provision being extended in this bill that 
I want to address specifically, the extension of the New Markets Tax 
Credit, NMTC, program. This tax program is critical to the 
revitalization of struggling communities and census tracts in our 
country that are in critical need of help.
  There is one critical problem with the NMTC program that needs to be 
addressed. The Financial Services Committee's Oversight and 
Investigations Subcommittee, which I chair, held a hearing on October 
30 entitled ``Preserving and Expanding Minority Banks,'' to review 
unique challenges facing minority- and women-owned financial 
institutions. A real concern revealed at this hearing was that 
minority-owned financial institutions have not been receiving 
allocations of credits under the NMTC program. Over the life of the 
program, only six minority banks have received allocations under the 
NMTC program and in the last round of allocations, of 61 recipients, 
only one minority bank was awarded new markets tax credits. This 
represented just $120 million of a total of $3.9 billion in tax credits 
awarded.
  I believe that facilitating greater access to the NMTC program for 
minority and women-owned financial institutions will improve the 
program and help ensure the revitalization of low-income urban and 
rural areas. I appreciate the agreement of Chairman Rangel and 
Subcommittee Chairman Neal to work with me, and perhaps to have a joint 
hearing with our Financial Services Subcommittee, to explore effective 
ways to increase participation in the NMTC program for minority- and 
women-owned financial institutions.
  Ms. McCOLLUM of Minnesota. Mr. Speaker, I am proud to support the 
Temporary Tax Relief Act (H.R. 3996), and I would like to congratulate 
Chairman Rangel and Speaker Pelosi for putting families first. This 
bill is necessary, fair and fiscally responsible. H.R. 3996 reverses 
the trend of tax breaks for the wealthy and instead gives a well 
deserved break to hard working middle class Americans.
  The AMT was originally designed to ensure that very wealthy 
individuals did not use loopholes and deductions to avoid paying much 
or all of their taxes, and for many years it did just that. However, 
since the AMT was not indexed for inflation, a problem ignored by past 
Congresses, it now threatens to ensnare 23 million middle-class 
families. We must act now to prevent this unintended burden on hard-
working Americans.
  Additionally, several tax benefits for research and development, 
veterans, college students, and families will be extended by this 
legislation. These are important provisions of the tax code that, if 
allowed to expire, would cause millions of American families and 
businesses to be hit with an unexpectedly high bill from the IRS this 
year.
  Unlike recent Congresses, we in the 110th Congress have made a 
commitment to pay-as-you-go spending principles. We are all best served 
by a tax code that is fair, simple and

[[Page 30775]]

based on the ability to pay, and fixing the tax code for the middle 
class will mean lessened collections by the IRS. That is why this 
legislation pays for these tax benefits for middle class Americans by 
closing loopholes for a few wealthy individuals, such as those who pay 
less tax on the bonuses they receive for managing multi-million dollar 
hedge funds than most Americans pay on their hard-earned income.
  This legislation also fixes a flaw in the tax code that places an 
undue burden on families facing foreclosure. Due to this flaw, the 
outstanding debt owed on a foreclosed home is counted as income for tax 
purposes. The individuals affected by this never see this `income' and 
are clearly not in any position to pay taxes on additional tens of 
thousands of dollars. This bill will prevent this on-paper income from 
forcing American families to pay taxes on their misfortune.
  I urge my colleagues to support this much needed and fully paid-for 
tax break for middle class America.

                              {time}  1315

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

                            [Roll No. 1081]

                               YEAS--216

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

                               NAYS--193

     Aderholt
     Akin
     Alexander
     Bachmann
     Bachus
     Baker
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Barton (TX)
     Bean
     Biggert
     Bilbray
     Bilirakis
     Blackburn
     Blunt
     Boehner
     Bonner
     Bono
     Boozman
     Boustany
     Brady (TX)
     Broun (GA)
     Brown (SC)
     Brown-Waite, Ginny
     Buchanan
     Burgess
     Burton (IN)
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Coble
     Cole (OK)
     Conaway
     Cooper
     Culberson
     Davis (KY)
     Davis, David
     Davis, Tom
     Deal (GA)
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     English (PA)
     Fallin
     Feeney
     Ferguson
     Flake
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gilchrest
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Granger
     Graves
     Hall (TX)
     Hastings (WA)
     Hayes
     Heller
     Hensarling
     Herger
     Hoekstra
     Hulshof
     Hunter
     Inglis (SC)
     Issa
     Johnson (IL)
     Johnson, Sam
     Jordan
     Keller
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline (MN)
     Knollenberg
     Kuhl (NY)
     Lamborn
     Lampson
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Mack
     Mahoney (FL)
     Manzullo
     Matheson
     McCarthy (CA)
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris Rodgers
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mitchell
     Moran (KS)
     Murphy, Tim
     Musgrave
     Myrick
     Neugebauer
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roskam
     Royce
     Ryan (WI)
     Sali
     Saxton
     Schmidt
     Sensenbrenner
     Sessions
     Shadegg
     Shays
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Tancredo
     Taylor
     Terry
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walberg
     Walden (OR)
     Walsh (NY)
     Wamp
     Weldon (FL)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--24

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

                              {time}  1344

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

                          ____________________