[Senate Report 106-421]
[From the U.S. Government Publishing Office]
Calendar No. 830
106th Congress Report
SENATE
2d Session 106-421
_______________________________________________________________________
VESSEL WORKER TAX FAIRNESS
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 893
September 26 (legislative day, September 22), 2000.--Ordered to be
printed
__________
U.S. GOVERNMENT PRINTING OFFICE
79-010 WASHINGTON : 2000
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred sixth congress
second session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Staff Director
Ann H. Choiniere, General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
Gregg Elias, Democratic General Counsel
Calendar No. 830
106th Congress Report
SENATE
2d Session 106-421
======================================================================
VESSEL WORKER TAX FAIRNESS
_______
September 26 (legislative day, September 22), 2000.--Ordered to be
printed
_______
Mr. McCain, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
[To accompany S. 893]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 893) ``A bill to amend title
46, United States Code, to provide equitable treatment with
respect to State and local income taxes for certain individuals
who perform duties on vessels'', having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
Purpose of the Bill
The bill will amend section 11108 of title 46, United States
Code, in order to prevent merchant mariners who perform duties
on the navigable waters of more than one state from being taxed
in multiple jurisdictions.
Background and Needs
The Interstate Commerce Act exempts truck drivers, airline
pilots, and railroad employees from being taxed by state and
local jurisdictions in which they do not reside. Merchant
mariners operating vessels in more than one state argue that
they should be afforded the same tax treatment due to the
interstate nature of their business.
Summary of Major Provisions
The bill will prevent merchant mariners engaged in interstate
commerce from being taxed in or having taxes withheld in state
or local jurisdictions in which they do not reside.
Legislative History
Senator Gorton introduced S. 893 on April 27, 1999. A
similar measure was introduced in the House during the 103rd
Congress.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 11, 2000.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 893, a bill to amend
title 46, United States Code, to provide equitable treatment
with respect to state and local income taxes for certain
individuals who perform duties on vessels.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Victoria Heid
Hall.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 893--A bill to amend title 46, United States Code, to provide
equitable treatment with respect to state and local income
taxes for certain individuals who perform duties on vessels
S. 893 would prohibit state and local governments from
imposing income taxes on individuals working on vessels
operating on the navigable waters of more than one state unless
that individual resides in the jurisdiction assessing the tax.
Such a prohibition is an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA). CBO estimates that
the costs of this mandate would be well below the threshold
established in UMRA ($55 million in 2000, adjusted annually for
inflation). S. 893 would have no impact on the federal budget
and contains no new private-sector mandates as defined in UMRA.
According to the Federation of Tax Administrators (FTA),
under current law the amount of state and local income taxes
owed by the individuals affected by this bill is based on the
jurisdiction with the highest applicable income tax rate:
either the jurisdiction where the income is earned, or the
jurisdiction where the worker resides. In contrast, under S.
893 state and local income taxes would be based solely on where
a vessel worker resides. In that case, some individuals would
pay lower income taxes than they would under current law,
resulting in a net loss nationwide in state and local income
tax revenues. Little data are available on the number of
workers on vessels that operate on the navigable waters of more
than one state and on the states in which they reside.
Consequently, CBO cannot precisely estimate those losses. Based
on information from FTA, the U.S. Coast Guard's National
Maritime Center, and the Bureau of Labor Statistics, however,
CBO estimates that the revenues forgone by state and local
government would be small and would not exceed the threshold
established in UMRA ($55 million in 2000, adjusted annually for
inflation).
The CBO contact is Victoria Heid Hall. This estimate was
approved by Robert A. Sunshine, Assistant Director for Budget
Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
Because S. 893 does not create any new programs, the
legislation will have no additional regulatory impact, and will
result in no additional reporting requirements. The legislation
will have no further effect on the number or types of
individuals and businesses regulated, the economic impact of
such regulation, the personal privacy of affected individuals,
or the paperwork required from such individuals and businesses.
number of persons covered
S. 893 as reported will cover all merchant mariners employed
in interstate commerce but will not impose a regulatory impact
on individuals.
economic impact
The bill as reported does not impose new regulatory
requirements on individuals and businesses and therefore should
not have significant economic impact.
privacy
The bill as reported should have no significant impact on
individual privacy.
paperwork
The bill as reported should not significantly impact
paperwork requirements for individuals or businesses.
Section-by-Section Analysis
Section 1. Amendment of chapter 111 of title 46, United States Code
This section declares individuals engaged on a vessel to
perform assigned duties in more than one state as a pilot
licensed or authorized under the laws of a state, or
individuals who perform regularly-assigned duties while engaged
as a master, officer, or crewman on a vessel operating on the
navigable waters of more than one state, shall be exempt from
income taxation laws of states or political subdivisions of
which that individual is not a resident.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
TITLE 46. SHIPPING
SUBTITLE II. VESSELS AND SEAMEN
PART G. MERCHANT SEAMEN PROTECTION AND RELIEF
CHAPTER 111. PROTECTION AND RELIEF
Sec. 46. TAXES.
(a) Withholding._Wages due or accruing to a master or seaman
on a vessel in the foreign, coastwise, intercoastal,
interstate, or noncontiguous trade or an individual employed on
a fishing vessel or any fish processing vessel may not be
withheld under the tax laws of a State or a political
subdivision of a State. However, this section does not prohibit
withholding wages of a seaman on a vessel in the coastwise
trade between ports in the same State if the withholding is
under a voluntary agreement between the seaman and the employer
of the seaman.
(b) Liability.--
(1) Limitation on jurisdiction to tax.--An individual
to whom this subsection applies is not subject to the
income tax laws of a State or political subdivision of
a State, other than the State and political subdivision
in which the individual resides, with respect to
compensation for the performance of duties described in
paragraph (2).
(2) Application.--This subsection applies to an
individual--
(A) engaged on a vessel to perform assigned
duties in more than one State as a pilot
licensed under section 7101 of this title or
licensed or authorized under the laws of a
State; or
(B) who performs regularly-assigned duties
while engaged as a master, officer, or crewman
on a vessel operating on the navigable waters
of more than one State.