H.R. 44House108th Congress (2003-2005)In Committee

Investment Tax Incentive Act of 2003

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

January 7, 2003

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HouseIntro Referral

Introduced in House

January 7, 2003

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

January 7, 2003

Floor Debate

20 members

What members said about H.R. 44 on the floor

+15

8 Republicans12 Democrats

Rep. Thomas M. ReynoldsR-NY-26 · May 9, 2003

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 227 and ask for its immediate consideration. Mr. Speaker, for the purpose of debate only, I yield the customary 30…

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 227 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. Frost), ranking member of the Committee on Rules, pending which I yield myself such time as I

may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

(Mr. REYNOLDS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, House Resolution 227 is a closed rule providing 1 hour of debate for consideration of H.R. 2, the Jobs and Growth Reconciliation Act of 2003. The rule waives all points of order against the bill, as amended, and against its consideration; provides one motion to recommit with or without instructions.

Mr. Speaker, our economy is a global one, dependent on free markets, free trade and free-flowing exchange of ideas and information. But our economy is also local. Its effects ripple through communities throughout America impacting each and every working family. In the final months of the previous administration, America's economy was beginning to slow. President Bush in one of his first major policy initiatives of his new presidency shepherded through the largest tax reduction package in a generation, needed tax relief for working families that this Congress approved in bipartisan fashion. We lowered rates for American workers, made the Tax Code fairer by easing the marriage penalty, and provided an immediate shot in the arm to overtaxed American families and our national economy by providing a well-deserved rebate to some 95 million taxpayers.

The result? The shortest and shallowest recession in America's history.

Then the unthinkable happened. While positive growth registered in the fourth quarter of 2001, the horrific attacks on our Nation on September 11 left our Nation and our economy traumatized, and nowhere was that impact felt harder than in my home State of New York.

Still, our country rallied and produced positive growth in all four quarters of 2002, according to the National Bureau of Economic Research. But this calculated growth has not always been readily recognizable across America. The American people demand and deserve an energized economy, complete with expanding job opportunities and investment incentives.

As a logical compliment of the Economic Growth and Tax Relief Reconciliation Act, today's bill provides consistent tax relief and growth policies that will generate, on average, 575,000 jobs a year for the next 5 years.

In New York, this will mean nearly 36,000 new jobs every year for 5 years. For my part of the State, which never shared in the economic boom of the 1990s, job growth remains the number one priority, and this type of positive impact is what this and so many other parts of our country need. Plus, it puts more money back in the hands of hard- working Americans. Former President Richard Nixon once said, ``We can never make taxation popular, but we can make taxation fair.''

Two years ago, this Congress started to make the Tax Code more fair, and today we have the opportunity once again to achieve parity and fairness in the Tax Code. For years it has been well-documented that taxpayers in my home State of New York send far more of their hard- earned money to Washington than they get back in Federal programs and services. Frankly, my constituents and their pocketbooks have noticed.

My constituents have expressed their sincere concerns with the double taxation of dividends. Many are middle-class, retired seniors who rely on dividends as parts of their income. This legislation drastically reduces the dividend tax burden, making stocks more valuable and increasing expected rates of return. Stockholders in my district and all across America will have more control over their own money, while at the same time watching it grow at a faster rate.

The effect is twofold: First, to bring fairness to the Tax Code by greatly reducing the double taxation of dividends; second, as dividend paying stocks become more attractive, more potential investors will be brought to the market.

This bill also ensures equal treatment of dividends and capital gains by lowering the rate for each to 15 percent. By lowering the rates on dividends and capital gains, people will be more willing to invest because they will pay less tax on the returns to their investment, and corporate managers may find it more attractive to invest in projects since their cost of capital will decline. When businesses find their cost of capital lowered, it increases the likelihood that they will invest in new machinery, projects and employees. As more people invest, more companies grow and more jobs are created.

Another important component of this job-creating tax relief is our continued effort towards greater corporate accountability. By strengthening dividends, investors will have solid evidence of a company's corporate health, proving the investor's adage that ``profits are an opinion, but cash is a fact.'' By reducing the advantage of paying interest ahead of paying dividends, the incentive for some corporate managers to cook the books will be greatly diminished.

Equally important, this bill accelerates common-sense tax relief for families. By increasing the child tax credit to $1,000 for calendar years 2003 through 2005 and by expediting marriage penalty relief, families will retain valuable resources to help pay for their child's education, make a mortgage payment or help pay off the debt.

As President Bush said, ``If tax relief is good for Americans years from now, it is even better when the American economy needs it today.''

In New York, over 2 million married couples will benefit from marriage penalty relief and over 1.5 married families with children will benefit from the increased child tax credit.

Our country is blessed with a strong entrepreneurial spirit. Under this bill, small businesses will have the option of immediately deducting $100,000 in expenses, a significant increase over the current $25,000 deduction. Because most small businesses pay taxes as individuals, accelerating the top rate reduction means lower taxes for small business owners. That means that millions of entrepreneurs will have more resources to spend on employees, supplies or expansion efforts.

Mr. Speaker, the President has laid out clear goals for a strong, growing economy. Today this body can move one step closer to implementing this plan to create 1.2 million jobs by the end of 2004 alone.

Our country is already facing great challenges, and we must remain diligent in our efforts to tackle what lies ahead. The Jobs and Growth Tax Reconciliation Act confronts head on the serious issues before us, boosting employment levels, lowering the tax burden and growing the economy.

I urge my colleagues to join me in supporting this rule, as well as the crucial underlying legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Linder), a distinguished member of the Committee on Rules.

Mr. Speaker, I yield myself such time as I may consume.

It is a tough day when I watch some of my colleagues use kind of a class warfare tactic. I would think I was in a political 101 class when I listened to ``pioneers,'' except I know that the President, when he ran as a candidate from being the Governor of Texas, he took all local money from those pioneers. Not all parties can claim that over the recent decade.

But when we look here, I know something about Grand Prairie taxes where my colleague, the ranking member of the Committee on Rules, comes from. My wife lived there; grew up there until she moved to New York with me. I know a little about western New York where I reside, but I know a little about Harlem, where the ranking member of the Committee on Ways and Means resides. They are not rich in my area. They are not rich in Grand Prairie, Texas; and they are not rich in Harlem. But this bill, a typical family of four earning $40,000 will see their taxes go from $1,178 to $45 a year, and 23 million small businesses, whether it is Grand Prairie or Buffalo or Harlem, will be able to create new jobs with new incentives and tax relief under this bill.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Ohio (Ms. Pryce).

Mr. Speaker, I yield myself such time as I may consume.

I did not get here until January of 1999, but I am told since the Republicans took control in January of 1995, every single bill that comes on the floor of this House will have a recommit, and I am here today to tell my

colleagues that this bill will have a recommit so the minority can write it any way they want and it will be up for consideration. We will have a recommit vote, and then we will have final passage, and the will of the House will be done.

I yield to the gentleman from Maryland, the minority whip.

Mr. Speaker, I would have to answer the minority whip when we are on my time, and that is I have been reading the minority's press clips since I have been here, and to them it seems to be the biggest deal for mankind what the recommit motion is and how that vote occurred here. So I am confused the gentleman's suggestion today of how restrictive it is, after I read the press releases of so many of the gentleman's colleagues on what they think it is when they moved it before this House.

Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. Hensarling).

Mr. Speaker, may I inquire of the amount of time remaining on both sides?

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Nevada (Mr. Gibbons).

(Mr. GIBBONS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 1 minute to the gentleman from Minnesota (Mr. Kennedy).

Mr. Speaker, I yield 1 minute to the gentleman from Indiana (Mr. Pence).

Mr. Speaker, I yield 1 minute to the gentleman from Nebraska (Mr. Osborne).

Mr. Speaker, I yield 1 minute to the gentlewoman from Michigan (Mrs. Miller).

(Mrs. MILLER of Michigan asked and was given permission to revise and extend her remarks.)

Regular order, please, Mr. Speaker.

Mr. Speaker, I yield myself such time as I may consume.

Half of the tax relief package in 2003 is directed to the child tax credit, expanding the 10 percent bracket, eliminating the marriage penalty, accelerating the marginal rate cuts, and ensuring that middle- class families do not face the AMT. 9.9 million taxpayers will not pay the AMT because of H.R. 2. Ten million Americans who are our seniors will directly receive assistance from the dividend return they are going to get in their senior income.

If I were able to signal a message to the White House, I would say, Mr. President, we are on our way shortly to have a rule vote and we are no longer talking about your early ideas, should we or should we not have a tax cut. Mr. President, there is going to be a tax cut when the House concludes its business, I predict, and I predict it will pass by a bipartisan support, just as the one did that the President initiated in 2001.

So as we look here today, we are talking some process, but when I sat in that Committee on Rules meeting last night, over half of the amendments introduced by my Democratic colleagues came forth on how they want to deal in tax planning, not to do away with it.

So today we are moving forward. We are going to have a rule vote, and then we are going to take the bill on the floor, if it passes the rule, and we are going to have an opportunity to debate what the tax policy will be for this country. I believe, not only in my district and my State, but the country wants that money back in their pockets rather than the Federal Government spending it.

Mr. Speaker, I yield 1 minute to the gentleman from New Hampshire (Mr. Bradley).

Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Cunningham), one of the great patriots of this House.

Mr. Speaker, I yield 1 minute to the gentleman from Iowa (Mr. Nussle), the chairman of the Committee on the Budget.

(Mr. NUSSLE asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I have one additional speaker, and I reserve the right to close.

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Dreier).

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, our economy is in need of a doctor, but the diagnosis suggests a remedy that is more comprehensive than the Band-Aid approach some of my colleagues suggest. Rather, the economy requires a shock to the system to stimulate a more rapid rate of growth, create incentives to work, save and invest, and encourage more disciplined Federal spending. The prognosis is very promising, but it stipulates immediate attention. That is why I urge a ``yes'' vote on this rule and the underlying legislation. A ``yes'' vote delivers money back into the hands of our constituents, the American taxpayers, and sends jobs to our districts.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

Rep. Martin FrostD-TX-24 · May 9, 2003

Mr. Speaker, I yield myself such time as I may consume. (Mr. FROST asked and was given permission to revise and extend his remarks, and include extraneous material.) Mr. Speaker, the rule poses a…

Mr. Speaker, I yield myself such time as I may consume.

(Mr. FROST asked and was given permission to revise and extend his remarks, and include extraneous material.)

Mr. Speaker, the rule poses a serious threat to the American economy because it prevents the House from considering anything other than the same old failed Bush economics that have left America with the weakest economy in a generation.

Now, when I am back in my district in Texas, I am often asked a question that is highly relevant to today's debate. That question is, ``Why does the Bush administration continue to insist on more tax breaks for the wealthiest few, while the country is running record deficits?'' So I want to take a few minutes to share with the House the explanation I give to my own constituents.

It all began during the 2000 campaign for President. At the start of that campaign, the Republican candidate from my State of Texas, who now serves as President, made an almost unprecedented decision. He became one of the very few presidential candidates who have ever rejected Federal funding during the primaries. By rejecting Federal funds, of course, he freed himself from the State by State spending limits and, therefore, he was able to outspend his most serious Republican rival for the nomination at a critical point in the primary campaign.

As a part of the decision to reject Federal funds, the Bush campaign established a special group called the ``Pioneers.'' Each Member of this small

elite group agreed to raise at least $100,000 for the Bush campaign.

I submit for the Record a list of more than 5 Bush campaign ``Pioneers'' as compiled by Texans for Public Justice. I also submit for the Record an article from the May 6, 2003, edition of the Washington Post. Its headline reads, `` `Pioneers paved Bush's way with big dollars.' ''

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Lawsuit Reveals 312 New Bush ``Pioneer'' Fundraisers

Austin & Boston: Newly released Bush presidential campaign

documents reveal 312 previously unknown members of Bush's

record-breaking ``Pioneer'' fundraising network. Participants

volunteered to help the campaign circumvent a $1,000 federal

campaign contribution limit by pledging to bundle checks from

family, friends and associates (most Pioneers pledged to

raise at least $100,000). Combined with previous disclosures,

the new data publicly identify 538 participants in the

Pioneer program. Yet the new documents still do not reveal

what each participant raised nor the total amount of Pioneer

money raised. Indeed, there is some evidence that the

campaign has yet to disclose everyone who answered the

``Pioneer'' call.

The new disclosures come in response to a legal challenge

to a provision of the McCain-Feingold 2002 Bipartisan

Campaign Reform Act that doubled the limit on individual

contributions to federal candidates to $2,000 and up to

$12,000 in races involving a self-funded candidate.

Represented by the National Voting Rights Institute (NVRI),

the plaintiffs, known as ``the Adams plaintiffs,'' argued

that the increased limits would open the floodgates to

donations from the wealthy and make it impossible for

candidates without large networks of maximum donors to run

for office. The Pioneer program is a leading example of the

way that wealthy interests are able to bundle together large

contributions to influence elections. A federal court panel

ruling on May 2 rejected the arguments made by the Adams

plaintiffs.

In response to a September 2002 subpoena from the

plaintiffs requesting complete contribution data and other

information on the Pioneer program, representatives of the

campaign claimed to possess only limited information. For

example, Bush attorneys claimed that they could not locate an

accounting of the total amount of money raised by each

Pioneer fundraiser. Bush lawyers provided only limited

financial data on just 212 of the 538 disclosed Pioneer

fundraisers. The total amount attributed to these 212

fundraisers through some unknown data in the campaign is

$24.9 million, far short of the $60 million to $80 million

that observers suspect that the program raised.

``It's time to end the secrecy over who bankrolled the Bush

campaign,'' said Craig McDonald, an expert witness for the

plaintiffs and director of Texans for Public Justice, a

research organization that has tracked Bush's fundraising

since his gubernatorial days. ``It just isn't believable that

the President's campaign lost most of a $60 million

fundraising list. Has anyone checked Donald Evans' laptop?''

``These documents reveal the disproportionate power gained

by those who can bundle huge sums of hard money for political

campaigns,'' said NVRI Executive Director John C. Bonifaz.

``With the hard money increases in the Bipartisan Campaign

Reform Act, elite donors such as the Bush Pioneers will

achieve a stranglehold over the electoral process and

ordinary voters will be locked out. This offends the basic

constitutional promise of political equality for all.''

The newly released information and an accompanying Texans

for Public Justice (TPJ) analysis reveals the identities of

previously unknown Pioneer fundraisers. Key facts about the

newly released Pioneer volunteers include:

The campaign credited each of 21 super Pioneers (or

partnerships in which two or three participants shared one

Pioneer tracking number) with raising more than $200,000

through some unknown data in the campaign. Topping the list

are business partners William DeWitt and Mercer Reynolds,

whom the new records reveal supported Bush to an extent

rivaled perhaps only by Enron. Sharing the same Pioneer

tracking number, these two Men--who bailed out Bush's

hemorrhaging Bush Oil Co., in 1984 and invested in the Texas

Rangers venture that made Bush a millionaire 15 times over--

delivered a minimum of $605,082.

The largest known single individual Pioneer was Michigan

real estate magnate Ronald Weiser, who was credited with

delivering at least $588,309.

At least 49 of the newly identified fundraisers are Lawyers

& Lobbyists Randy DeLay, brother of House Majority Whip Tom

DeLay.

At least 44 of the just-disclosed fundraisers come from the

Energy and Natural Resources industry, including former

Dynergy CEO Chuck Watson and former El Paso Energy CEO

William Wise, whose companies were battered by Enronesque

allegations of accounting fraud and ``round-trip trading.''

The oil company of Pioneer Ray Hunt has teamed up with

Halliburton to build a gas pipeline through a fragile

Peruvian rain forest that is home to remote indigenous

tribes.

Former Enron chief Ken Lay was credited with raising at

least $112,050.

Two-thirds of the new fundraisers (201) come from Bush's

home state of Texas, followed by 18 from California and 16

from Washington, D.C.

Critics have long contended that Bush's Pioneer disclosures

were incomplete--if not selective. Bush campaign officials

told the media that almost 400 individuals already had taken

the Pioneer pledge by July 1999. An April 2000 article

reported that the campaign had revealed just one-third of the

names that appeared on campaign Pioneer lists obtained by The

Nation. In fact, six of the eleven Pioneers that The Nation

reported by name did not appear in the newly released

documents (all of these happen to be current or former

corporate lobbyists). Prior to the latest disclosure, the

Bush campaign had revealed just 226 Pioneers whom it said had

raised at least $100,000 each.

Materials related to the new Pioneer disclosures made

available at the TPJ web site include:

1. Previously sealed depositions of Bush for President

Committee Finance Director Jack Oliver;

2. A sample of the more than 300 Pioneer tracking forms

produced by the campaign;

3. A campaign spreadsheet tracking 505 Pioneer program

participants (including limited contribution data on 212 of

them);

4. A TPJ-compiled list of all 538 known Pioneer program

participants; and

5. A preliminary TPJ analysis of the newly revealed Pioneer

participants.

Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. Rangel), the ranking member of the Committee on Ways and Means.

(Mr. RANGEL asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 3 minutes to the gentleman from Maryland (Mr. Hoyer), the distinguished Democratic whip.

Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts (Mr. McGovern).

Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr. Hastings).

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Turner).

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from South Carolina (Mr. Spratt), the ranking member on the Committee on the Budget.

(Mr. SPRATT asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as he may consume to the gentleman from New York (Mr. Engel).

(Mr. ENGEL asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as she may consume to the gentlewoman from California (Ms. Woolsey).

(Ms. WOOLSEY asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Edwards).

(Mr. EDWARDS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, how much time is remaining on each side?

Mr. Speaker, I yield such time as she may consume to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey (Mr. Menendez).

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Georgia (Mr. Scott).

Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Capuano).

Mr. Speaker, I would inquire of the other side how many speakers they have left.

Mr. Speaker, we are prepared to close, but customarily we close by preceding the last speaker on the other side.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, because this rule is so patently unfair, I urge every Member of this House, even those who do not care about the integrity of the institution itself, to vote against the previous question. If the previous question is defeated, I will offer an amendment to the rule. My amendment will allow the House to consider the Rangel substitute, the Rebuilding America Through Jobs Democratic substitute which was voted down in the Committee on Rules last night by a straight party- line vote.

The Democratic plan provides immediate job-boosting help to the economy. It provides fair tax relief by giving working families a break. It does not pander to the wealthiest of the wealthy. It provides a desperately needed extension of unemployment assistance to the millions of people without jobs under George W. Bush. It stimulates the economy by giving tax incentives to all businesses, especially small businesses and U.S. manufacturing.

Let me make it very clear that a ``no'' vote on the previous question will not stop consideration of Republican Pioneers Tax Relief Act. A ``no'' vote will simply allow the House to consider the Democratic Jobs and Growth Plan; but a ``yes'' vote on the previous question will prevent the House from taking up this responsible alternative. Make no mistake, this vote is the only opportunity the House will have to consider the Rangel substitute. I urge a ``no'' vote on the previous question.

Mr. Speaker, I ask unanimous consent the text of the amendment be printed in the Record immediately before the vote on the previous question.

Mr. Speaker, I yield back the balance of my time.

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.

Rep. Louise McIntosh SlaughterD-NY-28 · Jan 8, 2003

Mr. Speaker, I thank the gentleman from Texas for yielding me the customary 30 minutes, and I yield myself such time as I may consume. (Ms. SLAUGHTER asked and was given permission to revise and…

Mr. Speaker, I thank the gentleman from Texas for yielding me the customary 30 minutes, and I yield myself such time as I may consume.

(Ms. SLAUGHTER asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I am going to read a letter from a constituent of mine in Rochester, New York, whom we will call Mary.

``Dear Louise: I am a 52-year-old mother with a handicapped child at home and a daughter in graduate school. I am writing because I am tired of freezing. Our thermostat is set at 55 and the electric company is still sending us threatening letters every month. We pay as much as we can, but without extended unemployment benefits, my son will have to go to an institution. I have 42 job rejections and I have a B.A. in sociology. It's very hard for me to worry about home security issues and terrorism when I am cold. Maybe I can make it through the winter with extended benefits.''

Another received over the holidays:

``Dear Louise: My husband was laid off in January. We have taken out two loans against our house in addition to our mortgage to survive and we have a 2-year-old child who is getting almost nothing under the Christmas tree.''

There are more where that came from, Mr. Speaker. Another wrote me, ``I am 34 years old. A year ago today I was making $76,000 a year as a software engineer at Xerox, and today I cannot find a job. I have a newborn baby girl, and I am going to run out of my benefits next week. I consistently made $60,000 a year for the past 5 years and paid taxes accordingly.''

None of these people will be helped by this legislation today. None of them.

Mr. Speaker, last month I asked some unemployed workers in my district to sign a petition that calls on Congress to make the extension of Federal unemployment benefits a priority. During the last 2 weeks alone, more than 300 constituents have signed on to the petition. They are losing their homes. They have sold their cars. They cannot support their families, their children; and these are not people who sit back and passively collect checks to avoid working. They have been pounding the pavement in an economy that is shutting them out. Indeed, Mr. Speaker, I have been told that it is almost impossible at this time to get even a part-time job or a temporary job in Rochester.

These are people who have worked all of their lives and paid into the unemployment insurance fund and now simply are asking to get some back. Through no fault of their own, they find themselves reeling in an economic slowdown.

While working, they did all of their part; and the cushion that they are given now is resonating like a hard thud. The money is sitting there, Mr. Speaker, in a trust fund that we are failing to fully utilize. That is bad stewardship. These constituents are not comforted by an abstract proposal to reduce the tax on corporate dividends or other so-called stimulus. A victory for them would be to keep their homes heated and a roof over their heads. To add insult to injury, my constituents were greeted with this headline 3 days after Christmas reading nationwide, ``800,000 lose jobless benefits,'' with the kicker that Congress went home and failed to okay funds.

All during the holidays, Mr. Speaker, we talked about getting back here and the first thing we wanted to do, there was this great sense that we would come back to help the people whose benefits expired on December 28. Unfortunately, that is not the case. If benefits expire later, this bill will do some help, but this is appalling. I have been at a loss to explain to my constituents why a majority in this House let them down. A recent report suggests that without an extension package, a projected 12,000 unemployed workers in Rochester, in the Buffalo-Niagra area are scheduled to lose their benefits between December 28 and March 31. But, as I said before, this measure before us today will be too little and too late for thousands in my region and perhaps in others.

The version we are considering today would only allow for a 13-week extension of benefits for those who are still eligible. It would not address the needs of the nearly 84,000 unemployed in the State of New York alone who have already exhausted their benefits.

Mr. Speaker, it seems almost superfluous to note that the 108th Congress kicks off its legislative program with a rule so closed and restricted that the minority party was prevented from offering even a single substitute. I remember the day that this institution was considered one of the great deliberative bodies, brimming with ideas and a host of viewpoints befitting a democracy, but no more, Mr. Speaker. Today, 205 Members of this body and their constituents have been disenfranchised and shut out. My colleagues, a cold wind is blowing in this institution, and the needs and voices of our most vulnerable constituents are feeling the chill.

Mr. Speaker, the Democratic substitute that was blocked by the Committee on Rules last night would have made a real difference to thousands. First and foremost, the measure would reestablish the Federal extended unemployment compensation program and guarantee all jobless workers at least 26 weeks of extended benefits. The program would be extended until June 30, 2003. Workers in every State would be eligible for 26 weeks of extended unemployment benefits after they exhaust their regular unemployment compensation. This provision would provide extended unemployment benefits to merely 2\1/2\ million workers over the first half of 2003, and the unemployment rate becomes more and more shocking every day.

Moreover, any workers who exhausted their initial 13 weeks of temporary extended unemployment compensation in 2002 would receive an additional 13 weeks. Any worker who was cut off on December 28 because of the termination of the current program would receive the remainder of their original 13 weeks on a retroactive basis, plus the additional 13 weeks. Finally, any worker who exhausted 26 weeks which they received because their State hit the requisite unemployment trigger would receive an additional 7 weeks if their State remained designated as having high unemployment.

Mr. Speaker, one of the things that literally broke my heart was when one Member of Congress was quoted as saying, ``We don't want to extend these benefits; they will not go out and look for work.'' We are talking about people who are having a very difficult time; in fact, probably will not be able to find the kind of work commensurate with their education and their skills. I am very much afraid that my district, like many others, will lose them to other parts of the country. It is a tragedy that is happening here today, Mr. Speaker. We could be doing something good for the unemployed of America; but instead, we are turning our back on them and saying, have a little dividend tax relief.

I do want to point out too on the stimulus package, because it is so important that most people who have stock in the United States have either a 401(k) program or a mutual fund, they will not see anything from any kind of tax relief.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3\3/4\ minutes to the gentleman from New York (Mr. Rangel), the ranking member of the Committee on Ways and Means.

(Mr. RANGEL asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Massachusetts (Mr. McGovern), a member of the Committee on Rules.

Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

I do have three or four more speakers, Mr. Speaker.

Mr. Speaker, I yield 2 minutes to the gentleman from Maryland (Mr. Wynn).

Mr. Speaker, I yield 2 minutes to the gentleman from Washington (Mr. McDermott).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from California (Mr. Becerra).

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I would ask the gentleman from Texas to yield for a unanimous consent.

Mr. Speaker, I meant to say at the end of my time that we will call for a vote on the previous question. If it is defeated, we have an amendment to the rule, that we would like to offer the Rangel substitute for 26 weeks of extended benefits. We are concerned that we were denied an opportunity to put that on the floor, and by voting no on the previous question we will be able to substitute.

Amendment to H. Res. 14 Offered by Ms. Slaughter

Strike all after the resolved clause and insert:

That upon the adoption of this resolution it shall be in

order without intervention of any point of order to consider

in the House the bill (S. 23) to provide for a 5-month

extension of the Temporary Extended Unemployment Compensation

Act of 2002 and for a transition period for individuals

receiving compensation when the program under such Act ends.

The bill shall be considered as read for amendment. The

previous question shall be considered as ordered on the bill

and on any amendment thereto to final passage without

intervening motion except: (1) one hour of debate on the bill

equally divided and controlled by Representative Thomas of

California and Representative Rangel of New York; (2) the

amendment specified in section 2, if offered by

Representative Rangel of New York or his designee, which

shall be in order without intervention of any point of order,

shall be considered as read, and shall be separately

debatable for one hour equally divided and controlled by the

proponent and an opponent; and (3) one motion to recommit

with or without instructions.

Sec. 2. The amendment referred to in the first section of

this resolution is as follows:

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.

Rep. Pete SessionsR-TX-32 · Jan 8, 2003

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 14 and ask for its immediate consideration. Mr. Speaker, for the purpose of debate only, I yield the customary 30…

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 14 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), pending which I yield myself such time as I may consume. During consideration of this resolution all time yielded is for the purpose of debate only.

The rule provides for 1 hour of debate and waives all points of order against consideration of the bill. As we begin the 108th Congress I would like to point out that we intend to continue the courtesy that we began when the Republicans became the majority. This rule allows us to continue in the tradition of extending the minority party an opportunity to offer a motion to recommit.

Mr. Speaker, the resolution before us today allows us to debate and consider a most important measure, S-23, which provides for a 5-month extension of the Temporary Extended Unemployment Compensation Act of 2002. Last Congress we passed the Job Creation and Worker Assistance Act of 2002, which became Public Law 107-147. This economic stimulus bill includes a temporary extension of unemployment compensation and provides for the temporary extended unemployment compensation program.

This program provided up to 13 additional weeks of federally funded benefits for unemployed workers in all States. Benefits were payable to qualified workers through December 28, 2002. Though several attempts were made, and language extending this program was passed by the House, the 107th Congress unfortunately adjourned without having passed an extension.

Today, we have the opportunity to consider legislation that would immediately provide for a 5-month extension of unemployed benefits, through May 2003, with a 3-month phaseout. This also allows for newly eligible workers by the end of May 2003 to receive extended unemployment benefits through August of this year.

Mr. Speaker, 1.9 million new recipients would be aided by this extension, as well as nearly 800,000 continuing recipients who have been affected by the December 28 ``cliff.'' This comes to a total of 2.7 million workers and their families who would benefit from the legislation that will hopefully pass today.

This measure is similar to the language that was championed by Senators Clinton and Nickles at the end of the last Congress. Yesterday, the Senate passed this legislation by unanimous consent. Today, the House has the opportunity to pass and to send this measure to President Bush for his signature. By moving expeditiously, we could ensure that unemployed workers do not suffer from a significant delay in the receipt of their checks. I hope that we can mirror the Senate's actions on this bill with a strong, bipartisan vote. I believe that it would be a strong indication of this new Congress's commitment to American workers and their families. Furthermore, extending unemployment benefits and providing unemployed workers with additional purchasing power would be yet another way to help stimulate the economy which, in turn, would help us to keep unemployment down.

Mr. Speaker, before I yield to the gentlewoman from New York, I would like to offer a brief explanation of the second part of this resolution. Section 2 of this resolution provides that allocations referred to in section 3(a) of House Resolution 5 may be submitted by the gentleman from Iowa (Mr. Nussle). This is merely a technical clarification of the rules package we adopted yesterday, which contained a provision to allow the chairman of the Committee on the Budget to have printed in the Congressional Record 302(a) allocations. This is necessary so that the House might complete its obligation to fund this through the current year FY 03 fiscal year.

As everyone knows, the Committee on Rules is currently the only committee up and running, so my good friend, the gentleman from Iowa (Mr. Nussle), has technically not been appointed the chairman of the Committee on the Budget yet. This provision merely lets him carry out his duties as if he already were the committee chairman.

Mr. Speaker, I urge my colleagues to join me in supporting this rule and the underlying legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, last night the Committee on Rules had an opportunity to hold a hearing on this unemployment compensation bill. However, for months our chairman, the gentleman from California (Mr. Dreier), has been involved in the negotiations as a member of the leadership of the House and is a person who has taken a lead on this important issue. I yield such time as he may consume to the gentleman from California (Mr. Dreier), the chairman of the Committee on Rules.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, what we are trying to work on today is a bill that was passed by the Senate last night. Last year, this House passed a bill very similar to this. We tried to do the very best we could. The process is that two bodies of Congress, the House and Senate, have to get together. That is what is happening today.

Yesterday, the Senate acted, or last night. Immediately last night the Committee on Rules had a meeting. We had a hearing where we talked directly about this bill. Today it is on the floor. I think we are doing the timely things. I think we are doing the right things. I do not think we are delaying this in any manner. It is process, and it is a process that we intend to follow.

I am proud that we had this on the floor today, and I am also proud that by presenting this rule and by having this debate perhaps as early as tonight or tomorrow the President of the United States, George W. Bush, will have the chance to sign this bill. That is what this is about. I am proud that we are able to do that today.

Mr. Speaker, I yield such time as he may consume to the gentleman from Iowa (Mr. Nussle), the gentleman who is to be chairman of the Committee on the Budget.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, speech after speech we hear about how we have been delayed in this process. I agree. Part of the process is, however, that the two bodies, the House and the Senate, have a process. What we are doing today is taking a Senate bill that is even more generous than the one which the Senate passed last year. We are accepting this because we believe it is the right thing to do.

Our President, George W. Bush, spoke very clearly and very passionately about his belief that when the House of Representatives and the Senate would come back, this was several weeks ago when he spoke, that he was asking us to make sure that we held the necessary meetings and committee mark-ups to make sure that this bill did come to the floor. That is what we are doing today. I am proud of what we are doing. I offer no apologies for what our party stands for.

We are here on the floor of the House of Representatives as a majority party with a great bill. It happens to be a better bill now than what was marked up last year and passed by the United States Senate. But it is one that we agree on, and it is one that we should be proud of.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, at this time I have no further speakers. I would like to inquire from the gentlewoman from New York (Ms. Slaughter) as to how many speakers and the time remaining on both sides.

Mr. Speaker, I yield myself the remaining time.

Today, we have had a fabulous debate, an opportunity to have people from both parties, both sides of the aisle to be able to talk about this bill that is before us, S. 23. It is a Senate bill. It is an agreement that was reached in the other body just last night.

Last night, this body, through the leadership of the gentleman from Illinois (Mr. Hastert) had the Committee on Rules come into order. We had a hearing last night. We talked about this important issue. We deliberated. We heard from both sides. We followed the process. That process that the Committee on Rules went through is one that this body has gone through for many years, and we came up with a product.

The product that we chose was exactly the same bill that the Senate had approved last year but made better, and was done all last night.

Mr. Speaker, it is my time and I do not choose to yield at this time. I am offering to close as is provided for by the rules, and I will allow the gentlewoman to insert something into the Record if that is a request.

Mr. Speaker, I yielded to the gentlewoman for the purpose of allowing something to be placed into the Record. It is my time and I wish to gain that time back.

Mr. Speaker, I thank the Speaker for allowing the gentlewoman to insert that into the Record.

So now we are at the point where we have completed part of the process where we are going to vote on the rule, and in a few minutes, I assume after a vote on that, then we will have a debate where we will talk about the substance further of the bill. This has allowed both parties the time to place forward their ideas, and for anyone to think that we have not allowed free time or gagged someone to tell them what they can or cannot discuss is simply ludicrous. That is why we allow the time on the floor.

I am proud of what the Committee on Rules has done. I am proud of the debate that we have had today, and I look forward to the President of the United States having an opportunity, perhaps as early as this afternoon or tomorrow, to sign this bill to get these benefits to the people that need it the most. I am proud of what we are doing.

Mr. Speaker, once again, I urge my colleagues to join me in supporting this rule and the underlying legislation which is so critical.

Rep. William M. ThomasR-CA-22 · May 9, 2003

Mr. Speaker, pursuant to House Resolutions 227, I call up the bill (H.R. 2) to amend the Internal Revenue Code of 1986 to provide additional tax incentives to encourage economic growth, and ask for…

Mr. Speaker, I yield myself such time as I may consume.

The Members should know that we have a statement of administration policy on this bill, and it reads in part: ``The administration strongly supports House passage of H.R. 2 and commends the House for including all the elements of the jobs and growth plan proposed by the President.'' I would also like to call Members' attention to today's Congressional Record. In the Congressional Record, beginning on page 3829 is the first analysis of a tax bill by the Joint Committee on Taxation utilizing the power provided to the joint committee by rule XIII. It says in part that ``in accordance with House rule XIII, this document, prepared by the staff of the Joint Committee on Taxation . . . provides a macroeconomic analysis of H.R. 2.

``The analysis presents the results of simulating the changes contained in H.R. 2 under three economic models of the economy. The models employ a variety of assumptions regarding Federal fiscal policy, monetary policy, and behavioral responses to the proposed changes in law.''

It then goes on on page 3830, 3831, 3832, to examine this bill under those three macroeconomic models, and it explains in detail the models that are used. It says, for example, if Members take the time to look on page 3831 of the May 8 Congressional Record, in part: ``The estimated change in Gross Domestic Product (`GDP') due to this proposal can range at least from a 0.3 percent (an average of $43 billion) to a 1.5 percent (an average of $183 billion) increase in nominal, or current dollar GDP over the first 5 years, and 0.2 to a 1.2 percent increase over the second 5 years.''

This bill, according to the bipartisan professional staff at the Joint Committee on Taxation, says this bill grows the economy. In addition, they say, that up to 900,000 jobs in the first 5 years will be created ``as the effects of the acceleration of individual rate cuts, and the initial increase in investment prevail. Employment increases in the first 5 years because of both the positive labor supply incentive from the individual rate cuts, and the economic stimulus effect of the proposals taken as a whole.'' The bipartisan, professional Joint Committee on Taxation says this bill creates jobs and stimulates the economy.

It probably would be more fun for either side to read the effects of the bill

based upon some particular ax-grinding institute that has a really fair-sounding name that is funded by various organizations because the hyperbole in the way they examine the bill is a whole lot more fun. It is not very realistic, but it is a whole lot more fun.

This is the professional bipartisan staff of the Joint Committee on Tax under rule XIII concluding on page 3831: ``As the simulations indicate, depending on how much temporary demand stimulus is generated by the proposal, the revenue feedback,'' money coming back to the Federal Government by spending money in this bill to cut people's taxes, give it back to them, ``the revenue feedback could range from 5.8 percent to 27.5 percent in the first 5 years, and'' between ``2.6 and 23.4 percent over the 10-year budget period.''

It stimulates the economy, creates jobs, brings more revenue back to the Federal Government. That is what this bill is about.

Mr. Speaker, I reserve the balance of my time.

Parliamentary Inquiry

Will the gentleman yield?

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, on my time, to respond to the gentleman from New York, I asked that the measures be treated equally and fairly. That was my position. But apparently the Committee on Rules rejected my position, and, notwithstanding the fact that I was trying to support the gentleman from New York, in the opinion of the Committee on Rules, apparently the gentleman's bill was so far out of the normal procedure that they determined not to make it in order.

I had asked that the Committee on Rules treat both bills the same way, and I was denied in my request to the Committee on Rules.

Mr. Speaker, it is my pleasure to yield 2 minutes to the gentleman from Texas (Mr. Sam Johnson), a member of the committee.

(Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as he may consume to the gentleman from Wisconsin (Mr. Ryan), a member of the committee, for the purpose of a colloquy.

Mr. Speaker, will the gentleman yield?

I will tell the gentleman he raises an important point, but it is also a part of a larger tax policy problem.

Currently, as the gentleman may know, under the U.S. Tax Code we punish U.S. corporations for being U.S. corporations. Several provisions of our Tax Code put U.S. corporations at a disadvantage versus their international competitors. These flaws in the Tax Code force U.S. companies to move their headquarters overseas in order to compete. We must reform our Tax Code to improve our international competitiveness. The Committee on Ways and Means will be addressing this larger issue in this Congress.

With regard to the specific issue of dividend payments to U.S. citizens by foreign corporations, it is my intent as the legislation process proceeds to craft a solution that treats all American shareholders of either domestic or foreign-owned corporations fairly and equally, while improving the competitiveness of the U.S. Tax Code.

Mr. Speaker, it is my pleasure to yield 2 minutes to the gentlewoman from Washington (Ms. Dunn), a member of the committee.

Mr. Speaker, in examining the number of Members who are enthusiastic on my side of the aisle about this bill, what I am trying to do is figure out a way to allow for senior members on the committee to have a full expression of their support in a particular manner, and there are many other Members of the Republican Conference who are not on the committee and have requested time to speak as well. And what I am trying to do is manage the time in a way that the more-senior members have an opportunity to present the particulars of the bill and that the other Members also have a chance to speak.

So we are going to be working on trying to fit all of the people in.

Mr. Speaker, it is my pleasure to yield 1\1/2\ minutes to the gentleman from Georgia (Mr. Collins), a member of the Committee on Ways and Means.

Mr. Speaker, it is my pleasure to yield 2 minutes to the gentleman from Illinois (Mr. Weller), a member of the Committee on Ways and Means.

Mr. Speaker, I really have a difficult time understanding the concept that giving people back their own money is greed.

Mr. Speaker, it is my pleasure to yield 1\1/2\ minutes to the gentleman from California (Mr. Herger), a member of the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, one of the things I really do enjoy about the gentleman from Washington (Mr. McDermott) is that he is consistent. His description of my quote and the meaning of it is consistent with the way in which he presents his version of the facts.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Connecticut (Mrs. Johnson), a member of the committee.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I invite the gentleman from Wisconsin to perhaps read page 3831 of the Congressional Record in which the Bipartisan Joint Committee on Taxation says that up to 900,000 new jobs in the first 5 years will be created by the acceleration of individual rate cuts and the initial increase in investments prevail.

The gentleman does not want to believe and he has every right not to believe; but, frankly, the facts refute his position.

Mr. Speaker, I yield 2 minutes to the gentleman from Arizona (Mr. Hayworth), a member of the Committee on Ways and Means.

Mr. Speaker, I yield such time as he may consume to the gentleman from Minnesota (Mr. Ramstad), a member of the committee.

(Mr. RAMSTAD asked and was given permission to revise and extend his remarks.)

Mr. Speaker, might I inquire about the division of time.

Mr. Speaker, it is my pleasure to yield 1\1/2\ minutes to the gentleman from Michigan (Mr. Camp), a member of the Committee on Ways and Means.

Mr. Speaker, it is my pleasure to yield 1\1/2\ minutes to the gentleman from Ohio (Mr. Portman), one of the most senior members of the Committee on Ways and Means.

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Introduced in HouseIssued January 7, 2003

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 44 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 44

To amend the Internal Revenue Code of 1986 to provide reduced capital
gain rates for qualified economic stimulus gain and to index the basis
of assets of individuals for purposes of determining gains and losses.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

January 7, 2003

Mr. Dreier (for himself, Mr. Hall, Ms. Dunn, Ms. McCarthy of Missouri,
Mr. English, Mr. Sessions, Mr. Toomey, and Mr. Manzullo) introduced the
following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to provide reduced capital
gain rates for qualified economic stimulus gain and to index the basis
of assets of individuals for purposes of determining gains and losses.

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 ``Investment Tax
Incentive Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.

SEC. 2. REDUCED CAPITAL GAIN RATES FOR QUALIFIED ECONOMIC STIMULUS
GAIN.

(a) Maximum Capital Gain Rate for Individuals.--
(1) In general.--Paragraph (2) of section 1(h) (relating to
reduced capital gain rates for qualified 5-year gain) is
amended to read as follows:
``(2) Reduced capital gain rates for qualified 5-year gain,
qualified economic stimulus gain, and qualified section 1202
economic stimulus gain.--
``(A) Reduction in 10-percent rate.--The rate under
paragraph (1)(B) shall be--
``(i) 5 percent with respect to so much of
the amount to which the 10-percent rate would
otherwise apply as does not exceed qualified
economic stimulus gain,
``(ii) 8 percent with respect to so much of
such amount not taken into account under clause
(i) as does not exceed qualified 5-year gain,
and
``(iii) 10 percent with respect to the
remainder of such amount.
``(B) Reduction in 20-percent rate.--The rate under
paragraph (1)(C) shall be--
``(i) 10 percent with respect to so much of
the amount to which the 20-percent rate would
otherwise apply as does not exceed the excess
of qualified economic stimulus gain over the
amount of such gain taken into account under
subparagraph (A)(i),
``(ii) 18 percent with respect to so much
of such amount not taken into account under
clause (i) as does not exceed the lesser of--
``(I) the excess of qualified 5-
year gain over the amount of such gain
taken into account under subparagraph
(A)(ii), or
``(II) the amount of qualified 5-
year gain (determined by taking into
account only property the holding
period for which begins after December
31, 2000), and
``(iii) 20 percent with respect to the
remainder of such amount.
For purposes of determining under clause (ii)(II)
whether the holding period of property begins after
December 31, 2000, the holding period of property
acquired pursuant to the exercise of an option (or
other right or obligation to acquire property) shall
include the period such option (or other right or
obligation) was held.
``(C) Reduction in 28-percent rate.--The rate under
paragraph (1)(E) shall be--
``(i) 14 percent with respect to so much of
the amount to which the 28-percent rate would
otherwise apply as does not exceed qualified
section 1202 economic stimulus gain, and
``(ii) 28 percent with respect to the
remainder of such amount.''.
(2) Qualified economic stimulus gain; qualified section
1202 economic stimulus gain.--Subsection (h) of section 1
(relating to maximum capital gains rate) is amended by adding
at the end the following new paragraphs:
``(13) Qualified economic stimulus gain.--For purposes of
this subsection, the term `qualified economic stimulus gain'
means the aggregate long-term capital gain from property the
holding period for which begins during the 2-year period
beginning on the date of the enactment of this paragraph. The
determination under the preceding sentence shall be made
without regard to collectibles gain, gain described in
paragraph (7)(A)(i), and section 1202 gain.
``(14) Qualified section 1202 economic stimulus gain.--For
purposes of this subsection, the term `qualified section 1202
economic stimulus gain' means the aggregate section 1202 gain
from property the holding period for which begins during the 2-
year period beginning on the date of the enactment of this
paragraph.''.
(3) Exclusion of qualified economic stimulus gain from
qualified 5-year gain.--Paragraph (9) of section 1(h) is
amended by inserting ``qualified economic stimulus gain,''
before ``collectibles gain''.
(b) Maximum Capital Gain Rate for Corporations.--Section 1201 is
amended to read as follows:

``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS.

``(a) General Rule.--If for any taxable year a corporation has a
qualified economic stimulus gain, then, in lieu of any tax imposed by
sections 11, 511, and 831(a) and (b), there is hereby imposed a tax (if
such tax is less than the tax imposed by such sections) which shall
consist of the sum of--
``(1) a tax computed on the taxable income reduced by the
amount of qualified economic stimulus gain, at the rates and in
the manner as if this subsection had not been enacted, plus
``(2) a tax of 20 percent of the qualified economic
stimulus gain (or, if less, taxable income).
``(b) Qualified Economic Stimulus Gain.--For purposes of this
section, the term `qualified economic stimulus gain' has the meaning
given such term in section 1(h)(13), except that such gain shall not
exceed the net capital gain.
``(c) Regulations.--Rules similar to the rules of section 1(h)(11)
shall apply for purposes of this section.
``(d) Cross References.--

``For computation of the alternative
tax--
``(1) in the case of life insurance
companies, see section 801(a)(2),
``(2) in the case of regulated
investment companies and their shareholders, see section 852(b)(3)(A)
and (D), and
``(3) in the case of real estate
investment trusts, see section 857(b)(3)(A).''

(c) Conforming Amendment.--Section 857(b)(3)(A)(ii) is amended by
striking ``determined at the rate provided in section 1201(a)'' and
inserting ``, determined as provided in section 1201(a),''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.

SEC. 3. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN OR
LOSS.

(a) In General.--Part II of subchapter O of chapter 1 (relating to
basis rules of general application) is amended by redesignating section
1023 as section 1024 and by inserting after section 1022 the following
new section:

``SEC. 1023. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING
GAIN OR LOSS.

``(a) General Rule.--
``(1) Indexed basis substituted for adjusted basis.--Solely
for purposes of determining gain or loss on the sale or other
disposition by a taxpayer (other than a corporation) of an
indexed asset which has been held for more than 3 years, the
indexed basis of the asset shall be substituted for its
adjusted basis.
``(2) Exception for depreciation, etc.--The deductions for
depreciation, depletion, and amortization shall be determined
without regard to the application of paragraph (1) to the
taxpayer or any other person.
``(b) Indexed Asset.--
``(1) In general.--For purposes of this section, the term
`indexed asset' means--
``(A) common stock in a C corporation (other than a
foreign corporation), and
``(B) tangible property,
which is a capital asset or property used in the trade or
business (as defined in section 1231(b)).
``(2) Stock in certain foreign corporations included.--For
purposes of this section--
``(A) In general.--The term `indexed asset'
includes common stock in a foreign corporation which is
regularly traded on an established securities market.
``(B) Exception.--Subparagraph (A) shall not apply
to--
``(i) stock of a foreign investment company
(within the meaning of section 1246(b)),
``(ii) stock in a passive foreign
investment company (as defined in section
1296),
``(iii) stock in a foreign corporation held
by a United States person who meets the
requirements of section 1248(a)(2), and
``(iv) stock in a foreign personal holding
company (as defined in section 552).
``(C) Treatment of american depository receipts.--
An American depository receipt for common stock in a
foreign corporation shall be treated as common stock in
such corporation.
``(c) Indexed Basis.--For purposes of this section--
``(1) General rule.--The indexed basis for any asset is--
``(A) the adjusted basis of the asset, increased by
``(B) the applicable inflation adjustment.
``(2) Applicable inflation adjustment.--The applicable
inflation adjustment for any asset is an amount equal to--
``(A) the adjusted basis of the asset, multiplied
by
``(B) the percentage (if any) by which--
``(i) the gross domestic product deflator
for the last calendar quarter ending before the
asset is disposed of, exceeds
``(ii) the gross domestic product deflator
for the last calendar quarter ending before the
asset was acquired by the taxpayer (or, if
later, the calendar quarter ending on December
31, 2002).
The percentage under subparagraph (B) shall be rounded to the
nearest \1/10\ of 1 percentage point.
``(3) Gross domestic product deflator.--The gross domestic
product deflator for any calendar quarter is the implicit price
deflator for the gross domestic product for such quarter (as
shown in the last revision thereof released by the Secretary of
Commerce before the close of the following calendar quarter).
``(d) Suspension of Holding Period Where Diminished Risk of Loss;
Treatment of Short Sales.--
``(1) In general.--If the taxpayer (or a related person)
enters into any transaction which substantially reduces the
risk of loss from holding any asset, such asset shall not be
treated as an indexed asset for the period of such reduced
risk.
``(2) Short sales.--
``(A) In general.--In the case of a short sale of
an indexed asset with a short sale period in excess of
3 years, for purposes of this title, the amount
realized shall be an amount equal to the amount
realized (determined without regard to this paragraph)
increased by the applicable inflation adjustment. In
applying subsection (c)(2) for purposes of the
preceding sentence, the date on which the property is
sold short shall be treated as the date of acquisition
and the closing date for the sale shall be treated as
the date of disposition.
``(B) Short sale period.--For purposes of
subparagraph (A), the short sale period begins on the
day that the property is sold and ends on the closing
date for the sale.
``(e) Treatment of Regulated Investment Companies and Real Estate
Investment Trusts.--
``(1) Adjustments at entity level.--
``(A) In general.--Except as otherwise provided in
this paragraph, the adjustment under subsection (a)
shall be allowed to any qualified investment entity
(including for purposes of determining the earnings and
profits of such entity).
``(B) Exception for corporate shareholders.--Under
regulations--
``(i) in the case of a distribution by a
qualified investment entity (directly or
indirectly) to a corporation--
``(I) the determination of whether
such distribution is a dividend shall
be made without regard to this section,
and
``(II) the amount treated as gain
by reason of the receipt of any capital
gain dividend shall be increased by the
percentage by which the entity's net
capital gain for the taxable year
(determined without regard to this
section) exceeds the entity's net
capital gain for such year determined
with regard to this section, and
``(ii) there shall be other appropriate
adjustments (including deemed distributions) so
as to ensure that the benefits of this section
are not allowed (directly or indirectly) to
corporate shareholders of qualified investment
entities.
For purposes of the preceding sentence, any amount
includible in gross income under section 852(b)(3)(D)
shall be treated as a capital gain dividend and an S
corporation shall not be treated as a corporation.
``(C) Exception for qualification purposes.--This
section shall not apply for purposes of sections 851(b)
and 856(c).
``(D) Exception for certain taxes imposed at entity
level.--
``(i) Tax on failure to distribute entire
gain.--If any amount is subject to tax under
section 852(b)(3)(A) for any taxable year, the
amount on which tax is imposed under such
section shall be increased by the percentage
determined under subparagraph (B)(i)(II). A
similar rule shall apply in the case of any
amount subject to tax under paragraph (2) or
(3) of section 857(b) to the extent
attributable to the excess of the net capital
gain over the deduction for dividends paid
determined with reference to capital gain
dividends only. The first sentence of this
clause shall not apply to so much of the amount
subject to tax under section 852(b)(3)(A) as is
designated by the company under section
852(b)(3)(D).
``(ii) Other taxes.--This section shall not
apply for purposes of determining the amount of
any tax imposed by paragraph (4), (5), or (6)
of section 857(b).
``(2) Adjustments to interests held in entity.--
``(A) Regulated investment companies.--Stock in a
regulated investment company (within the meaning of
section 851) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the average of the fair market values
of the indexed assets held by such company at
the close of each month during such quarter,
bears to
``(ii) the average of the fair market
values of all assets held by such company at
the close of each such month.
``(B) Real estate investment trusts.--Stock in a
real estate investment trust (within the meaning of
section 856) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the fair market value of the indexed
assets held by such trust at the close of such
quarter, bears to
``(ii) the fair market value of all assets
held by such trust at the close of such
quarter.
``(C) Ratio of 80 percent or more.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 80
percent or more, such ratio for such quarter shall be 100 percent.
``(D) Ratio of 20 percent or less.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 20
percent or less, such ratio for such quarter shall be
zero.
``(E) Look-thru of partnerships.--For purposes of
this paragraph, a qualified investment entity which
holds a partnership interest shall be treated (in lieu
of holding a partnership interest) as holding its
proportionate share of the assets held by the
partnership.
``(3) Treatment of return of capital distributions.--Except
as otherwise provided by the Secretary, a distribution with
respect to stock in a qualified investment entity which is not
a dividend and which results in a reduction in the adjusted
basis of such stock shall be treated as allocable to stock
acquired by the taxpayer in the order in which such stock was
acquired.
``(4) Qualified investment entity.--For purposes of this
subsection, the term `qualified investment entity' means--
``(A) a regulated investment company (within the
meaning of section 851), and
``(B) a real estate investment trust (within the
meaning of section 856).
``(f) Other Pass-Thru Entities.--
``(1) Partnerships.--
``(A) In general.--In the case of a partnership,
the adjustment made under subsection (a) at the
partnership level shall be passed through to the
partners.
``(B) Special rule in the case of section 754
elections.--In the case of a transfer of an interest in
a partnership with respect to which the election
provided in section 754 is in effect--
``(i) the adjustment under section
743(b)(1) shall, with respect to the transferor
partner, be treated as a sale of the
partnership assets for purposes of applying
this section, and
``(ii) with respect to the transferee
partner, the partnership's holding period for
purposes of this section in such assets shall
be treated as beginning on the date of such
adjustment.
``(2) S corporations.--In the case of an S corporation, the
adjustment made under subsection (a) at the corporate level
shall be passed through to the shareholders. This section shall
not apply for purposes of determining the amount of any tax
imposed by section 1374 or 1375.
``(3) Common trust funds.--In the case of a common trust
fund, the adjustment made under subsection (a) at the trust
level shall be passed through to the participants.
``(4) Indexing adjustment disregarded in determining loss
on sale of interest in entity.--Notwithstanding the preceding
provisions of this subsection, for purposes of determining the
amount of any loss on a sale or exchange of an interest in a
partnership, S corporation, or common trust fund, the
adjustment made under subsection (a) shall not be taken into
account in determining the adjusted basis of such interest.
``(g) Dispositions Between Related Persons.--
``(1) In general.--This section shall not apply to any sale
or other disposition of property between related persons except
to the extent that the basis of such property in the hands of
the transferee is a substituted basis.
``(2) Related persons defined.--For purposes of this
section, the term `related persons' means--
``(A) persons bearing a relationship set forth in
section 267(b), and
``(B) persons treated as single employer under
subsection (b) or (c) of section 414.
``(h) Transfers To Increase Indexing Adjustment.--If any person
transfers cash, debt, or any other property to another person and the
principal purpose of such transfer is to secure or increase an
adjustment under subsection (a), the Secretary may disallow part or all
of such adjustment or increase.
``(i) Special Rules.--For purposes of this section--
``(1) Treatment of improvements, etc.--If there is an
addition to the adjusted basis of any tangible property or of
any stock in a corporation during the taxable year by reason of
an improvement to such property or a contribution to capital of
such corporation--
``(A) such addition shall never be taken into
account under subsection (c)(1)(A) if the aggregate
amount thereof during the taxable year with respect to
such property or stock is less than $1,000, and
``(B) such addition shall be treated as a separate
asset acquired at the close of such taxable year if the
aggregate amount thereof during the taxable year with
respect to such property or stock is $1,000 or more.
A rule similar to the rule of the preceding sentence shall
apply to any other portion of an asset to the extent that
separate treatment of such portion is appropriate to carry out
the purposes of this section.
``(2) Assets which are not indexed assets throughout
holding period.--The applicable inflation adjustment shall be
appropriately reduced for periods during which the asset was
not an indexed asset.
``(3) Treatment of certain distributions.--A distribution
with respect to stock in a corporation which is not a dividend
shall be treated as a disposition.
``(4) Section cannot increase ordinary loss.--To the extent
that (but for this paragraph) this section would create or
increase a net ordinary loss to which section 1231(a)(2)
applies or an ordinary loss to which any other provision of
this title applies, such provision shall not apply. The
taxpayer shall be treated as having a long-term capital loss in
an amount equal to the amount of the ordinary loss to which the
preceding sentence applies.
``(5) Acquisition date where there has been prior
application of subsection (a)(1) with respect to the
taxpayer.--If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer,
the date of acquisition of such asset by the taxpayer shall be
treated as not earlier than the date of the most recent such
prior application.
``(6) Collapsible corporations.--The application of section
341(a) (relating to collapsible corporations) shall be
determined without regard to this section.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''
(b) Clerical Amendment.--The table of sections for part II of
subchapter O of chapter 1 is amended by striking the item relating to
section 1023 and inserting after the item relating to section 1022 the
following new items:

``Sec. 1023. Indexing of certain assets
for purposes of determining
gain or loss.
``Sec. 1024. Cross references.''
(c) Effective Date.--The amendments made by this section shall
apply to dispositions after December 31, 2002, in taxable years ending
after such date.
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