Withholding Tax Relief Act of 2006

Mr. President, today I am introducing a bill with Senators Hutchison, Feinstein, and Boxer entitled the Border Health Security Act of 2006. This bill addresses the tremendous health problems confronting our nation's southwestern border.

The United States-Mexico border region is defined in the U.S.-Mexico Border Health Commission authorizing legislation as the area of land 100 kilometers, or 62.5 miles, north and south of the international boundary. It stretches 2,000 miles from California, through Arizona and New Mexico to the southern tip of Texas and is estimated to have a population of 12 million residents.

The border region comprises 2 sovereign nations, 25 Native American tribes, and 4 States in the United States and six States in Mexico.

Why should we provide some focus to this geographic region? The situation along the border is among the most dire in the country. In the past, we have recognized problems with other regions, through the Denali, Delta, and Appalachian commissions, and have provided targeted funding to those areas. The U.S.-Mexico Border Health Commission, legislation I sponsored

with Senators McCain, Simon, and Hutchison, was created for the same reasons and annually receives about $4 million in funding that is matched by $1 million from the Mexican Government for administrative purposes to improve international cooperation and agreements to tackle health problems in the region. However, we need to take the next step and provide resources to address the problems.

In the border region, 3 of the 10 poorest counties in the United States are located in the border area, 21 of the counties have been designated as economically distressed, approximately 430,000 people live in 1,200 colonias in Texas and New Mexico, which are unincorporated communities that are characterized by substandard housing, unsafe public drinking water, and wastewater systems, very high unemployment, and the lowest per capita income as a region in the Nation.

In a report earlier this year by the U.S.-Mexico Border Counties Coalition, the Coalition found that, if the border were a State, it would rank second with respect to the uninsured, last with respect to access to health professionals, including doctors, nurses and allied health professionals per capita; second with respect to tuberculosis, third with respect to hepatitis; and fifth with respect to diabetes.

The result is a health system that confronts tremendous health problems with little or no resources.

According to U.S. Census Bureau data reported in September 2005 for the three-year average of 2002 to 2004, the states of Texas and New Mexico rank first and second as the states with the highest uninsured rates in the country with rates of 25.0 percent and 21.0 percent, respectively. California and Arizona are not much better and had uninsured rates of 18.7 percent and 17.1 percent, respectively.

However, the figures along the border are even worse, as the rates of uninsured are higher still than that in the four states overall. Uninsured rates in many border counties are estimated to be above 30 percent and as high as 50 percent in certain communities. According to the U.S. Census Bureau's small area health insurance estimates, SAHIE, the three New Mexico border counties had an uninsured rate of 29.4 percent compared to the statewide average of 23.7 percent and more than twice the United States rate of 14.2 percent.

As the U.S.-Mexico Border Commission notes, ``The border is characterized by weaknesses in the border health systems and infrastructure, lack of public financial resources, poor distribution of physicians and other health professionals and hospitals. Moreover, the low rates of health insurance coverage and low incomes puts access to health services out of reach for many border residents and thus keeps the border communities at risk.''

The U.S.-Mexico Border Commission has identified and approved of an agenda through its Health Border 2010 initiative, which seeks to, among other things: reduce by 25 percent the population lacking access to a primary provider; reduce the female breast cancer death rate by 20 percent; reduce the cervical cancer death rate by 30 percent; reduce deaths due to diabetes by 10 percent; reduce hospitalizations due to diabetes by 25 percent; reduce the incidence of HIV cases by 50 percent; reduce the incidence of tuberculosis cases by 50 percent; reduce the incidence of hepatitis A and B cases by 50 percent; reduce the infant mortality rate by 15 percent; and, increase initiation of prenatal care in the first trimester by 85 percent.

However, the U.S.-Mexico Border Commission lacks the resources that are needed to address those important goals. The bipartisan legislation I am introducing today with Senators Hutchison, Feinstein, and Boxer would address that problem by reauthorizing the U.S.-Mexico Border Health Commission at $10 million and authorizing additional funding to improve the infrastructure, access, and the delivery of health care services along the entire U.S.-Mexico border.

These grants would be flexible and allow the individual communities to establish their own priorities with which to spend these funds for the following range of purposes: maternal and child health, primary care and preventative health, public health and public health infrastructure, health promotion, oral health, behavioral and mental health, substance abuse, health conditions that have a high prevalence in the border region, medical and health services research, community health workers or promotoras, health care infrastructure, including planning and construction grants, health disparities, environmental health, health education, and outreach and enrollment services with respect to Medicaid and the State Children's Health Insurance Program,

Mr. President, I rise to introduce legislation that seeks to put America squarely on the path toward energy security for the 21st Century. Today, I am joined by a number of my colleagues in introducing the Clean Energy Development for a Growing Economy, or Clean EDGE, Act.

Mr. President, this legislation is a sweeping proposal that incorporates the ideas of many of my colleagues on this side of the aisle. It is our attempt to move America forward, on a pressing issue that--as we've said many times before--poses one of the greatest national security, economic and environmental challenges faced by our generation. I am talking about the issue of energy independence, and what it will take to put America on the right track.

The legislation we are presenting today is the result of a good deal of work within our caucus. As a member of the Senate Energy Committee, I speak from some experience when I say that developing a cohesive, national approach to energy policy is quite difficult. That is because, in so many instances, there are important issues of regional diversity that can divide us.

Instead of immediately succumbing to those divisions, what we did when we began to work on this legislation was to start with a goal. Like the Manhattan Project that established America as the world's first nuclear power, and the Apollo Project that ensured America won the race to the moon, we recognized that initiatives of this magnitude must begin with a goal. When America sets a goal, America will achieve it. It takes leadership and resolve, and it takes the shared commitment of individual citizens to make it a truly national effort. But make no mistake: the people of the United States will rise to the challenge.

Today, we can no longer ignore the enormous cost of America's dependence on foreign oil. It has become a crisis for consumers; it poses an imminent

risk to our national security; and it jeopardizes our long-term economic competitiveness. That is why we believe that America must strive for an aggressive goal: to reduce our national petroleum consumption equivalent to 40 percent of our projected imports by 2020, or about 6 million barrels of oil a day.

Next, we set out to define agreed-upon principles about the best ways we could jumpstart our Nation's effort to achieve this goal. I am proud to say that we were able to achieve a good deal of consensus on these principles. Today, we sent the President a letter outlining them, which gained the signatures of 42 of my colleagues. These principles boil down to this:

The United States must launch an aggressive effort designed to ensure that an increasing number of new vehicles sold in America can run on alternative fuels--starting with 25 percent in 2010--and must launch a bold initiative to invest in the infrastructure needed to promote real competition at the gas pump.

The United States must ensure that consumers are protected from gasoline price-gouging and energy market manipulation.

The United States must lessen its reliance on fossil fuels and take steps to curb greenhouse gas emissions by diversifying electricity sources to include more renewable resources.

The United States Governmment--our Nation's single largest energy consumer--must help lead the transition by adopting the best available fuel efficiency and alternative vehicle technologies to reduce its petroleum consumption by 20 percent over the next 5 years, and by 40 percent by 2020.

The United States must level the playing field for new renewable and energy efficiency technologies by providing incentives for consumers and manufacturers to develop and deploy the next generation of fuel efficient vehicles, and by ensuring that major oil companies pay their fair share in taxes and royalties owed to the American public.

These are the principles that guided us as we crafted the Clean EDGE Act. This legislation is a starting point, as we try to advance the dialogue about what it will take to put America on the path toward energy independence.

There are provisions contained in this bill that we know can garner broad bipartisan support. There are others that may not have been possible to enact, before America started waking up to the costs of our energy independence. And there are other ideas that require broader debate and close scrutiny within the Senate Committees of jurisdiction. The Senate should work its will.

But once again, that is the point of this legislation: to start the process; to jump-start the debate, and outline a vision of where this country needs to go to secure our future.

As we have come together on this side of the aisle in recognition of the need to address the pressing issue of energy security, I know I speak for a number of my colleagues when I say I believe it is possible to come together in a bipartisan manner to pass energy legislation this summer. It is possible, if the Senate decides to put politics and partisan rancor aside. We can roll up our sleeves and get to work on crafting a real energy security plan that brings out the best in America. That process would also bring out the best in the Senate.

So I am proud to introduce this legislation today, and look forward to working with my colleagues across the aisle in further developing an energy independence plan for America.

Mr. President, today, President Bush is signing H.R. 4297, the Tax Increase Prevention and Reconciliation Act of 2005. I opposed this legislation because it contains the wrong priorities for America-- leaving behind working families and substantially adding to the deficit. This law chooses to extend the lower rates on capital gains and dividends for 2009 and 2010, but only addresses the individual alternative minimum tax (AMT) for 2006.

According to the Joint Committee on Taxation, those earning $200,000 or more will receive 84 percent of the benefit of the capital gains tax cut and 63 percent of the benefit of the dividends tax cuts. According to the Congressional Budget Office, 42.8 percent of taxpayers with income between $50,000 and $100,000 will be impacted by the AMT if the AMT is not addressed for

2007--a number that increases to 66 percent by 2010. The Tax Increase Prevention and Reconciliation of Act of 2005 extends a tax cut that does not expire to the end of 2008 with a price tag of $50 billion, but fails to protect the hard working families that will be impacted by the AMT. These families were never intended to be impacted by the AMT, a tax originally designed to prevent a small number of high income taxpayers from avoiding taxation.

Today, I am introducing legislation that will address the AMT for 2007 and repeal the lower tax rates on capital dividends for 2009 and 2010. To calculate the AMT, individuals add back certain ``preference items'' to their regular tax liability. These include personal exemptions, the standard deduction, and the itemized deduction for state and local taxes. From this amount, taxpayers subtract the AMT exemption amount, commonly referred to as the ``patch'' which reverted to lower levels at the end of 2005. H.R. 4297 increased and extended the patch for 2006. The patch was increased in order to hold the same number of taxpayers harmless from the AMT in 2006 as in 2005.

The problem with the AMT is that while the regular tax system is indexed for inflation, the AMT exemption amounts and tax brackets remain constant. This has the perverse consequence of punishing taxpayers for the mere fact their incomes rose due to inflation.

A choice was made in 2001 to provide more tax cuts to those with incomes of over one million dollars rather than addressing a looming tax problem for the middle class. The Economic Growth and Tax Relief Reconciliation Act of 2001 did include a small adjustment to the AMT, but it was not enough. We knew at the time that the number of taxpayers subject to the AMT would continue to rise steadily. The combination of lower tax cuts and a minor adjustment to the AMT would cause the AMT to explode. We are now approaching this explosion.

My legislation extends and expands the AMT exemption amount for 2007 to prevent additional taxpayers from being impacted by the AMT. Without increasing and extending the AMT exemption for 2007, an additional 3.2 million taxpayers will be impacted by the AMT in 2007. In addition, the legislation will allow nonrefundable personal credits such as the higher education tax credits and the dependent care credit against the AMT for 2007. This legislation is offset by repealing the lower rates on capital gains and dividends.

My colleagues in the majority argue that the extension of the capital gains and dividends benefits is necessary to provide investor certainty. But I believe that the certainty of working families worried about paying the AMT should come first. New data from the Joint Committee on Taxation requested by the Ways and Means Democratic Members shows that in 2007, 62 percent of all taxable capital gain income will be recognized by taxpayers liable for the minimum tax. Simply put, taxpayers forced to carry the AMT burden will not benefit from the lower capital gains and dividends rate.

The AMT is a looming problem that is impacting hard-working families and for each year that we fail to address the AMT, it gets worse and more expensive. We need to address the AMT for 2007. My legislation is not a long-term cure to the AMT crisis, but it will provide certainty for next year to hard working families that will be impacted by the AMT just because of where they live and the number of children they have, and it will address the AMT in a revenue neutral manner for 2007 as well.

The Tax Increase Prevention and Reconciliation Act of 2005 addresses the AMT for 2006, but at a price--providing a $42,000 tax cut to those making more than a million dollars a year. The AMT for 2006 could have been addressed in a bill that did not include the extension of additional tax cuts and it could have been offset. Instead, addressing the AMT for 2006 was included in a bill that will add far more than $70 billion to the deficit.

We all agree that the AMT should not be impacting families with incomes below $100,000. I am concerned that we will not address the AMT for 2007 in a timely and fiscally responsible manner. My bill does this and would give Congress time to work together in a bipartisan manner to find a fiscally responsible permanent solution to the AMT.

I ask unanimous consent that the full text of this bill be printed in the Record.

Mr. President, I rise to introduce S. 2821, the Withholding Tax Relief Act of 2006. Today, President Bush signed into law H.R. 4297, the Tax Increase Prevention and Reconciliation Act of 2005, and this afternoon, I am making good on a promise I made on the Senate floor last week--to repeal the expanded withholding tax contained in H.R. 4297 to ensure that the bill does what its title claims, that is, prevents tax Increases.

Americans have been asking for tax relief. Congress answered this call, in part, when it passed the Tax Increase Prevention and Reconciliation Act of 2005. The lower taxes on capital gains and dividends--and the higher alternative minimum tax exemption amounts-- contained in H.R. 4297 will assist small businesses, encourage the kind of investment that creates jobs and makes our economy grow, and ensure fairer tax treatment for middle-income families who would otherwise be left footing the bill for a tax intended for the wealthy.

Alongside these tax relief provisions, however, conferees inserted a sweeping new withholding requirement that will raise taxes by nearly $7 billion. This bill seems to have a history of that. When the original tax reconciliation bill came before the Senate, it contained a windfall profits tax provision that would have imposed an additional $4.923 billion tax on the energy industry. I voted against it because the bill that was supposed to provide tax relief actually raised taxes. Although the conferees stripped this provision in conference, they replaced it with an even bigger tax hike--section 511's expanded withholding requirement.

Section 511 of H.R. 4297 imposes a new mandatory 3 percent withholding requirement on all payments for goods and services made to Federal, State, and local contractors. The provision, which is the largest revenue raiser in the bill, represents a significant shift in U.S. tax policy.

Withholding has not always been around. Despite predominant public opposition, Congress enacted mandatory withholding on Federal income tax in 1943 in order to fund World War II. As a result, tax collections jumped from $7.3 billion in 1939 to $43 billion in 1945. That is an increase of $35.7 billion in just 4 years. In congressional hearings on the issue, Congressmen spoke candidly of the revenues that needed to be ``fried out of the taxpayers.'' There was no doubt in the minds of lawmakers that the result of withholding would be an increase in the tax burden on the public.

Congress sought to expand withholding to dividends and interest in 1982, and public opposition was so profound that it was repealed 1 year later. Now, proponents of section 511's expanded withholding requirement say that it is necessary to close a ``tax loophole'' that allows taxpayers to avoid their tax obligations. There is no such ``loophole''--the Internal Revenue Service, IRS, has simply failed to do its job of collecting.

Information-reporting requirements are already in place to assist the IRS in its collection duties. Government entities are required to make an information return, reporting payments to corporations as well as individuals. Moreover, every head of every Federal executive agency that enters into contracts must file an information return reporting the contractor's name, address, date of contract action, amount to be paid to the contractor, and other information. Expanding withholding would now not only have the Federal Government spend taxpayers' dollars, but it would make taxpayers bear the burden and costs of collecting them, too.

The costs of section 511 are high--so high, in fact, that the Congressional Budget Office said that the provision constitutes an unfunded mandate on the State and local governments, exceeding the annual threshold established in the Unfunded Mandates Reform Act. The provision will also cause the cost of doing business to go up. A 3- percent withholding on multibillion dollar contracts--for as long as 15 months, held interest-free--will affect cash flows, investment, and cause businesses to raise prices in order to make up for losses, thereby putting them at a significant competitive disadvantage. Consider the Federal contract totals for Idaho and California alone. In fiscal year 2004, Idaho's nondefense contracts totaled $1.1 billion, and in fiscal year 2005, the State's defense contracts added up to $154 million. In fiscal year 2004, California's nondefense contracts totaled $9.4 billion, and in fiscal year 2005, the State had $30.9 billion in defense contracts.

The bill that I am introducing today, the Withholding Tax Relief Act of 2006, will repeal the $7 billion withholding tax contained in H.R. 4297. Tax relief should not be coupled with tax increases, and I will continue to work to give more meaning to the phrase in the bill's title, ``Tax Increase Prevention.'' This bill is a first step. I urge my colleagues to join me in support of this legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise to introduce S. 2821, the Withholding Tax Relief Act of 2006. Today, President Bush signed into law H.R. 4297, the Tax Increase Prevention and Reconciliation Act of 2005, and this afternoon, I am making good on a promise I made on the Senate floor last week--to repeal the expanded withholding tax contained in H.R. 4297 to ensure that the bill does what its title claims, that is, prevents tax Increases.

Americans have been asking for tax relief. Congress answered this call, in part, when it passed the Tax Increase Prevention and Reconciliation Act of 2005. The lower taxes on capital gains and dividends--and the higher alternative minimum tax exemption amounts-- contained in H.R. 4297 will assist small businesses, encourage the kind of investment that creates jobs and makes our economy grow, and ensure fairer tax treatment for middle-income families who would otherwise be left footing the bill for a tax intended for the wealthy.

Alongside these tax relief provisions, however, conferees inserted a sweeping new withholding requirement that will raise taxes by nearly $7 billion. This bill seems to have a history of that. When the original tax reconciliation bill came before the Senate, it contained a windfall profits tax provision that would have imposed an additional $4.923 billion tax on the energy industry. I voted against it because the bill that was supposed to provide tax relief actually raised taxes. Although the conferees stripped this provision in conference, they replaced it with an even bigger tax hike--section 511's expanded withholding requirement.

Section 511 of H.R. 4297 imposes a new mandatory 3 percent withholding requirement on all payments for goods and services made to Federal, State, and local contractors. The provision, which is the largest revenue raiser in the bill, represents a significant shift in U.S. tax policy.

Withholding has not always been around. Despite predominant public opposition, Congress enacted mandatory withholding on Federal income tax in 1943 in order to fund World War II. As a result, tax collections jumped from $7.3 billion in 1939 to $43 billion in 1945. That is an increase of $35.7 billion in just 4 years. In congressional hearings on the issue, Congressmen spoke candidly of the revenues that needed to be ``fried out of the taxpayers.'' There was no doubt in the minds of lawmakers that the result of withholding would be an increase in the tax burden on the public.

Congress sought to expand withholding to dividends and interest in 1982, and public opposition was so profound that it was repealed 1 year later. Now, proponents of section 511's expanded withholding requirement say that it is necessary to close a ``tax loophole'' that allows taxpayers to avoid their tax obligations. There is no such ``loophole''--the Internal Revenue Service, IRS, has simply failed to do its job of collecting.

Information-reporting requirements are already in place to assist the IRS in its collection duties. Government entities are required to make an information return, reporting payments to corporations as well as individuals. Moreover, every head of every Federal executive agency that enters into contracts must file an information return reporting the contractor's name, address, date of contract action, amount to be paid to the contractor, and other information. Expanding withholding would now not only have the Federal Government spend taxpayers' dollars, but it would make taxpayers bear the burden and costs of collecting them, too.

The costs of section 511 are high--so high, in fact, that the Congressional Budget Office said that the provision constitutes an unfunded mandate on the State and local governments, exceeding the annual threshold established in the Unfunded Mandates Reform Act. The provision will also cause the cost of doing business to go up. A 3- percent withholding on multibillion dollar contracts--for as long as 15 months, held interest-free--will affect cash flows, investment, and cause businesses to raise prices in order to make up for losses, thereby putting them at a significant competitive disadvantage. Consider the Federal contract totals for Idaho and California alone. In fiscal year 2004, Idaho's nondefense contracts totaled $1.1 billion, and in fiscal year 2005, the State's defense contracts added up to $154 million. In fiscal year 2004, California's nondefense contracts totaled $9.4 billion, and in fiscal year 2005, the State had $30.9 billion in defense contracts.

The bill that I am introducing today, the Withholding Tax Relief Act of 2006, will repeal the $7 billion withholding tax contained in H.R. 4297. Tax relief should not be coupled with tax increases, and I will continue to work to give more meaning to the phrase in the bill's title, ``Tax Increase Prevention.'' This bill is a first step. I urge my colleagues to join me in support of this legislation.

I ask unanimous consent that the text of the bill be printed in the Record.