Refinery Investment Tax Assistance Act of 2007

Mr. President, this week, we celebrate Flag Day, and in a few weeks we will celebrate the Fourth of July.

We ask a lot from our men and women in the armed services, and their sacrifices are essential to protecting our freedom here at home. One way to support them is to make the Tax Code a little friendlier to the troops.

That is why I am introducing the Defenders of Freedom Tax Relief Act of 2007. This bill would extend the tax rules favoring the military that expire in 2007 and 2008. It would also eliminate roadblocks in the current tax laws that present difficulties for veterans and servicemembers.

Our troops should fight against our Nation's enemies, not our Nation's Tax Code. Family members of fallen soldiers killed in the line of duty receive a death benefit of $100,000. But the Tax Code restricts the survivors from contributing this benefit into a tax-favored retirement account. My bill would exempt this benefit from the current restrictions on contribution amounts and income limitations. That way, the family members of fallen soldiers could take advantage of tax- favored Roth IRA accounts.

Lower ranking, lower income soldiers do most of the heavy lifting in combat situations. Under the current Tax Code, their income is not counted in computing the earned income tax credit, or EITC. The EITC is a beneficial tax provision available to working Americans. It makes no sense to deny it to our troops. My bill would count combat duty income for EITC purposes, and it would make this change to the Tax Code permanent.

My bill would also eliminate the confusion that surrounds State gifts to servicemembers. Military members should not be caught in the crossfire of competing Tax Code interpretations.

Another hazard facing our troops in the Tax Code is the statute of limitations for filing a tax refund. Most Veterans' Administration disability claims filed by veterans are quickly resolved. But thousands of disability awards are delayed due to lost paperwork or the appeals of rejected claims. Once a disabled veteran finally gets a favorable award, the good news is that the disability award is tax-free. But many of these disabled veterans get ambushed by a statute that bars them from filing a tax refund claim. My bill would give disabled veterans in this situation an extra year to claim their tax refunds.

Our men and women in uniform provide an invaluable service to our country. They, along with their families, make sacrifices and live a demanding lifestyle. The Tax Code should not add to their hardships as they move from assignment to assignment around the globe.

Protecting American interests around the world requires most of our troops to move a number of times during their career. Restricting favorable mortgage bond financing to only first-time homebuyers does not make much sense for them. Therefore, my bill would eliminate this restriction for veterans who served in the active military.

The bill would make permanent a provision that allows intelligence community employees to make use of the exclusion of gain on the sale of their home when they are assigned overseas or 50 miles away from their home.

A soldier's rucksack is heavy enough as it is without piling tax paperwork on top of it. My bill would help reduce paperwork.

My bill would treat differential pay as wages. This would make it easer for employers to contribute to a reservist's retirement plans. And it would eliminate the reservist's need to make estimated tax payments.

My bill would also make permanent certain taxpayer information reporting rules, so that the Social Security Administration and the Veterans' Administration could facilitate the administration of veteran needs-based pension and compensation programs.

A further roadblock for military service men and women is the 10- percent penalty triggered for early withdrawal from a qualified retirement plan. If reservists are called to active duty, the last thing that they should have to worry about is their 401(k) plan or IRA account. This provision would permit penalty-free early withdrawal. And it would give reservists 2 years from the time that they stop active duty to roll over their IRAs or 401(k) plans.

Small business employers are being asked to make sacrifices here at home. My bill would help.

Mobilization of Reserve personnel creates unexpected employee absences. This hits small businesses especially hard. Some employers voluntarily take on the added burden of eliminating any pay gap experienced by their reservist-employees. These employers pay the difference between the civilian salary and the military pay. In recognition of their patriotism, my bill would provide small businesses with fewer than 50 employees a tax credit of 20 percent of the differential pay, up to $20,000, for those small businesses that make differential payments to reservists called up to active duty.

This bill is fully paid for with a change in the Tax Code that makes sure that anyone relinquishing their U.S. citizenship is still on the hook to pay their fair share of U.S. taxes.

We owe the Americans fighting in our Armed Forces an enormous debt of gratitude. These important tax reforms are one small way of saluting them for all that they do. I urge my colleagues to join me in supporting this measure.

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

Mr. President, today Senators Baucus, Grassley and I, along with other Finance Committee members, are introducing the Defenders of Freedom Tax Relief Act of 2007. Earlier in the year, Senator Smith and I introduced the Active Duty Military Tax Relief Act of 2007, which would help those who are valiantly serving their country and the families that they leave behind.

The Defenders of Freedom on Tax Relief Act of 2007 includes several provisions from the Active Duty Military Tax Relief Act of 2007. It also includes additional provisions to help military families and veterans who often struggle financially.

The best definition of patriotism is keeping faith with those who wear the uniform of our country. That means giving our troops the resources they need to keep them safe while they are protecting us. And it means supporting our troops at home as well as abroad.

Currently, there are over 149,700 military personnel serving in Iraq. There are approximately 22,100 U.S. servicemembers in Afghanistan. Many of these men and women are reservists and have been called to active duty, frequently for multiple tours.

Most large businesses have the resources to provide supplemental income to reservist employees called up and to replace them with temporary employees. I applaud the businesses that have been able to pay supplemental income to their reservists, but

it is not easy for small businesses to do the same.

In January, the Committee on Small Business and Entrepreneurship held a hearing on veterans' small business issues. A majority of our veterans returning from Iraq and Afghanistan are Reserve and National Guard members--35 percent of whom are either self-employed or own or are employed by a small business.

We heard some disturbing statistics about the impact and unintended consequences the call up of reservists is having on small businesses. According to a January 2007 survey conducted by Workforce Management, 54 percent of the businesses surveyed responded that they would not hire a citizen soldier if they knew that they could be called up for an indeterminate amount of time. I am concerned that long call ups and redeployments have made it hard for small businesses to be supportive of civilian soldiers.

The Active Duty Military Tax Relief Act of 2007 provides a tax credit to small businesses to assist with the cost of paying the salary of their reservist employees when they are called to active duty. A similar provision is included in the Defenders of Freedom Tax Relief Act of 2007.

In addition to helping small businesses, the Active Duty Military Tax Relief Act of 2007 addresses concerns related to differential military pay, income tax withholding, and retirement plan participation. These provisions will make it easier for employers who would like to pay their employees supplemental income, above their military pay, and make pension contributions. Our legislation would make differential military pay subject to Federal income tax withholding. In addition, with respect to the retirement plan rules, the bill provides that a person receiving differential military pay would be treated as an employee of the employer making the payment, and allows the differential military pay to be treated as compensation. These provisions are included in the Defenders of Freedom Tax Relief Act of 2007.

The Active Duty Military Tax Relief Act of 2007 would make permanent the existing provision which allows taxpayer to include combat pay as earned income for purposes of the earned-income tax credit, EITC. Without this provision some military families would no longer be eligible to receive the EITC because combat pay is currently not taxable.

Last Congress, Senator Smith and I introduced the Fallen Heroes Family Savings Act, which we have incorporated into the Active Duty Military Tax Relief Act. This provision provides tax relief for the death gratuity payment that is given to families who have lost a loved one in combat. This payment is currently $100,000.

Our current tax laws do not allow the recipients of this payment to use it to make contributions to tax-preferred saving accounts that help with saving for retirement. The Active Duty Military Tax Relief Act of 2007 would allow military death gratuities to be contributed to certain tax-preferred accounts. These contributions would be treated as qualified rollovers. A similar provision is included in the Defenders of Freedom Tax Relief Act of 2007.

Our service men and women need to know that we are honoring their valor by taking care of those they leave behind. Helping ease the tax burden on the death gratuity will enable military families to save more for retirement. These changes to our tax laws will help our military families with some of their financial burdens. It cannot repay the sacrifices they have made for us, but it is a small way we can support our troops and their families at home as well as abroad.

Mr. President, today I rise to reintroduce my legislation, the Refinery Investment Tax Assistance Act, aimed at increasing refining capacity in this Nation. No one doubts that U.S. consumers and businesses will face another long hot summer of too high gas prices. There is general consensus among experts that a major bottleneck in U.S. refining capacity is a big part of the reason prices are so high. My bill will help resolve that problem.

As my colleagues know, the Government does not explore for, extract, transport, or refine oil in this country. Our Nation relies wholly on private industry to feed a very large domestic energy appetite. Unfortunately, the Government often stands in the way of industry in these activities. While many refiners would like to expand their capacity to refine oil, they face extraordinary costs from bureaucratic regulations that limit the available funding for such expansion. Because of this and other unfriendly economic factors, not a single new refinery has been built in the United States since 1976. In fact, we have lost nearly 200 refineries over that time period and now we badly need that refining capacity.

I authored a key provision of the Energy Policy Act of 2005, which is currently providing some incentives for new refining capacity. However, due to budgetary constraints, the tax incentives in my proposal were cut in half during the conference between the House and the Senate. I am confident that if we had known 2 years ago just how much of a bottleneck the refinery shortage would present in today's market, the full measure of my incentive would have been enacted.

The Refinery Investment Tax Assistance Act would restore those provisions I originally introduced, but which were later removed for budget reasons. First, it would increase the short-term incentive for the industry to build new refineries or to expand existing ones. As with the 2005 bill, S. 1591 would provide immediate expensing of 100 percent of the cost of new or expanded refineries in certain circumstances. As I said earlier, cost constraints forced us to limit this incentive in 2005 to 50 percent of expensing for refiners that were able to commit to installing new refining equipment before 2008. Under this bill, any added capacity would have to be placed in service by 2012 in order to qualify to write off the full cost of the expanded capacity in the first year.

The second part of S. 1591 would address the 10-year depreciation schedule for refining assets under our current tax law. This 10-year schedule is longer than the write-off period for much of the equipment used in other manufacturing industries, including the petrochemical industry. My bill would eliminate this disparity by shortening the depreciation schedule for refining assets from 10 years to 5. This unfair and unwarranted treatment of our refining industry acts as a long-term obstacle to new investment in increased capacity. I call on my colleagues to help me level the playing field on depreciation for this critically important sector of our energy industry.

I should also point out that this legislation would allow refineries to change only the timing of the depreciation of their equipment, but not the amount. Meanwhile, it would increase the size of our tax base by encouraging industry to build new refineries and increase capacity.

Testifying before the Senate Energy and Natural Resources Committee in 2005, Mr. Bob Slaughter of the National Petrochemical & Refiners Association said that an important solution to the energy crisis would be to ``expand the refining tax incentive provision in the Energy Act [and] reduce the depreciation period for refining investments from 10 to . . . five years in order to remove a current disincentive for refining investment.''

These changes are incorporated in the legislation I am introducing today.

Mr. Slaughter gave this testimony in the aftermath of hurricane Katrina. Every American has felt the effects of the storms on our energy sector. Refineries have been pummeled and, at one point, an unprecedented 25 percent of our Nation's refining capacity was taken offline. The rising gas prices hurt families' budgets, businesses that pay high travel expenses, and even school districts that must fuel buses to transport students. Once again, forecasters are predicting a terrible storm season this summer with hurricanes comparable to those of 2005.

We have learned that when it comes to our Nation's energy security, refining is where we are the most vulnerable. This legislation will help us deal with the energy crisis and make our Nation more secure from the attacks of Mother Nature and terrorists. I hope my colleagues will join me in pursuing the secure and independent refining program that this country truly needs. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I rise to reintroduce my legislation, the Refinery Investment Tax Assistance Act, aimed at increasing refining capacity in this Nation. No one doubts that U.S. consumers and businesses will face another long hot summer of too high gas prices. There is general consensus among experts that a major bottleneck in U.S. refining capacity is a big part of the reason prices are so high. My bill will help resolve that problem.

As my colleagues know, the Government does not explore for, extract, transport, or refine oil in this country. Our Nation relies wholly on private industry to feed a very large domestic energy appetite. Unfortunately, the Government often stands in the way of industry in these activities. While many refiners would like to expand their capacity to refine oil, they face extraordinary costs from bureaucratic regulations that limit the available funding for such expansion. Because of this and other unfriendly economic factors, not a single new refinery has been built in the United States since 1976. In fact, we have lost nearly 200 refineries over that time period and now we badly need that refining capacity.

I authored a key provision of the Energy Policy Act of 2005, which is currently providing some incentives for new refining capacity. However, due to budgetary constraints, the tax incentives in my proposal were cut in half during the conference between the House and the Senate. I am confident that if we had known 2 years ago just how much of a bottleneck the refinery shortage would present in today's market, the full measure of my incentive would have been enacted.

The Refinery Investment Tax Assistance Act would restore those provisions I originally introduced, but which were later removed for budget reasons. First, it would increase the short-term incentive for the industry to build new refineries or to expand existing ones. As with the 2005 bill, S. 1591 would provide immediate expensing of 100 percent of the cost of new or expanded refineries in certain circumstances. As I said earlier, cost constraints forced us to limit this incentive in 2005 to 50 percent of expensing for refiners that were able to commit to installing new refining equipment before 2008. Under this bill, any added capacity would have to be placed in service by 2012 in order to qualify to write off the full cost of the expanded capacity in the first year.

The second part of S. 1591 would address the 10-year depreciation schedule for refining assets under our current tax law. This 10-year schedule is longer than the write-off period for much of the equipment used in other manufacturing industries, including the petrochemical industry. My bill would eliminate this disparity by shortening the depreciation schedule for refining assets from 10 years to 5. This unfair and unwarranted treatment of our refining industry acts as a long-term obstacle to new investment in increased capacity. I call on my colleagues to help me level the playing field on depreciation for this critically important sector of our energy industry.

I should also point out that this legislation would allow refineries to change only the timing of the depreciation of their equipment, but not the amount. Meanwhile, it would increase the size of our tax base by encouraging industry to build new refineries and increase capacity.

Testifying before the Senate Energy and Natural Resources Committee in 2005, Mr. Bob Slaughter of the National Petrochemical & Refiners Association said that an important solution to the energy crisis would be to ``expand the refining tax incentive provision in the Energy Act [and] reduce the depreciation period for refining investments from 10 to . . . five years in order to remove a current disincentive for refining investment.''

These changes are incorporated in the legislation I am introducing today.

Mr. Slaughter gave this testimony in the aftermath of hurricane Katrina. Every American has felt the effects of the storms on our energy sector. Refineries have been pummeled and, at one point, an unprecedented 25 percent of our Nation's refining capacity was taken offline. The rising gas prices hurt families' budgets, businesses that pay high travel expenses, and even school districts that must fuel buses to transport students. Once again, forecasters are predicting a terrible storm season this summer with hurricanes comparable to those of 2005.

We have learned that when it comes to our Nation's energy security, refining is where we are the most vulnerable. This legislation will help us deal with the energy crisis and make our Nation more secure from the attacks of Mother Nature and terrorists. I hope my colleagues will join me in pursuing the secure and independent refining program that this country truly needs. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce the Maritime Hazardous Cargo Security Act of 2007 along with my colleagues Senators Inouye, Stevens, and Smith. As the bipartisan leaders of the Senate Committee on Commerce, Science, and Transportation and its Subcommittee on Surface Transportation and Merchant Marine Safety, Security, and Infrastructure, we have been working together over the course of this session to evaluate the risks posed by the transportation of especially hazardous cargo in the maritime sector. This bill is the result of exhaustive research and consultation with affected industries and the Department of Homeland Security. Ships bringing liquefied natural gas, LNG, from foreign ports as well as the facilities along America's shores that handle LNG must be better secured against terrorism.

With so much focus on hazardous cargo that is transported on our roads and railways, we must not neglect the much larger shipments of hazardous cargoes that are carried by vessel. Energy supply challenges in our country have led to the proposals for approximately 70 new shoreside facilities in the United States to receive liquefied natural gas via oceangoing tank vessel. Many of the safety and security risks of the transportation of this commodity are known and have been detailed by the Government Accountability Office. Furthermore, other chemicals and petrochemicals can present even greater security risks.

The shipping system for these commodities is international in scope, so our bill would require the administration to work with our international trading partners to develop standards of care to adequately protect those ships, facilities, employees and nearby communities and residents from attacks involving these and other hazardous cargoes. Our proposal would require significant steps to protect the safety and security of our regional and national economies, and the public health, from the potential hazards of high risk cargo transported by ship.

Specifically the Maritime Hazardous Cargo Act of 2007 would: Direct the Administration to work with international partners to develop standards and procedures for the safe and secure handling of especially hazardous cargoes, EHC, for all vessels and port facilities; require successful completion of U.S. Coast Guard Incident Command System, ICS, training for all personnel responsible for the safety and security of a vessel in port; require the Department of Homeland Security to develop regional response and recovery plans for the resumption of commerce after disruption by a security incident; authorize the U.S. Coast Guard to develop cost share plans for security costs associated with high- risk U.S. facilities; authorize assistance to foreign ports that handle and transport EHC's for the purpose of complying with or exceeding current International Ship and Port Facility Code, ISPFC, standards; authorize voluntary third party validation of international port facilities to certify they meet or exceed international safety standards; and require the U.S. Coast Guard to develop a resource allocation plan to show how its proposed budget will be used for EHC security operations and to report to Congress biannually.

In summary, the Maritime Hazardous Cargo Act of 2007 will require strengthening of Federal protections against terrorist attacks on facilities and vessels that transport, handle, and store especially hazardous cargoes, EHC's. The transportation of EHC's by ship can pose a significant risk to the public safety and the economic security of the Nation, particularly the transportation of chemicals and petrochemicals such as anhydrous ammonia, ammonium nitrate, chlorine, liquefied natural gas and liquefied petroleum gas. Currently, no international standards exist for the safe and secure handling of these chemicals/petrochemicals by ship and limited U.S. Coast Guard resources for EHC security poses a dangerous risk to our communities. Further, I intend to work with my cosponsors and other colleagues to ensure there are sufficient resources in the Federal budget to carry out the provisions of the bill.

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