Art and Collectibles Capital Gains Tax Treatment Parity Act

Mr. President, in 2003, Senator Campbell and I, joined by 68 other Senators, introduced a bill that allowed a qualified retired or current law enforcement officer to carry a concealed firearm across State lines. The Senate passed our bill by unanimous consent, which was signed into law in July 2004. Passage of the Law Enforcement Safety Officers Act was a resounding vote of confidence in the men and women who serve their communities as protectors of the peace, and their Nation as the first line of defense in any emergency.

But since enactment of the Law Enforcement Officers Safety Act, it has become clear that qualified retired officers have been subject to varying and complex certification procedures from State to State. In many cases, differing interpretations have complicated the implementation of the law, and retired officers have experienced significant frustration in getting certified to lawfully carry a firearm.

With the input of the law enforcement community, this bill proposes modest amendments to streamline the current law, which will give retired officers more flexibility in obtaining certification, and provides room for the variability in certification standards among the several States. For example, where a State has not set active duty standards, the retired officer can be certified pursuant to the standards set by any law enforcement agency in the State.

In addition to these adjustments, the bill also makes clear that Amtrak officers, along with officers of the Executive branch of the Federal Government, are covered by the law. The bill also reduces from 15 to 10 the years of service required for a retired officer to qualify under the law. Though these changes broaden the reach of the law, the requirements for eligibility still involve a significant term of service for a retired officer to qualify, and a demonstrated commitment to law enforcement.

This bill makes sensible improvements to existing law by providing the flexibility needed to permit qualified retired law enforcement officers to carry concealed firearms in a legal and responsible manner.

With the enactment of the Law Enforcement Officers Safety Act, Congress and the President also recognized that law enforcement officers are never ``off-duty.'' The dedicated public servants who are trained to uphold the law and keep the peace deserve our support not just in their professional lives, but also when they go off-duty or into retirement. Convicted criminals often have long and exacting memories, and to the extent we can, we must aid these public servants with the tools they need to keep themselves and their families safe. Because one thing we know for sure is that a law enforcement officer is a target, whether in uniform or out, and whether active or retired. We also act in our own interest when we help law enforcement officers with the ability to answer the call of duty wherever they may be. Society's trust in the men and women who serve should include the faith that the responsibilities we entrust to them do not disappear once State lines are crossed.

In 2004, Congress listened carefully to the concerns of the law enforcement community and responded appropriately. Let us do so again with these sensible improvements.

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

Mr. President, I was disappointed at the end of last Congress that, like so much other urgent business of the American people left unattended, we did not pass a measure to improve court security. We made some progress on this important issue when the Senate passed a consensus bipartisan court security bill. Unfortunately we were unable to cross the finish line because the House Republican leadership did not take up this bill. And so that still eaves our Nation's judges and their families without the vital protections that bill would have provided.

Today, I join with other Senators on both sides of the aisle to try again. Along with the Majority Leader Senator Reid; the Judiciary Committee's Ranking Member, Senator Specter; the Majority Whip, Senator Durbin; and Senators Kennedy, Schumer, Cornyn, Hatch and Collins, I introduce the Court Security Improvement Act of 2007, a consensus measure with bipartisan support nearly identical to the bill we passed in the Senate last December. House Judiciary Chairman Conyers is introducing an identical measure in the House with bipartisan support. This bi-cameral, bi-partisan introduction sends a strong message that we intend finally to finish this difficult struggle and enact this bill that should have been enacted months ago to increase protections for the dedicated women and men throughout the Judiciary in this country.

This is an important issue, and one I plan to make a priority this Congress. I hope that we can have quick action on this bill to bring to fruition our efforts to provide increased security, an effort that gained new urgency after the tragedy that befell Judge Joan Lefkow of Chicago. She is the Federal judge whose mother and husband were murdered in their home. As we heard in her courageous testimony in May 2005 before the Judiciary Committee, this tragedy provided a terrible reminder not only of the vulnerable position of our judges and their families, but of the critical importance of protecting judges both where they work and where they and their families live. The shooting last summer of a State judge in Nevada provided another terrible reminder of the vulnerable position of our Nation's State and Federal judges. We cannot tolerate or excuse or justify violence or the threat of violence against judges.

In a speech last year, Justice Sandra Day O'Connor criticized the uncivil tone of attacks on the courts, noting that they pose a danger to the very independence of the Federal judiciary. It is most unfortunate that some in this country have chosen to use dangerous and irresponsible rhetoric when talking about judges, comparing judges to terrorists and threatening judges with punishment for decisions they do not like. This rhetoric can only foster unacceptable violence against judges and it must stop, for the sake of our judges and the independence of the judiciary. Judicial fairness and independence are essential if we are to maintain our freedoms. Our independent judiciary is the envy of the rest of the world and a great source of our national strength and resilience. Let no one say things that might bring about further threats against our judges. We ought to be protecting them physically and institutionally.

When I last chaired the Judiciary Committee, one of my first efforts was pushing for passage of the Judicial Protection Act, which toughened criminal penalties for assaults against judges and their families. In order to meet the continuing challenges of keeping the Federal judiciary safe, in the last Congress Chairman Specter and I introduced S. 1968, the Court Security Improvement Act of 2005.

The bill we are introducing today in the Senate and House is a consensus bipartisan bill. I hope that quick action and passage of this bill can serve as a model for what we can achieve with bipartisan cooperation in the 110th Congress. Its core provisions, which previously passed the Senate not only last December, but also in June as part of the managers' package of the ``John Warner National Defense Authorization Act for Fiscal Year 2007,'' S. 2766, come the Court Security Improvement Act of 2005.

The bill responds to the needs expressed by the Federal judiciary for a

greater voice in working with the United States Marshals Service to determine their security needs. It enacts new criminal penalties for the misuse of restricted personal information to harm or threaten to harm Federal judges, their families or other individuals performing official duties. It enacts criminal penalties for threatening Federal judges and Federal law enforcement officials by the malicious filing of false liens, and provides increased protections for witnesses. The bill also contains provisions making available to States new resources to improve security for State and local court systems as well as providing additional protections for law enforcement officers. I am pleased that the bill includes an extension of life insurance benefits to bankruptcy, magistrate and territorial judges.

Finally, the bill contains provisions that have passed the Senate several times extending and expanding to family members the authority of the Judicial Conference to redact certain information from a Federal judge's mandatory financial disclosure. This expired redaction authority was used in circumstances in which the release of the information could endanger the filer or the filer's family. I hope that we can reinstate and expand this much needed redaction authority.

These protections are crucial to the preservation of the independence of our Federal judiciary so that it can continue to serve as a bulwark protecting individual rights and liberty. Our Nation's Founders knew that without an independent judiciary to protect individual rights from the political branches of government, those rights and privileges would amount to nothing. It is the ultimate check and balance in our system of government in times of heated political rhetoric.

We owe it to our judges to better protect them and their families from violence and to ensure that they have the peace of mind necessary to do their vital and difficult jobs.

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

Mr. President, I am pleased to join my colleagues, Senators Harkin, Kennedy, Coleman, Pryor, Cantwell, Durbin, Mikulski, Bingaman, Lautenberg and Kerry, in introducing the ``Keeping Families Together Act.'' This legislation is intended to reduce the barriers to care for children with serious mental illness so that their parents are no longer forced to give up custody solely for the purpose of securing mental health treatment.

Serious mental illness afflicts millions of our Nation's children and adolescents. It is estimated that as many as 20 percent of American children under the age of 17 suffer from a mental, emotional or behavioral illness. What I find most disturbing, however, is the fact that two-thirds of all young people who need mental health treatment are not getting it.

Behind each of these statistics is a family that is struggling to do the best it can to help a son or daughter with serious mental health needs to be just like every other kid--to develop friendships, to do well in school, and to get along with their siblings and other family members. These children are almost always involved with more than one social service agency, including the mental health, special education, child welfare, and juvenile justice systems. Yet no one agency, at either the State or the Federal level, is clearly responsible or accountable for helping these children and their families.

My interest in this issue was triggered by a compelling series of stories by Barbara Walsh in the Portland Press Herald which detailed the obstacles that many Maine families have faced in getting desperately needed mental health services for their children. Too many families in Maine and elsewhere have been forced to make wrenching decisions when they have been advised that the only way to get the care that their children so desperately need is to relinquish custody and place them in either the child welfare or juvenile justice system.

When a child has a serious physical health problem like diabetes or a heart condition, the family turns to their doctor. When the family includes a child with a serious mental illness, it is often forced to go to the child welfare or juvenile justice system to secure treatment.

Yet neither system is intended to serve children with serious mental illness. Child welfare systems are designed to protect children who have been abused or neglected. Juvenile justice systems are designed to rehabilitate children who have committed criminal or delinquent acts. While neither of these systems is equipped to care for a child with a serious mental illness, in far too many cases, there is nowhere else for the family to turn.

In some extreme cases, families feel forced to file charges against their child or to declare that they have abused or neglected them in order to get the care that they need. As one family advocate observed, ``Beat `em up, lock `em up, or give `em up,'' characterizes the choices that some families face in their efforts to get help for their children's mental illness.

In 2003, the Government Accountability Office (GAO) issued a report that I requested with Representatives Pete Stark and Patrick Kennedy that found that, in 2001, parents placed more than 12,700 children into the child welfare or juvenile justice systems so that these children could receive mental health services. This likely is just the tip of the iceberg, since 32 States--including five States with the largest populations of children--did not provide the GAO with any data.

Other studies indicate that the problem is even more pervasive. A 1999 survey by the National Alliance on Mental Illness found that 23 percent--or one in four of the parents surveyed--had been told by public officials that they needed to relinquish custody of their children to get care, and that one in five of these families had done so.

Some States have passed laws to limit custody or prohibit custody relinquishment. Simply banning the practice is not a solution, however, since it can leave children with mental illness and their families without services and care. Custody relinquishment is merely a symptom of the much larger problem, which is the lack of available, affordable and appropriate mental health services and support systems for these children and their families.

In 2003 and 2004, I chaired a series of hearings in the Homeland Security and Governmental Affairs Committee to examine this issue further. We heard compelling testimony from mothers who told us that they were advised that the only way to get the intensive care and services that their children needed was to relinquish custody and place them in the child welfare or juvenile justice system. This is a wrenching decision that no family should be forced to make. No parent should have to give up custody of his or her child just to get the services that the child needs.

The mothers also described the barriers they faced in getting care for their children. They told us about the limitations in both public and private insurance coverage. They also talked about the lack of coordination and communication among the various agencies and programs that service children with mental health needs. One parent, desperate for help for her twin boys, searched for two years until she finally located a program--which she characterized as ``the best kept secret in Illinois''--that was able to help.

Parents should not be bounced from agency to agency, knocking on every door they come to, in the hope that they will happen upon someone who has an answer. It simply should not be such a struggle for parents to get services and treatment for their children.

We also need to question what happens to these children when they are turned over to the child welfare or juvenile justice authorities. I released a report in 2004 with Congressman Henry Waxman that found that all too often they are simply left to languish in juvenile detention centers, which are ill-equipped to meet their needs, while they wait for scarce mental health services.

Our report, which was based on a national survey of juvenile detention centers, found that the use of juvenile detention facilities to ``warehouse'' children with mental disorders is a serious national problem. It found that, over a six month period, nearly 15,000 young people--roughly seven percent of all of the children in the centers surveyed--were detained solely because they were waiting for mental health services outside the juvenile justice system. Many were held without any charges pending against them, and the young people incarcerated unnecessarily while waiting for treatment were as young as seven years old. Finally, the report estimated that juvenile detention facilities are spending an estimated $100 million of the taxpayers' money each year simply to warehouse children and teenagers while they are waiting for mental health services.

The Keeping Families Together Act, which we are introducing today, will help to improve access to mental health services and assist states in eliminating the practice of parents relinquishing custody of their children solely for the purpose of securing treatment.

The legislation authorizes $100 million over six years for competitive grants to states to create an infrastructure to support and sustain statewide systems of care to serve children who are in custody or at risk of entering custody of the State for the purpose of receiving mental health services. States already dedicate significant dollars to serve children in state custody. These Family Support Grants would help states to serve children more effectively and efficiently, while keeping them at home with their families.

In addition, the legislation calls for the creation of a federal interagency task force to examine mental health issues in the child welfare and juvenile justice systems and the role of those agencies in promoting access by children and youth to needed mental health services. The task force would also be charged with monitoring the Family Support grants, making recommendations to Congress on how to improve mental health services, and fostering interagency cooperation and removing interagency barriers that contribute to the problem of custody relinquishment.

The Keeping Families Together Act takes a critical step forward to meeting the needs of children with serious mental or emotional disorders. Our legislation has been endorsed by a broad coalition of mental health and children's groups, including the National Alliance on Mental Illness, the Bazelon Center for Mental Health Law, Mental Health America, the American Psychological Association, and the American Psychiatric Association. I ask unanimous consent that letters from these organizations endorsing the bill be printed in the Record.

The Keeping Families Together Act will help to reduce the barriers to care for children with serious mental illness, and I urge our colleagues to join us as cosponsors.

Mr. President, I rise today to introduce again legislation to eliminate one of the great inconsistencies in the Internal Revenue Code. I would like to thank my colleague, the senior Senator from New York, Senator Schumer, for again working with me on this important piece of legislation.

The bill we are introducing today is designed to restore some internal consistency to the tax code as it applies to art and artists. No one has ever said that the tax code is fair even though it has always been a theoretical objective of the code to treat similar taxpayers similarly.

Our bill would address two areas where similarly situated taxpayers are not treated the same. These two areas are internal inconsistencies contained within the tax code. Internal inconsistency number one deals with the long-term capital gains tax treatment of investments in art and collectibles. The second internal inconsistency involves how charitable contributions of art by the artist are treated under the law.

Long-term capital gains tax treatment of art is inherently unfair. If a person invests in stocks or bonds and sells at a gain, the tax treatment is long term capital gains. The top capital gains tax rate is 15 percent. However, if the same person invests in art or collectibles the top rate is hiked up to 28 percent. Art for art's sake should not incur a higher tax rate simply for revenue's sake. That is a big impact on the pocketbook of the investor.

Art and collectibles are alternatives to financial instruments as an investment choice. To create a tax disadvantage with respect to one investment compared to another creates an artificial market and may lead to poor investment allocations. It also adversely impacts those who make their livelihood in the cultural sectors of the economy.

Santa Fe, NM, is the third largest art market in the country. We have a diverse colony of artists, collectors and

gallery owners. We have fabulous Native American rug weavers, potters and carvers. Creative giants like Georgia O'Keeffe, Maria Martinez, E. L. Blumenshein, Allan Houser, R.C. Gorman, and Glenna Goodacre have all chosen New Mexico as their home and as their artistic subject. John Nieto, Wilson Hurley, Clark Hulings, Veryl Goodnight, Bill Acheff, Susan Rothenberg, Bruce Nauman, Agnes Martin, Doug Hyde, Margaret Nez, and Dan Ostermiller are additional examples of living artists creating art in New Mexico.

Art, antiques, and collectibles are a $12 to $20 billion annual industry nationwide. In New Mexico, it has been estimated that art and collectible sales range between $500 million and one billion a year.

Economists have always been interested in the economics of the arts. Adam Smith is a well-known economist. He was also a serious, but little-known essayist on painting, dancing, and poetry. Similarly, Keynes was both a famous economist and a passionate devotee of painting. However, even artistically inclined economists have found it difficult to define art within the context of economic theory.

When asked to define jazz, Louis Armstrong replied: ``If you gotta ask, you ain't never going to know.'' A similar conundrum has challenged Galbraith and other economists who have grappled with the definitional issues associated with bringing art within the economic calculus. Original art objects are, as a commodity group, characterized by a set of attributes: every unit of output is differentiated from every other unit of output; art works can be copied but not reproduced; and the cultural capital of the nation has significant elements of public good.

Because art works can be resold, and their prices may rise over time, they have the characteristics of financial assets, and as such may be sought as a hedge against inflation, as a store of wealth, or as a source of speculative capital gain. A study by Keishiro Matsumoto, Samuel Andoh and James P. Hoban, Jr. assessed the risk-adjusted rates of return on art sold at Sotheby's during the 14-year period ending September 30, 1989. They concluded that art was a good investment in terms of average real rates of return. Several studies found that rates of return from the price appreciation on paintings, comic books, collectibles and modern prints usually made them very attractive long- term investments. Also, when William Goetzmann was at the Columbia Business School, he constructed an art index and concluded that painting price movements and stock market fluctuations are correlated.

I conclude that with art, as well as stocks, past performance is no guarantee of future returns, but the gains should be taxed the same.

In 1990, the editor of Art and Auction asked the question: ``Is there an `efficient' art market?'' A well-known art dealer answered ``Definitely not. That's one of the things that makes the market so interesting.'' For everyone who has been watching world financial markets lately, the art market may be a welcome distraction.

Why do people invest in art and collectibles? Art and collectibles are something you can appreciate even if the investment doesn't appreciate. Art is less volatile. If buoyant and not so buoyant bond prices drive you berserk and spiraling stock prices scare you, art may be the appropriate investment for you. Because art and collectibles are investments, the long-term capital gains tax treatment should be the same as for stocks and bonds. This bill would accomplish that.

Artists will benefit. Gallery owners will benefit. Collectors will benefit. And museums benefit from collectors. About 90 percent of what winds up in museums like New York's Metropolitan Museum of Art comes from collectors.

Collecting isn't just for the hoyty toity. It seems that everyone collects something. Some collections are better investments than others. Some collections are just bizarre. The internet makes collecting big business, and flea market fanatics are avid collectors. In fact, people collect the darndest things. Books, duck decoys, chia pets, snowglobes, thimbles, handcuffs, spectacles, baseball cards, teddy bears, and guns are a few such ``collectibles''.

For most of these collections, capital gains isn't really an issue, but you never know. You may find that your collecting passion has created a tax predicament--to phrase it politely. Art and collectibles are tangible assets. When you sell them, capital gains tax is due on any appreciation over your purchase price.

The bill provides capital gains tax parity because it lowers the top capital gains rate from 28 percent to 15 percent.

As I stated earlier, the second internal inconsistency deals with the charitable deduction for artists donating their work to a museum or other charitable cause. When someone is asked to make a charitable contribution to a museum or to a fund raising auction, it shouldn't matter whether that person is an artist or not. Under current law, however, it makes a big difference. As the law stands now, an artist/ creator can only take a deduction equal to the cost of the art supplies. Our bill will allow a fair market deduction for the artist.

It's important to note that our bill includes certain safeguards to keep the artist from ``painting himself a tax deduction.'' This bill applies to literary, musical, artistic, and scholarly compositions if the work was created at least 18 months before the donation was made, has been appraised, and is related to the purpose or function of the charitable organization receiving the donation. As with other charitable contributions, it is limited to 50 percent of adjusted gross income (AGI). If it is also a capital gain, there is a 30 percent of AGI limit. Mr. President, I believe these safeguards bring fairness back into the code and protect the Treasury against any potential abuse.

I hope my colleagues will help us put this internal consistency into the Internal Revenue Code.

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

Mr. President, I rise today to introduce again legislation to eliminate one of the great inconsistencies in the Internal Revenue Code. I would like to thank my colleague, the senior Senator from New York, Senator Schumer, for again working with me on this important piece of legislation.

The bill we are introducing today is designed to restore some internal consistency to the tax code as it applies to art and artists. No one has ever said that the tax code is fair even though it has always been a theoretical objective of the code to treat similar taxpayers similarly.

Our bill would address two areas where similarly situated taxpayers are not treated the same. These two areas are internal inconsistencies contained within the tax code. Internal inconsistency number one deals with the long-term capital gains tax treatment of investments in art and collectibles. The second internal inconsistency involves how charitable contributions of art by the artist are treated under the law.

Long-term capital gains tax treatment of art is inherently unfair. If a person invests in stocks or bonds and sells at a gain, the tax treatment is long term capital gains. The top capital gains tax rate is 15 percent. However, if the same person invests in art or collectibles the top rate is hiked up to 28 percent. Art for art's sake should not incur a higher tax rate simply for revenue's sake. That is a big impact on the pocketbook of the investor.

Art and collectibles are alternatives to financial instruments as an investment choice. To create a tax disadvantage with respect to one investment compared to another creates an artificial market and may lead to poor investment allocations. It also adversely impacts those who make their livelihood in the cultural sectors of the economy.

Santa Fe, NM, is the third largest art market in the country. We have a diverse colony of artists, collectors and

gallery owners. We have fabulous Native American rug weavers, potters and carvers. Creative giants like Georgia O'Keeffe, Maria Martinez, E. L. Blumenshein, Allan Houser, R.C. Gorman, and Glenna Goodacre have all chosen New Mexico as their home and as their artistic subject. John Nieto, Wilson Hurley, Clark Hulings, Veryl Goodnight, Bill Acheff, Susan Rothenberg, Bruce Nauman, Agnes Martin, Doug Hyde, Margaret Nez, and Dan Ostermiller are additional examples of living artists creating art in New Mexico.

Art, antiques, and collectibles are a $12 to $20 billion annual industry nationwide. In New Mexico, it has been estimated that art and collectible sales range between $500 million and one billion a year.

Economists have always been interested in the economics of the arts. Adam Smith is a well-known economist. He was also a serious, but little-known essayist on painting, dancing, and poetry. Similarly, Keynes was both a famous economist and a passionate devotee of painting. However, even artistically inclined economists have found it difficult to define art within the context of economic theory.

When asked to define jazz, Louis Armstrong replied: ``If you gotta ask, you ain't never going to know.'' A similar conundrum has challenged Galbraith and other economists who have grappled with the definitional issues associated with bringing art within the economic calculus. Original art objects are, as a commodity group, characterized by a set of attributes: every unit of output is differentiated from every other unit of output; art works can be copied but not reproduced; and the cultural capital of the nation has significant elements of public good.

Because art works can be resold, and their prices may rise over time, they have the characteristics of financial assets, and as such may be sought as a hedge against inflation, as a store of wealth, or as a source of speculative capital gain. A study by Keishiro Matsumoto, Samuel Andoh and James P. Hoban, Jr. assessed the risk-adjusted rates of return on art sold at Sotheby's during the 14-year period ending September 30, 1989. They concluded that art was a good investment in terms of average real rates of return. Several studies found that rates of return from the price appreciation on paintings, comic books, collectibles and modern prints usually made them very attractive long- term investments. Also, when William Goetzmann was at the Columbia Business School, he constructed an art index and concluded that painting price movements and stock market fluctuations are correlated.

I conclude that with art, as well as stocks, past performance is no guarantee of future returns, but the gains should be taxed the same.

In 1990, the editor of Art and Auction asked the question: ``Is there an `efficient' art market?'' A well-known art dealer answered ``Definitely not. That's one of the things that makes the market so interesting.'' For everyone who has been watching world financial markets lately, the art market may be a welcome distraction.

Why do people invest in art and collectibles? Art and collectibles are something you can appreciate even if the investment doesn't appreciate. Art is less volatile. If buoyant and not so buoyant bond prices drive you berserk and spiraling stock prices scare you, art may be the appropriate investment for you. Because art and collectibles are investments, the long-term capital gains tax treatment should be the same as for stocks and bonds. This bill would accomplish that.

Artists will benefit. Gallery owners will benefit. Collectors will benefit. And museums benefit from collectors. About 90 percent of what winds up in museums like New York's Metropolitan Museum of Art comes from collectors.

Collecting isn't just for the hoyty toity. It seems that everyone collects something. Some collections are better investments than others. Some collections are just bizarre. The internet makes collecting big business, and flea market fanatics are avid collectors. In fact, people collect the darndest things. Books, duck decoys, chia pets, snowglobes, thimbles, handcuffs, spectacles, baseball cards, teddy bears, and guns are a few such ``collectibles''.

For most of these collections, capital gains isn't really an issue, but you never know. You may find that your collecting passion has created a tax predicament--to phrase it politely. Art and collectibles are tangible assets. When you sell them, capital gains tax is due on any appreciation over your purchase price.

The bill provides capital gains tax parity because it lowers the top capital gains rate from 28 percent to 15 percent.

As I stated earlier, the second internal inconsistency deals with the charitable deduction for artists donating their work to a museum or other charitable cause. When someone is asked to make a charitable contribution to a museum or to a fund raising auction, it shouldn't matter whether that person is an artist or not. Under current law, however, it makes a big difference. As the law stands now, an artist/ creator can only take a deduction equal to the cost of the art supplies. Our bill will allow a fair market deduction for the artist.

It's important to note that our bill includes certain safeguards to keep the artist from ``painting himself a tax deduction.'' This bill applies to literary, musical, artistic, and scholarly compositions if the work was created at least 18 months before the donation was made, has been appraised, and is related to the purpose or function of the charitable organization receiving the donation. As with other charitable contributions, it is limited to 50 percent of adjusted gross income (AGI). If it is also a capital gain, there is a 30 percent of AGI limit. Mr. President, I believe these safeguards bring fairness back into the code and protect the Treasury against any potential abuse.

I hope my colleagues will help us put this internal consistency into the Internal Revenue Code.

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

Mr. President, today I rise to discuss an issue that is near and dear to my heart, because it involves children and youth in our foster care system. Inconsistencies in our Federal wage laws, coupled with increases in the minimum wage, are financially crippling the private, non-profit organizations and institutions that make up a necessary part of our communities' support systems for the most vulnerable in our society, the children.

More than 500,000 children are in America's foster care system at any given time, because their own families are in crisis or unable to provide for their essential well-being--most because they have been subject to abuse and neglect. Thankfully, most of these children are able to be placed with individual caring families. But for those children without a suitable or available foster family, they are placed in one of the many group homes associated with our foster care system.

Many of these group homes are specially tailored to the specific needs of foster care children by offering unique programs and on-site education to help heal the emotional scarring they have experienced.

These homes--often run by private, non-profit organizations--are dedicated to providing residential care and treatment for the ``orphans of the living,'' and they have long been a vital part of the social service networks in America's communities.

An essential component of the foster care network is the presence of caring parents in a family-like situation. And as in traditional parenting, the houseparents of group foster homes seek to provide the same love, care, and supervision of a traditional family for the five to eight children that reside with them.

Houseparents volunteer to permanently reside at the group home in order to create a family- like environment for those without a true sense of home--one that offers a structured atmosphere where these most vulnerable youth can heal, grow, and become productive members of society.

Foster care alumni studies show us that it is the consistent and life-long connection of caring foster parents that plays the biggest role in helping foster children transition into society.

However, our current laws are working against this cause, forcing group homes to move away from what they know is best for the children and preventing them from providing the most appropriate and consistent care. These youth so desperately need the stability that a family- like situation can provide. And this is what my amendment seeks to address.

Traditionally, in addition to a modest, fixed salary, houseparents have received food, lodging, insurance, and transportation free of charge.

In 1974, Congress recognized and confirmed the unique role houseparents serve when it passed the Hershey Exemption. This amended the Fair Labor Standards Act to preserve the appropriate method of compensation for houseparents--and allowed the lodging and food provided them to be considered when determining an appropriate salary for married houseparents serving with their spouse at nonprofit educational institutions.

Through this exemption, Congress supplied a way for these vital social services to continue to be provided by non-profit organizations in a way that is cost-effective, and at the same time appropriate and meaningful to both the children and the houseparents.

However, since the addition of this exemption, the demographics of America and of America's foster children have changed. Research now shows that due to the negative experiences some youth have faced, they may find a better environment for growth and healing in having a single houseparent of the same sex.

Our labor standards for these group homes have not kept pace with the ever-changing needs of these children.

Because the Hershey Exemption was only extended to married couples, group homes are now forced to choose between what is cheaper and what is best for the children. Unfortunately, the financial realities of the situation

place these facilities in a compromising situation.

You see, when a group home employs a single houseparent for a home, they are required to pay them as an hourly employee, whereas married houseparents serving together are allowed to be paid as salaried employees.

As a result, it costs a facility in Florida more than $74,000 annually at the current minimum wage rate to provide a full-time, single houseparent using the traditional live-in model.

In response, most facilities have resorted to teams of houseparents that work in 8 or 12 hour shifts--just to avoid the additional costs of overtime pay. Yet even this team model is pricey and means tough coordination and inconsistencies in care for these children. It also destroys the family-like arrangement of the home.

If the minimum wage bill--to which I am offering this bill as an amendment--passes, it will cost facilities across the U.S. in excess of $84,000 annually to house and employ a single, full-time houseparent in a foster care or educational group home. However, if it were a married couple serving in the same environment it would only require minimum wage guidelines being met.

Can you see how this inconsistency in our labor laws is, and will continue to be, crippling for the private, non-profit facilities?

In order to enable group homes to provide the most appropriate and consistent care for foster and emotionally scarred youth, my amendment will extend the Hershey Exemption to single houseparents, allowing them to be treated as salaried employees when free lodging and board are provided.

Voting in favor of my amendment will enable private, non-profit group homes to continue providing these vital services for our communities, with a stronger atmosphere of love and growth for the children.

Voting against this amendment will--that is, allowing it not to pass--will mean that the already heavy financial burden for these facilities will continue to grow. Homes will be forced to close or have to scale back on the number of children they can help.

To vote against this amendment is to turn children out on the street at a time when they need us most.

As a loving parent and grandparent, I want what is best for my children and for my grandchildren--I want to make sure they have whatever they need to overcome the obstacles of life and succeed. This is also what we should seek for foster children and the hurting youth in our communities--to provide the loving homes and facilities for them that provide what they need most and in the most appropriate and consistent way possible.

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