Floor Statements

Mr. Speaker, today I am joined by my colleague from New York, Mr. Rangel, in introducing our bill, ``Encouraging Work Act of 2003.'' The bill would permanently extend the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Credit (W-t-W) and make other changes discussed below. Both programs are currently due to expire on December 31, 2003. The credits are tax incentives designed to encourage employers to hire public assistance recipients and other individuals with barriers to employment. They are important tools in our efforts to help needy individuals become productive employees.

Improvements in the programs the past few years have made WOTC and W- t-W far more effective in providing employment, with training, for our nation's disadvantaged. Such training can be costly and the credits provide an incentive to employers to hire the disadvantaged and provide the needed training while

offsetting costs associated with the latter effort.

Of course, many believe the programs would be even more successful if they could be extended indefinitely. We hear from both employers and state job services, which administer the programs, that the continued uncertainty surrounding short-term extensions impedes expanded participation and improvements in program administration. If the programs were made permanent, employers, both large and small, would be induced to expand their recruitment efforts and encourage the states to improve the administration of the programs. Such a change would benefit everyone.

WOTC provides employers a 40-percent tax credit on the first $6,000 of wages paid to those from targeted groups who are working at least 400 hours, or a partial credit of 25 percent for those working 120-399 hours. W-t-W provides employers a 35-percent tax credit on the first $10,000 of wages for those leaving welfare and working 400 hours in the first year. In the second year, the W-t-W credit is 50 percent of the first $10,000 of wages paid to qualifying employees.

In addition to making the credits permanent, our bill would simplify WOTC and W-t-W, as President Bush recommended in the Administration's FY 2004 budget, by combining them into one credit and making the rules for computing credits simpler. Among other changes, the bill would expand the food stamp category by increasing the age limit from 24 to 39 years of age for members of food stamp households and residents of enterprise zones or renewal communities (``a designated community resident''). The current ceiling of 24 limits the availability of individuals in these targeted categories. There are many individuals, over the age of 24, who could be gainfully employed if the age limit was expanded. Currently, the programs do an excellent job of helping women on welfare enter into the workforce. Over 80 percent of the hires in the programs are women. However, men from welfare households face a greater barrier to employment because they are no longer eligible for welfare once they turn 18. However, they can qualify up to age 24 if they are a member of a household receiving food stamps or live in an enterprise zone or renewal community. We believe increasing the age limit to 39 will provide employers an incentive to hire more ``at- risk'' males and provide them with a sense of personal responsibility and self-esteem in assuming their responsibilities as parents and members of society.

More than 80 percent of the 2.2 million individuals hired under the WOTC and W-t-W programs were previously dependent on public assistance programs. However, during periods of slow economic growth and rising unemployment, employers have more hiring options. The jobs skills of those coming off welfare today--many because they have reached their 5- year life time eligibility ceiling--are even less than the first generation that left the welfare rolls. Because of the high cost of recruiting, training, supervising low-skilled individuals, many employers will look elsewhere for employees if these programs are not renewed before the end of the year. WOTC and W-t-W are proven incentives for encouraging employers to seek employees from the targeted groups.

We urge our colleagues to join us in cosponsoring this important legislation to extend and improve the two programs.

Mr. Speaker, I thank the gentleman from Illinois (Mr. Crane), the gentleman from Michigan (Mr. Levin), the gentleman from California (Mr. Royce), the gentleman from New York (Mr. Rangel). I want to thank particularly the gentleman from Virginia (Mr. Wolf) here who has been a leading light in this whole proposition and also Tony Hall, who is the ambassador to the Food and Agricultural Organization in Rome whose spirit just pervades this whole Chamber on this issue.

A lot of this has already been talked about. I will not go over it in detail, but let me just say a few things. This really is a follow-up to last year's bill. I will not give my colleagues the number, they know it, but this 1584 creates a system to monitor the blood diamonds coming from Africa. It is a very, very important bill for a variety of reasons, not the least of which the humanitarian aspect; and what it does, it attacks the problem of the trade in African diamonds by having the President implement the so-called Kimberley process. My colleagues know what that is. It is important. It is a vehicle for making this bill possible.

What the bill mechanically does is three things. First of all, it bans noncompliant rough diamonds. It severely punishes the violators of this ban, and it also helps other countries to set up similar systems.

Also, this bill will require various reports by the administration and a 24-month study by the GAO to report on the effectiveness of the system. It urges the President to continue negotiations to strengthen the system and protects the legitimate diamond trade and also remains consistent with our international trade obligations.

Like so many other things we do around here, all great ideas ultimately degenerate into work; and the people who did the great work, David Kavanaugh, Mike Walsh, Viji Rangaswami of the Subcommittee on Trade, Frank Record of the Committee on International Relations, Jay Bruns of the State Department, and many friends of the Campaign to Eliminate Conflict Diamonds, world vision, Amnesty International, Oxfam, and Catholic Relief Services. All have added their weight here to this very important piece of legislation.

I urge my associates and my colleagues to pass it.

Mr. Chairman, I rise in opposition to H. Con. Res. 95. I do so reluctantly.

I respect the President.

I admire the Speaker more than I can say.

I think Jim Nussle has done an extraordinary job under impossible conditions.

But I am going to oppose the Nussle bill because I think it moves us in the wrong direction.

There are strong arguments against my position, such as: This is only a step in a long process; the conference report is where the real vote is cast; and we must be loyal to the President and to the troops overseas.

But, Mr. Chairman, I don't think that being loyal to the President or our troops in the Persian Gulf--or for that matter to all the other citizens--is really an issue here.

This is a democratic process with which we work--and I know there are party pressures, and I know we need a budget--but this particular budget is not particularly helpful in solving our problems.

At the very least I feel that we should wait until the President submits his ``supplemental'' request--based on what he feels the military will need. This will be, I assume, a rather large number.

Also the issue of timing is critical. The expense budget which we will vote on is inherently tied to the tax reduction program. This scares me. Together the numbers are not right--the timing is bad. I ask myself--

How can we vote to adversely impact medical and education expenses in a war atmosphere?

How can we see our revenues collapsing in front of us and then consider a tax reduction bill which, while somewhat stimulating to our economy, will further deplete revenues?

For me this package, I'm sorry to say, doesn't hang together.

I just think we can do better.

I hope we can do better--so that I can soon vote for a program which does right by us as a country long term, stimulates our economy short term--and keeps faith with the families of our troops in the Persian Gulf.

Mr. Speaker, I would like to just make a few comments on H.R. 1307, and of course ask my colleagues to support it.

Last summer I introduced a bill that contained two of the present provisions, very modest. The bill increased the tax-free death benefit from $3,000 to $6,000 to members of our Armed Forces. Second, the bill made a change to allow members of the Armed Forces to have the 5-year rule, the so-called 5-year rule, deferred during the period they are assigned away from their principal residence. What this does is to allow individuals to take advantage of the law that excludes gain on the sale of a residence up to $250,000 or $500,000 per couple and if they resided in the property for 2 of the 5 years preceding the sale, and that was that. The bill passed the House. Both of these provisions are in and are part of H.R. 1307. The bill also expands the definition of ``member'' to include ancestors and lineal descendants for purposes of certain requirements of tax-exempt veterans organizations. These are all good changes. I recommend them. I support them.

Mr. Chairman, I'd like to speak on behalf of the Greenwood Amendment H.R. 534. This has to do with research to help save human lives. It's not a question of human cloning. The process we're talking about--therapeutic cloning--takes embryos, many of which are fertilized in a laboratory petri dish. They are saved. The cells are separated so they can continue to grow. We learn about a mechanism to better understand tissues in the body. There will be an ability to cure diseases such as Parkinson's, Diabetes, Heart Muscle Disease, Chronic Liver Disease--the list is endless.

So please don't stop this exciting area of breakthrough new science. Don't confuse the issue with reproductive cloning. Hammers are used to build a building, but they can also be used as a lethal weapon. Because a hammer can be used as a murder weapon, we don't automatically outlaw it. Please support the Greenwood Amendment.

Mr. Speaker, today I am pleased to join my colleague from Georgia, John Lewis, in introducing the ``Good Samaritan Tax Act'', a bill that has been introduced in three previous Congresses. Former Congressman Tony Hall (OH), now our Ambassador to the United Nations Agencies for Food and Agriculture, who originally initiated this proposal, was a cosponsor of the prior bills and the leading advocate for feeding the less fortunate.

The purpose of the bill is to help meet the demand for food for the needy. The end of the economic boom has increased the need for additional resources to feed the hungry. In fact, as more and more citizens are removed from the welfare rolls, or lose their jobs, many turn to food banks for help.

The bill would increase the incentives for restaurants, farms and other businesses in the food industry to donate food to food banks, homeless shelters and other charitable organizations. The Internal Revenue Code actually discourages contributions because of the uncertainty regarding the tax treatment of donations of food as compared to donations of other inventory. The bill has been designed to correct that deficiency.

We believe this bill would remove the uncertainty and provide the necessary incentive for businesses to increase their food donations. This would be accomplished by adding a provision to Section 170(e) of the Code that would indicate that the fair market value of donated food is determined, (1) without regard to internal policies, lack of market, or similar circumstances, whether the food cannot or will not be sold, and (2) if applicable, by taking into account the price at which similar products are sold by the taxpayer at the time of contribution. These have been points of controversy with the Internal Revenue Service, causing uncertainty as well as disincentives to incur the administrative and other costs necessary for the proper handling and preservation of food being donated. In addition, Section 170(e) would be amended to include businesses in addition to C corporations, as the current law provides.

We hope our colleagues will join us in cosponsoring this legislation.

Mr. Speaker, I am pleased to join my colleague from California,

Mr. Becerra, together with my colleague, Mr. Boehlert from New York in reintroducing a bill intended to clarify the tax treatment of certain environmental escrow accounts. This bill was first introduced in the 107th Congress.

The provisions in the bill would encourage prompt and efficient settlements with the Environmental Protection Agency (``EPA'') for the clean-up of hazardous waste sites. Currently, there is some uncertainty in the tax treatment of certain ``settlement funds'' that are, in effect, controlled by the EPA, in their role of resolving claims under Comprehensive Environmental Response, Compensation and Liability Act of 1980 (``CERCLA''). This uncertainty may prevent taxpayers from entering into prompt settlements with the EPA for the cleanup of Superfund hazardous waste sites and reduce the ultimate amount to funds available for cleanup of such sites.

The EPA has recognized this problem and has recently written to the Department of the Treasury expressing support for clarification that these ``funds will, for Federal income tax purposes, be treated as beneficially owned by the United States government and therefore not subject to Federal income tax if certain conditions are met.'' I include in the record, a copy of the EPA letter dated February 7, 2003

Our bill follows the recommendations of the EPA on this important issue. Under our bill, if certain conditions are met, the EPA (U.S. government) will be considered the beneficial owner of funds set aside in an environmental settlement fund account. These conditions include the fund being: (1) established pursuant to a consent decree; (2) created for the receipt of settlement payments for the sole purpose of resolving claims under CERCLA; (3) controlled (in terms of expenditures of contributions and earnings thereon) by the government or an agency or instrumentality thereof; and (4) upon termination, disbursed to the government or an agency or instrumentality thereof (e.g., the EPA). If such conditions are met, the EPA will be considered the beneficial owner of the escrow account for tax purposes and the account will not be considered a grantor trust for purposes of Sections 468B, and 671- 677 of the Internal Revenue Code. These escrow accounts, which are established under court consent decrees, are a necessary tool to enable the EPA to carry out its responsibilities and resolve or satisfy claims under CERCLA. Under these types of consent decrees, the EPA should be considered the owner of such funds for Federal tax purposes.

Due to the current uncertainty as to the proper Federal income tax treatment of such government-controlled funds, taxpayers may be hesitant to promptly resolve their claims under CERCLA by contributing to the settlement funds. One of the underlying purposes of CERCLA is to ensure prompt and efficient cleanup of Superfund hazardous waste sites. This goal is being frustrated by the existing uncertainty in the tax laws. The bill resolves these uncertainties and expedites the cleanup of Superfund hazardous waste sites by treating these escrow accounts as being beneficially owned by the U.S. government and not subject to tax.

We urge our colleagues to join us in cosponsoring this legislation.

Environmental Protection Agency,

Washington, DC, February 7, 2003.

Ms. Pamela F. Olson,

Assistant Secretary--Tax Policy, Department of the Treasury,

Washington, DC

Dear Ms. Olson: I am writing to express support by the

Environmental Protection Agency (``EPA'') for clarification

of the tax treatment of certain environmental cleanup

``settlement funds'' under IRC section 468B. The

clarification would provide that such funds will, for Federal

income tax purposes, be treated as beneficially owned by the

U.S. government and therefore not subject to Federal income

tax if certain conditions are met. As General Counsel to the

agency, I am not offering an opinion on the legal issue or

any other fiscal or tax policy aspects to this proposal. We

defer to the Treasury Department on these issues. However,

after consultation with our office of Enforcement and

Compliance Assurance, I offer this letter to provide our

views based on the environmental issues involved, that I hope

will assist you in your review of this issue.

The cleanup of Superfund hazardous waste sites is sometimes

funded by environmental ``settlement funds'' or escrow

accounts. These escrow accounts are established in consent

decrees between the EPA and the settling parties under the

jurisdiction of a federal district court. They are a tool to

enable the EPA to carry out its responsibilities and resolve

its claims against private parties under the Comprehensive

Environmental Response, Compensation and Liability Act of

1980 (``CERCLA'').

While the escrow accounts are funded by the settling

parties (defendants), some of these consent decrees require

that the EPA approve expenditures of such funds (including

the payment of costs and reimbursements), and provide that

any remaining funds after termination will be paid to the

Mr. Speaker, I am pleased to join my colleague from Maryland, Mr. Cardin, together with a bipartisan group of our colleagues, in introducing the ``Artists' Contribution to American Heritage Act of 2003.'' The bill would alleviate an unfairness in the tax law as it applies to charitable donations of property by the taxpayer/creator and significantly enhance the ability of museums and public libraries to acquire important original works by artists, writers and composers, and ensure the preservation of these works for future generations. The proposed legislation is the same as we introduced in the 106th and 107th Congresses, except for advancing the effective date by a year.

Since 1969, the law has provided that the creator of the artistic property is only allowed a charitable deduction equal to the cost of materials that went into the property. For example, an established artist who donates a painting to the local museum is allowed a deduction for the cost of the canvas, brushes and paint, etc. used to produce the painting. Of course, these amounts are de minimus. There is no real tax incentive to contribute such works of art for the public to enjoy. In fact, the tax law works in the other direction. It makes more financial sense to the creator to sell his or her work. If a collector or art buff buys a painting that appreciates over time, because the artist becomes well established or was a known and collected artist when the painting was purchased, the collector is allowed a deduction for fair market value when the painting is contributed to the local museum. This is the fairness issue.

Before 1969, the artists/taxpayers received the same treatment--the deduction was based on fair market value. The law was changed, primarily because of the perception that some taxpayers were taking advantage of the law through less than accurate valuations of their charitable gifts. After the law was changed in 1969, gifts of donor generated art work (paintings, manuscripts, compositions, artistic and historically significant correspondence and papers) to qualifying charitable organizations and governmental entities dropped significantly. Creators were more likely to sell their works than to contribute them. The situation has not improved over the years.

There have been significant changes in the valuation process since 1969. All taxpayers making charitable contributions of art work (other than donor generated art work) are required to: (a) provide and/or retain relevant information as to the value of the gift, (b) provide appraisals by qualified appraisers or, in some cases, (c) subject them to review by the IRS's Art Advisory Panel, depending on the dollar amount of the contribution. These changes would apply to creator- donated property under our proposal.

In addition to the valuation safeguards already in the law, our proposal would add additional protections to prevent abuse. These include the following: (a) limiting the value of the deduction to the amount of income the creator received from similar property and/or similar activities, (b) providing that the deduction can only be claimed in the year of contribution, i.e. the carry over rules do not apply, (c) limiting the deduction to property created at least 18 months before the contribution, (d) limiting the deduction to gifts related to the purpose of the institution which receives it, and (e) excluding contributions of property (letters, memos, etc.) created by taxpayers in their role as employees or officers of an organization.

The benefit to the nation when artists are encouraged to contribute their work during their lifetime cannot be overemphasized. It allows the public, historians, scholars and others

to learn from the artist his/her aesthetic aims for the work; how it was intended to be displayed, performed or interpreted; and what influences affected the artist.

Our proposal represents an important step in providing some tax incentive, with needed safeguards, for the creators and moves toward putting them on the same footing as collectors who contribute similar property. It could make the difference in a decision by the creator/ donor to contribute some of their created work to a museum or public library. That way important works are preserved and we all benefit. We urge our colleagues to join us in cosponsoring this legislation.

Mr. Speaker, I am pleased to join my colleague from Massachusetts, Mr. Neal, together with a number of our colleagues in introducing our bill, ``The Life Insurance Tax Simplification Act of 2003.'' The bill repeals two sections of the Internal Revenue Code, which no longer serve valid tax policy goals. Except for the effective date, the bill is identical to the one we introduced in the 107th Congress.

Congress has taken a major step forward in rewriting the regulatory structure of the financial services industry in the United States. This realignment is having a positive impact on the way life insurance companies serve their customers, conduct their operations and merge their businesses to achieve greater market efficiencies. Unfortunately, the tax code contains several provisions which no longer represent valid tax policy goals, and, in fact, are carry-overs from the old tax and regulatory regimes that separated the life insurance industry from the rest of the financial world and differentiated between the stock and mutual segments of the life insurance industry. Today, the lines of competition are not between the stock and mutual segments of the life insurance industry. Rather, life insurers must compete in an aggressive, fast moving global financial services marketplace contrary to the premises underlying these old, outmoded tax rules.

The bill would repeal section 809 that imposes a tax on the policyholder dividends of mutual life insurance companies, and section 815 that applies to policyholder surplus accounts of stock-owned life insurance companies. Both of these provisions are vestiges of an outdated tax scheme developed in 1984 when the lines of competitive balance existed between stock and mutual life insurance companies.

Section 809 was added to the Code in 1984, in part, to address a perceived imbalance between the tax treatment of stock and mutual companies. In 1984, there were over 100 mutual life insurers, including many large mutual companies, accounting for about one-half of industry activity. Today, about 40 mutual life companies remain, including only a few large companies, and mutual insurers account for only about 10 to 15 percent of the industry. Stocks as well as mutuals agree that section 809 is not now needed to provide competitive balance.

Both mutual and stock life insurers believe that their policies provide superior value to consumers. Repeal of section 809 would result in more nearly neutral taxation of stock and mutual companies and allow consumers to focus more on nontax considerations in selecting their insurance provider. As a result, repeal of section 809 is one of the few corporate tax relief measures endorsed by the Consumer Federation of America and the National Cooperative Business Association.

Section 815 was added to the Code as part of the 1959 changes to the life insurance companies tax structure. Before 1959, life insurance companies were taxed only on their investment income. Underwriting (premium) income was not taxed, and underwriting expenses were not deductible. The change provided that all life insurance companies paid tax on investment income not set aside for policyholders and on one- half of their underwriting income.

The other half of underwriting income for stock companies was not taxed unless it was distributed to shareholders (so-called ``policyholders surplus account or PSA''). The 1959 tax structure sought to tax the proper amount of income of stock and mutual companies alike and the PSA mechanism helped implement that goal.

In 1984, Congress rewrote the rules again. Both stock and mutual companies were subjected to tax on all their investment and underwriting income. In this context, dividend deductions for mutuals were limited under section 809, and the tax exclusion for a portion of stock company's underwriting income was discontinued. Congress made a decision not to tax the amount excluded between 1959 and 1984. Rather the amounts are only taxed if one of the specific events described in the current section 815 occurs (principally dissolution of the company).

The bill would repeal the obsolete section 815 provision. Since 1984, the Federal government has collected relative small amounts of revenue with respect to PSAs as companies avoid the specific events which trigger PSAs taxation. There is not a ``fund'', ``reserve'', ``provision'' or ``allocation'' on a life insurance company's books to pay PSA taxes because, under generally accepted accounting principles, neither the government nor taxpayers have ever believed the significant amounts of tax would be triggered. Nevertheless, the continued existence of the PSAs does result in a burden on the companies in today's changing financial services world--a burden based on bookkeeping entries made from nineteen to forty-three years ago to comply with Congress' then vision of how segments of the life insurance industry should be taxed.

The repeal of these two provisions, sections 809 and 815, would provide certainty, less complexity, and remove two provisions from the Internal Revenue Code, which no longer serve a valid tax policy goal in the life insurance tax structure of the Code. We urge our colleagues to join us in cosponsoring this legislation.

Mr. Speaker, today I am re-introducing a bill, the Individual and Small Business Tax Simplification Act, to address a problem that remains as relevant in the 108th Congress as it was in the 107th. In 1935, there were 34 lines on Form 1040 and instructions were two pages. Today, the tax code and regulations have grown to over 9 million words. According to the Tax Foundation, individual taxpayers spent 2.9 billion hours on federal tax compliance in 2002. This is 370 million more hours than in 2001. Businesses spent an additional 2.75 billion hours on tax compliance. The value of this 5.6 billion hours of lost time is incalculable. Our tax code is a growing thicket of complexity that frustrates ordinary taxpayers, is a haven for promoters of dubious schemes, and frequently generates unintended consequences.

To be sure, defining income in a manner that is fair and easy to administer is inherently complex, but, for a variety of reasons, the tax code has become far more complicated than necessary. Pamela Olson, the Treasury Department Assistant Secretary for Tax Policy, put it well recently when she said that our tax system ``is surely not a tax system that anyone would set out to create * * * it is the system that has evolved over time.'' In many cases, there is a clear answer to the question of whether a rational person would design a tax provision the same way from a clean slate. The objective of the legislation I am introducing today is to roll back unneeded complexity for individuals and small business taxpayers. One or more of the bill's provisions would simplify annual filing for every individual taxpayer and nearly every business in America.

This legislation builds on a bill that I introduced in the 106th Congress, the Tax Simplification and Burden Reduction Act. The Ways and Means Subcommittee on Oversight has held numerous hearings on tax simplification, and the bill draws on the record built at those hearings. I plan to hold additional hearings on tax simplification during the 108th Congress to consider ways to refine this legislation and to consider additional simplification proposals. Several of the provisions of this legislation appeared first as recommendations in the Joint Committee on Taxation's April, 2001 report, and the staff of the Joint Committee on Taxation has helped to refine the proposals contained in the bill. Other provisions originated with the work of the Tax Section of the American Bar Association and the American Institute of Certified Public Accountants. I have received many comments on last year's legislation, and I welcome comments from other individuals and organizations on the bill as we continue to work toward the goal of simplification.

Our future as a Nation depends on our ability to raise revenue in a manner that is fair and equitable. The Internal Revenue Code must be simplified to restore faith by all taxpayers in our tax system.

The proposal includes the following provisions:

Mr. Speaker, I am pleased to join my colleague from Massachusetts, Representative Richard Neal, in introducing our bill, ``The Housing Bond and Credit Modernization and Fairness Act of 2003''. My collaboration with Mr. Neal today is indicative of the broad bipartisan support Housing Bonds and the Low Income Housing Tax Credit (Housing Credit) programs enjoy.

The Congress has a golden opportunity, without creating any new program or asking for any appropriation of Federal money, to create new housing opportunity for tens of thousands of low- and moderate-income families every year. All it will take is enactment of simple legislation to eliminate obsolete provisions in the two principal federal programs that finance the production of affordable housing: Housing Bonds, or single-family Mortgage Revenue Bonds, MRBs, as they are commonly known, and the Housing Credit.

This bill is identical to the one Representative Neal and I introduced in the 107th Congress, which earned the support of 360 House cosponsors from both parties, from all regions of the country, and from rural and urban districts.

The Housing Bond and Credit Modernization and Fairness Act of 2003 would do three things.

First, the bill would repeal the Ten-Year Rule, a provision added to the MRB program in 1988 that prevents states from using homeowner payments on such mortgages to make new mortgages to additional qualified purchasers. For each day the Ten-Year Rule is in effect, states lose millions of dollars in financing for first-time home buyer mortgages, amounting to more than $12 billion in mortgage authority between 2001 and 2005. This represents nearly half of the entire Bond cap increase Congress enacted in 2000. Our bill would eliminate the Ten-Year Rule to allow states to use mortgage payments to finance additional lower income mortgages.

Second, the bill would replace the present unworkable limit on the price of the homes these mortgages can finance with a simple limit that works. No reliable comprehensive data exists to determine average area home prices. The current price limits were issued in 1994 based on 1993 data. They are obsolete and well below current home price levels in most parts of the country. Many qualified buyers simply cannot find homes that are priced below the outdated limits.

The answer is to replace the present limit, set in Washington, by a simple formula limiting the purchase price to three and a half times the qualifying income under the program.

Finally, the bill makes Housing Credit apartment production viable in rural areas by allowing statewide median incomes as the basis for the income limits in that program. This change would apply the same methodology for determining qualifying income levels used in the MRB Program. HUD data shows that current income limits inhibit Housing Credit development in more than 1,300 nonmetropolitan counties across the country.

I am pleased to tell my colleagues that the changes proposed by the Housing Bond and Credit Modernization and Fairness Act of 2003 have been endorsed by the bipartisan National Governors Association, the National Council of State Housing Agencies, and every major national housing organization. These groups know how important the Housing Bond and Housing Credit programs are in giving states the ability to meet the housing needs of low- and moderate-income families.

Today, I ask you to join in a bipartisan effort to see that these important provisions are enacted as part of tax legislation this year.

Mr. Speaker, I am pleased to join a number of my colleagues in introducing our bill to solve a problem that has been facing a number of companies during the past few years who grant stock options to their employees. Due to the passage of time, this problem is becoming more urgent for a number of reasons mentioned below. I introduced an identical bill in the 107th Congress.

Many companies use stock options as an incentive to attract and motivate employees. Companies give their workers the right to purchase company stock, at a small discount from the listed price, through Employee Stock Purchase Plans and Incentive Stock Options. Employee stock ownership motivates workers and can create a positive relationship between management and workers, where both reap rewards for successful company performance.

For nearly 30 years the Internal Revenue Service (IRS) took the position that the income from these stock options was not subject to employment taxes when the option is granted or exercised. Instead tax is imposed when the actual stock is sold. However, audits and rulings on specific companies a few years ago raised the troubling prospect that the IRS was changing its position to require that employment taxes should be withheld from the paychecks of individuals who exercised stock options under these plans.

Employee Stock Purchase Plans and Incentive Stock Options were created by Congress to provide tools to build strong companies and encourage greater employee ownership of company stock. It was not the intent of Congress to dilute these incentives by requiring employment tax on withholding when the stock is purchased.

Members of Congress raised concerns about this issue, and in early 2001 the IRS put in place a moratorium so that no employment taxes would be assessed on stock options. The IRS later lifted the moratorium for options exercised this year. In response to further opposition, in 2002 the IRS announced an indefinite moratorium. As a result, the Joint Committee on Taxation determined that there would be no revenue loss it the law were clarified to prevent withholding on ESPPs and ISOs. If the moratorium is lifted by the IRS there will be a substantial revenue cost attached to clarifying the law. In 2002, the House passed the previous legislation I introduced. Although the Senate Finance Committee passed the legislation unanimously, the legislation was not considered by the Senate.

The legislation would clarify that the difference between the exercise price and fair market value of a stock is not subject to employment taxes when an ISO or ESPP is exercised. In addition, wage withholding is not required on disqualifying dispositions of ISO stock or on the fifteen percent discount offered to employees by ESPPs.

I urge my colleagues to support this proposed legislation, so that this issue can be resolved as quickly as possible in this Congress.

Mr. Speaker, I am pleased to join my colleagues, Mr. Sam Johnson from Texas, Mr. Portman from Ohio and Mr. Ramstad from Minnesota, in introducing a bill, the ``Fairness, Simplification and Competitiveness for American Business Act of 2003''. This bill is very similar to the one I introduced in the last Congress, and contains many of the provisions that have been included in past bills I have sponsored on international tax matters. Our trade laws and practices, as well as our commitment to the World Trade Organization, have encouraged the expansion of U.S. business interests abroad. That process continues with passage of the Trade Promotion Authority legislation and recent announcements of various free trade agreements that have been completed or are being negotiated. However, our tax policy lags far behind and seems out of sync with our trade policy. Many would argue that our international tax policy seems to promote consequences that may be contrary to our national interest.

The United States continues to be the largest trading nation in the world. In a $10 trillion- plus economy, current data indicate that the value of our exports and imports of goods and services continues to represent about 25% of our GDP. It is no secret that our economy is more and more trade dependent, as our companies depend on overseas markets for a much larger share of profits and sales.

Recent cases with the WTO show how our trade relations with various countries or blocks of countries affect the competitiveness of U.S. multinationals vis-a-vis their foreign competitors. Tax policy sometimes becomes intertwined with trade policy. For example, how we comply with the WTO ruling that our foreign sales corporation/ extraterritorial income tax provisions are a prohibited export subsidy highlights the significance of these matters to our economy. The ruling allows sanctions that would amount to an annual $4 billion-plus potential hit against U.S. exports, unless we come into compliance. The forty-year-plus history behind the FSC/ETI and predecessor provisions was all about trying to make our companies tax competitive with their foreign competitors.

I don't believe anyone would seriously dispute that our tax system, in general and especially as it relates to international taxation, is overly complex and basically out of date. Many provisions were enacted, e.g. subpart F, in a totally different era as far as the world economy and competitiveness are concerned.

The focus of the legislation is to make the international area more rational. The proposal contains a number of provisions to simplify and make fair our international tax laws. In general, the bill seeks in important ways to: (1) simplify this overly complex area, especially in subpart F of the Code and the foreign tax credit mechanisms; (2) encourage exports; and (3) enhance U.S. competitiveness in other industrialized countries. The bill includes some provisions proposed by the Joint Committee on Taxation in its simplification report issued in 2001. In addition, Treasury officials have repeatedly stressed the importance of updating our international tax laws.

Some of the provisions in the prior bill have been modified to be consistent with H.R. 5095, introduced in the last Congress by the Chairman of the Ways and Means Committee. In addition, provisions relating to subpart F have been added from that bill. They are essential to updating that portion of the Internal Revenue Code.

In summary, the law as now constituted frustrates the legitimate goals and objectives of U.S. businesses and erects artificial and unnecessary barriers to U.S. competitiveness. Neither the largest U.S.- based multinational companies nor the Internal Revenue Service is in a position to administer and interpret the mind-numbing complexity of many of the foreign provisions. Why not then move toward creating a set of international tax rules that taxpayers can understand and the government can administer? I believe the proposed changes in this bill represent a creditable package and we have a unique opportunity in the 108th Congress to make significant progress in enacting reform in the international tax area. I urge your support of the proposal.

Mr. Speaker, on rollcall No. 6 I inadvertently pressed the ``yea'' button. I meant to vote ``nay'' on the McDermott motion to commit.

Announcement by the Speaker pro Tempore