[Pages H1912-H1953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PERMANENT EXTENSION OF THE HEALTH INSURANCE DEDUCTION FOR THE SELF-
EMPLOYED

Mr. QUILLEN. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 88 and ask for its immediate consideration.
The Clerk read the resolution, as follows:

H. Res. 88

Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 1(b) of rule
XXIII, declare the House resolved into the Committee of the
Whole House on the state of the Union for consideration of
the bill (H.R. 831) to amend the Internal Revenue Code of
1986 to permanently extend the deduction for health insurance
costs of self-employed individuals, to repeal the provision
permitting nonrecognition of gain on sales and exchanges
effectuating policies of the Federal Communications
Commission, and for other purposes. The first reading of the
bill shall be dispensed with. All points of order against
consideration of the bill are waived. General debate shall be
confined to the bill and the amendment made in order by this
resolution and shall not exceed one hour equally divided and
controlled by the chairman and ranking minority member of the
Committee on Ways and Means. After general debate the bill
shall be considered for amendment under the five-minute rule.
The amendment recommended by the Committee on Ways and Means
now printed in the bill shall be considered as adopted in the
House and in the Committee of the Whole. The bill, as
amended, shall be considered as read. No further amendment
shall be in order except the amendment in the nature of a
substitute printed in the report of the Committee on Rules
accompanying this resolution, which may be offered only by
Representative Gibbons of Florida or his designee, shall be
considered as read, shall be debatable for one hour equally
divided and controlled by the proponent and an opponent, and
shall not be subject to amendment. All points of order
against that amendment are waived. At the conclusion of
consideration of the bill for amendment the Committee shall
rise and report the bill to the House with such further
amendment as may have been adopted. The previous question
shall be considered as ordered on the bill and any amendment
thereto to final passage without intervening motion except
one motion to recommit with or without instructions.

The SPEAKER pro tempore. The gentleman from Tennessee [Mr. Quillen]
is recognized for 1 hour.
Mr. QUILLEN. Mr. Speaker, for purposes of debate only, I yield the
customary 30 minutes to the gentleman from Massachusetts [Mr. Moakley],
pending which I yield myself such time as I may consume.
During consideration of this resolution, all time yielded is for the
purpose of debate only.
(Mr. QUILLEN asked and was given permission to revise and extend his
remarks.)
Mr. QUILLEN. Mr. Speaker, House Resolution 88 is a modified closed
rule providing for the consideration of H.R. 831, which makes permanent
the 25-percent deduction for health insurance costs of self-employed
individuals. The rule waives all points of order against consideration
of the bill and provides for 1 hour of debate, equally divided and
controlled by the chairman and ranking minority member of the Committee
on Ways and Means.
The amendment recommended by the Committee on Ways and Means now
printed in the bill shall be considered as adopted in the House and in
the Committee of the Whole, and all debate shall be confined to the
bill and the amendment made in order by this resolution.
No amendment shall be in order except the amendment in the nature of
a substitute printed in the report of the Committee on Rules
accompanying this resolution, which may be offered only by
Representative Gibbons of
[[Page H1913]] Florida or his designee. Such amendment shall be
debatable for 1 hour equally divided and controlled by a proponent and
an opponent of the amendment, and shall not be subject to amendment.
All points of order against that amendment are waived.
Finally, the rule provides for one motion to recommit, with or
without instructions.
Mr. Speaker, normally I would be opposed to this type of restrictive
rule. However, it has been customary in the House to consider tax
measures under partially or even completely closed rules. And this
practice has been acceptable by both sides of the aisle. Chairman
Archer and ranking member Gibbons both requested a restrictive rule
from the Rules Committee, and this is one of the rare instances when I
agree that a restrictive rule is necessary.
Additionally, although the rule provides a blanket waiver, it is my
understanding that only two technical budget act waivers are needed for
this bill. Section 303(a) of the budget act prohibits revenue changes
starting in a year other than the year of the current budget
resolution. Because the changes in this bill to the earned income tax
credit are effective in fiscal year 1996, a waiver of section 303(a) is
required. Also, section 311(a) requires that revenues not fall below
the levels in the current budget resolution. The bill is paid for over
the 5-year period, but it is estimated to run a deficit in the first
year. So it is necessary to waive this section also.

Mr. Speaker, H.R. 831 will help more than 3.2 million self-employed
Americans by restoring the 25-percent deduction for health insurance
costs of the self-employed. Currently, larger businesses can deduct the
entire cost of health insurance for their employees as this is a
legitimate business expense. There is no equivalent provision for the
self-employed. This bill retroactively and permanently restores the 25-
percent deduction, which expired at the end of 1993. By passing this
legislation, we are making it economically possible for many self-
employed to obtain health insurance coverage, thus reducing the number
of uninsured Americans.
I am particularly pleased that this measure makes the deduction
permanent so that our farmers, doctors, hairdressers, and so many
others do not have to worry from year to year whether or not they can
afford to keep their health insurance coverage.
Although there is wide bipartisan support for this effort, this bill
is unfortunately not without controversy. To offset the loss of tax
revenue, the bill terminates a program that allows the Federal
Communications Commission to give tax breaks to corporations that sell
their broadcast facilities to minority purchasers. Additionally, the
bill phases out eligibility for the earned income tax credit to anyone
who has more than $2,500 per year in interest and dividend income.
We will hear strong arguments against changing the FCC provisions,
but the substitute amendment allowed under the rule, along with the
motion to recommit with instructions, provides opportunities to address
this issue. Mr. Speaker, I urge adoption of this rule, and I reserve
the balance of my time.
Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, although no one expects an open rule on a tax bill, at
the very least I had hoped Republicans would allow us to offer the
three or four other major amendments debated at the Rules Committee.
In committee, Democrats offered a number of constructive amendments
to improve the health care deduction and to change the financing
provisions--to find some way besides a retroactive tax increase to pay
for this.
At the Rules Committee, Democrats consolidated their proposals into
four amendments:
First, the amendment by Mr. Rangel funds the health deduction by
preventing Americans who renounce their citizenship from avoiding their
taxes;
Second, the amendment by Mr. Cardin increases from 25 to 80 percent
the portion of the cost of health care insurance that a self-employed
individual could deduct from his or her taxes;
Third, the amendment by Mr. Stark extends protections under existing
law to make health insurance portable. People leaving a job would still
be able to purchase their insurance at the same cost plus 2 percent;
and
Fourth, the amendment by Mr. Mfume allows the self-employed to deduct
100 percent of their health insurance costs. It is paid for by
modifying estate and gift taxes.
At Rules, three amendments were defeated on straight party line
votes.
Mr. Speaker, one of the biggest problems with this bill is that it
includes a retroactive tax increase. Companies acting on good faith are
about to have their tax deductions yanked out from under them simply
because we cannot find the money to pay for the health insurance tax
deduction.
Even though this is technically not a rate increase it is a
retroactive tax increase and it will still cause tremendous financial
shock to a great number of business people who trusted their Government
not to go back on its word.
This retroactivity is completely contrary to the promises made on
opening day. But Mr. Speaker, this should not surprise us. So what is
new.
On January 5, the Republicans said committees could not meet when the
House was considering amendments under the 5-minute rule; they said the
contract would be considered under open rules; they said rules would
only contain specific waivers, and they said there could be no
retroactive tax rate increases.
But these days, committees meet all the time while the House is in
session under the 5-minute rule.
There have been a whole lot of closed rules.
This rule waives all points of order.
And, this bill, the very first tax bill out of the gate, includes a
retroactive tax increase.
I want to emphasize that I am very supportive of the major goal of
this legislation, which is to restore the deductibility for the cost of
health insurance premiums paid by self-employed individuals.
It is absolutely critical that this deduction be available to ease
the financial burden that the self-employed must bear because of the
high cost of health care coverage.
One of the reasons I was very disappointed we failed to enact a
comprehensive health care bill last year was because of the
difficulties the self-employed face trying to find affordable health
insurance.
But I oppose this closed rule, and I urge defeat of this rule.
Mr. Speaker, I submit the following items:
First, a statement of the administration's policy supporting the tax
deduction but opposing the outright repeal of the FCC tax break, and
Second, a description of rules granted to date.
Statement of Administration Policy

H.R. 831--Permanently Extend the Tax Deductibility for
Health Insurance Costs for Self-Employed Individuals (Archer
(R) TX and 3 others):
As stated previously, the Administration supports the
primary purpose of H.R. 831--to extend permanently the 25
percent tax deduction for health insurance premiums for self-
employed individuals.
The Administration opposes one of the bill's offsets--i.e.,
the outright repeal of the current tax treatment for the sale
of radio and television broadcast facilities and cable
television systems to minority-owned businesses. The
Administration has expressed its willingness to work with
Congress to review what actions are necessary to ensure
proper use of the provision but continues to oppose its
outright repeal.
The Administration will work with the Congress to identify
appropriate offsets to extend this important health insurance
tax deduction.
Scoring for Purposes of Pay-As-You-Go:
H.R. 831 would affect receipts; therefore, it is subject to
the pay-as-you-go requirement of the Omnibus Budget
Reconciliation Act (OBRA) of 1990.
The Administration's preliminary scoring estimates of this
bill are presented in the table below. Final scoring of this
legislation may deviate from these estimates. If H.R. 831
were enacted, final OMB scoring estimates would be published
within five days of enactment, as required by OBRA. The
cumulative effects of all enacted legislation on direct
spending and receipts will be reported to Congress at the end
of the congressional session, as required by OBRA.

[[Page H1914]]
PAY-AS-YOU-GO ESTIMATES
[Receipts in millions]
----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 1995-2000
----------------------------------------------------------------------------------------------------------------
SE Tax................................... -493 -437 -474 -516 -563 -613 -3,096
FCC...................................... +399 +449 +213 +220 +226 +233 +1,740
EITC..................................... ........ +14 +277 +295 +309 +332 +1,227
Other.................................... +12 +31 +34 +37 +40 +43 +197
----------------------------------------------------------------------
Totals............................. -82 +57 +50 +36 +12 -5 +68

----------------------------------------------------------------------------------------------------------------
Note:
SE Tax=25 percent tax deduction for self-employed persons.
FCC=Repeal of current tax treatment on sale of broadcast facilities to minority-owned businesses.
EITC=Modification of the Earned Income Tax Credit.
Other=Change in Section 1033 of the Internal Revenue Code.

FLOOR PROCEDURE IN THE 104TH CONGRESS
----------------------------------------------------------------------------------------------------------------
Resolution Process used for floor Amendments
Bill No. Title No. consideration in order
----------------------------------------------------------------------------------------------------------------
H.R. 1...................... Compliance................. H. Res. 6 Closed..................... None.
H. Res. 6................... Opening Day Rules Package.. H. Res. 5 Closed; contained a closed None.
rule on H.R. 1 within the
closed rule.
H.R. 5...................... Unfunded Mandates.......... H. Res. 38 Restrictive; Motion adopted N/A.
over Democratic objection
in the Committee of the
Whole to limit debate on
section 4; Pre-printing
gets preference.
H.J. Res. 2................. Balanced Budget............ H. Res. 44 Restrictive; only certain 2R; 4D.
substitutes.
H. Res. 43.................. Committee Hearings H. Res. 43 Restrictive; considered in N/A.
Scheduling. (OJ) House no amendments.
H.R. 2...................... Line Item Veto............. H. Res. 55 Open; Pre-printing gets N/A.
preference.
H.R. 665.................... Victim Restitution Act of H. Res. 61 Open; Pre-printing gets N/A.
1995. preference.
H.R. 666.................... Exclusionary Rule Reform H. Res. 60 Open; Pre-printing gets N/A.
Act of 1995. perference.
H.R. 667.................... Violent Criminal H. Res. 63 Restrictive; 10hr. Time Cap N/A.
Incarceration Act of 1995. on amendments.
H.R. 668.................... The Criminal Alien H. Res. 69 Open; Pre-printing gets N/A.
Deportation Improvement preference; Contains self-
Act. executing provision.
H.R. 728.................... Local Government Law H. Res. 79 Restrictive; 10 hr. Time N/A.
Enforcement Block Grants. Cap on amendments; Pre-
printing gets preference.
H.R. 7...................... National Security H. Res. 83 Restrictive; 10 hr. Time N/A.
Revitalization Act. Cap on amendments; Pre-
printing gets preference.
H.R. 729.................... Death Penalty/Habeas....... N/A Restrictive; brought up N/A.
under UC with a 6 hr. time
cap on amendments.
S. 2........................ Senate Compliance.......... N/A Closed; Put on suspension None.
calendar over Democratic
objection.
H.R. 831.................... To Permanently Extend the H. Res. 88 Restrictive; makes in order 1D.
Health Insurance Deduction only the Gibbons
for the Self-Employed. amendment; waives all
points of order.
----------------------------------------------------------------------------------------------------------------
73% restrictive; 27% open. These figures use Republican scoring methods from the 103rd Congress. Not included in
this chart are three bills which should have been placed on the Suspension Calendar: H.R. 101, H.R. 400, H.R.
440.

Mr. QUILLEN. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from Florida [Mr. Goss], a very valuable member of the
Committee on Rules.
Mr. GOSS. Mr. Speaker, I thank the distinguished chairman emeritus of
the Committee on Rules, the gentleman from Tennessee [Mr. Quillen], for
yielding time to me, and let me first, at the request of the
leadership, make a unanimous consent request.

permission for certain committees and their subcommittees to sit today
during the 5-minute rule

Mr. GOSS. Mr. Speaker, I ask unanimous consent that the following
committees and their subcommittees be permitted to sit today while the
House is meeting in the Committee of the Whole House on the State of
the Union under the 5-minute rule:
The Committee on Commerce;
The Committee on Government Reform and Oversight;
The Committee on Science; and
The Committee on Transportation and Infrastructure.
Mr. Speaker, it is my understanding that the minority has been
consulted, and that there is no objection to these questions.
The SPEAKER pro tempore (Mr. Hefley). Is there objection to the
request of the gentleman from Florida?
There was no objection.
Mr. GOSS. Mr. Speaker, the House is moving expeditiously in meeting
the pledges it made with the American people under the Contract With
America. We continue to progress on issues of major importance to a
clear majority of our constituents. Today we will act on legislation of
great concern to many Americans--and one that has some sense of urgency
with tax season upon us--the permanent extension of a 25-percent health
insurance deduction for self-employed individuals. While this is a
modified closed rule, all Members of this House seem to agree that
certain types of highly complex bills--especially those involving the
Tax Code--must be considered under carefully structured debate. I am
pleased that we are able to
provide for one amendment in the nature of a substitute to be offered
by Mr. Gibbons or his designee, which will allow those Members who came
to the Rules Committee seeking changes in H.R. 831, a chance to have
their views debated and voted upon.

I am delighted that H.R. 831 achieves a goal supported overwhelmingly
by Members on both sides of the aisle. The deduction for the self-
employed was unfortunately allowed to expire at the end of 1993,
leaving many individuals and small businesses in limbo and at a
distinct disadvantage under the Tax Code.
H.R. 831 takes an important step in providing some certainty to these
folks, by making the extension of the deduction permanent. The goal is
to establish the right mix of carrots and sticks so more people can
secure health insurance. It was clear judging from the debate in the
Rules Committee meeting last Thursday, that Members are eager to rejoin
the larger issue of health care reform--of which H.R. 831 is only one
small piece. I share that eagerness and look forward to a substantive
debate on the whole picture of health reform in the coming months. In
the meantime, I know there are some tangential issues raised by H.R.
831 that will prompt lively discussion on this floor--especially the
side issue of minority preferences and the FCC--but I hope that the
purpose of H.R. 831, providing a degree of fairness and reliability to
the Tax Code for the self employed, will not be lost.
Mr. Speaker, I urge our colleagues to support this rule and to
participate in this debate. I think it is going to be a good debate,
with a good result.
Mr. MOAKLEY. Mr. Speaker, let me say that I am sure if I had the
number of Members on this side that the gentleman has on his side, I
would be sure it would be a good result also.
Mr. Speaker, I yield 7 minutes to the gentleman from Florida [Mr.
Gibbons].
Mr. GIBBONS. Mr. Speaker, I thank our colleague, the former chairman
of the Rules Committee and presently ranking minority member, the
gentleman from Massachusetts [Mr. Moakley].
Mr. Speaker, I guess we ought to call this bill the clean-up of the
messes of World War II.
I think the biggest accident that occurred in World War II--and I am
talking now about political accidents or economic accidents--happened
around this area of health insurance. As we may recall, early in 1942
the Congress decided that since wages and prices were going up so fast
because of the number of people entering the military and because of
the number of people who had to go into the new jobs that
[[Page H1915]] were being created to fill the war effort, there was a
great push on wages and prices, so wage-and-price controls were
instituted in the United States. But American business people being the
ingenious people they are found a way around all that by granting
fringe benefits.
There fringe benefits had largely been nonexistent prior to World War
II, but with the increases in taxes, and the impact of wage-and-price
controls, and the shortage of labor, fringe benefits became very
popular. They became the popular way of enticing people to work in a
particular industry. So out of all of those fringe benefits, at the top
of the fringe benefits came health care coverage. Health care insurance
sprung out of all that wage-and-price control push in the early 1940's.
Let me explain this to those who are not fully familiar with how
these benefits work. They work essentially like this: If you are the
beneficiary of a policy, the person who provides it to you, your
employer, usually a corporation, gets a tax deduction for that policy.
There are some abuses in that tax deduction. Some people get very, very
generous benefits with these insurance policies, something bordering on
vacations, and there are others who get practically nothing. There is
no requirement that the low-paid employees get the same amount as the
bosses or the members of the board of directors.

{time} 1720

So we need to straighten all that up, and we should have done it long
before this time, and we need to do it as rapidly as possible.
That is one deduction. Then there is an exclusion from income.
Remember, we were trying to find a way around wage-price controls, and
these were not wages, they were not income to the employee, so they
gave the employee an exclusion from income of this big benefit, which
was just the same as wages, but the Congress did not catch it in time
and they got excluded from income of the employee.
So there are two huge tax benefits. The largest tax benefits you will
find in the Internal Revenue Code revolve around this insurance
arrangement I have just described here. So that is one of the things we
are going to take a small step in straightening out today.
The gentleman from Washington [Mr. McDermott] will have a provision
in there that extends the deduction and exclusion to those people in
the country who are self-employed, in other words, a secretary or
helper of a self-employed, or someone whose corporation or business
does not give them a
health insurance policy. He will allow those people who have been
discriminated against horribly in our tax system and horribly in our
health care system, if the substitute amendment passes, and I think it
ought to pass, to get a tax deduction. It will have to be phased in,
because we are talking about a lot of money, but it is the right and
just thing to do for the self-employed who are covered by this bill,
and the employees of the self-employed and by those employees who work
for businesses who do not furnish health insurance. They ought to get
the same kind of treatment of their income that employees do who work
for a company who provides health insurance. If they buy the health
insurance themselves, these employees will get an exclusion and a
deduction. That is a good measure. It ought to be approved. It is in
the amendment.

The other part of World War II that we are straightening out here has
to do with a tax benefit that was granted because the Government had to
seize certain radio channels for wartime purposes. Since the person
that had their channel seized had no chance to reinvest their money
right away in a new radio station, they got a rollover. Somewhere along
the line, this rollover got turned into a benefit for minorities. That
will be amply discussed in the debate to come.
A substitute will be available, and Mr. McDermott sitting right back
here will handle the substitute. I have designated him to handle the
substitute for the Democratic members of the Committee on Ways and
Means, and he can adequately explain his substitute. I think it is a
good substitute and I urge you all to vote for that.
I would urge Members in the process here to vote for the motion to
recommit, because it really does right by people who have been hurt and
hurt badly and unfairly, and to vote also for the McDermott substitute,
because it does a fine job in making the necessary corrective efforts
in the other tax benefit.
Mr. Speaker, I yield back the balance of my time.
Mr. QUILLEN. Mr. Speaker, I yield 8 minutes to the gentleman from
Texas [Mr. Archer], the distinguished chairman of the Committee on Ways
and Means.
(Mr. ARCHER asked and was given permission to revise and extend his
remarks.)
Mr. ARCHER. Mr. Speaker, I thank my friend for yielding and for
bringing this rule before the floor. I think it is a fair rule. It
gives the minority an opportunity to have an hour debate on their
substitute and also gives them another opportunity to make a motion to
recommit with instructions. I believe that this issue can be fully
developed under that framework.
As the gentleman from Florida [Mr. Gibbons] just completed saying,
until December 31, 1993, the self-employed were permitted to deduct for
tax purposes 25 percent of their health insurance costs. At that time,
it was permitted to expire, and was not extended last year.
H.R. 831 not only restores the self-employed's 25-percent deduction
for 1994, but also makes the deduction permanent, so it does not
continue to go down this roller coaster road of being on again, off
again without the certainty that the self-employed should have.
It is vital so that millions of self-employed individuals can avoid
the expense of having to file an amended tax return for 1994. Hopefully
we will get this bill out of the House today, pass it to the
Senate, and hopefully it will be passed rapidly over there.

The $2.9 billion revenue cost of permanently extending the self-
employed health insurance deduction is fully funded in this bill by
several provisions that will greatly improve our Nation's tax laws.
Because it is fully funded, it will not in any way increase the
deficit.
First, H.R. 831 repeals the Internal Revenue Code section 1071, under
which the Federal Communications Commission can grant, at its
discretion, tax certificates deferring tax on the sale or exchange of
broadcast facilities.
Section 1071 was enacted in 1943 to address problems arising from new
Federal regulations forcing the sale of radio stations. Under general
tax principles, gain on dispositions of property that is involuntarily
converted, that is, property that is destroyed or taken by the
government in a condemnation proceeding, is excluded from taxable
income if the proceeds are reinvested in similar replacement property.
However, the involuntary conversion rules in effect at the time in
1943 did not apply to the sales of radio stations because of the
scarcity of stations and there was no opportunity for reinvestment.
Congress believed, therefore, it was appropriate to liberalize the
rules for the FCC-ordered sales and code section 1071 was enacted. The
time has come to repeal section 1071 because the FCC has expanded the
purposes for which it issues tax certificates far beyond Congress'
original intent of addressing problems relating to involuntary sales of
broadcast facilities.
More important, I believe it is wrong for the Congress to give
authority to any agency to administer what is in essence an open-ended
entitlement program with no constraints on the extent to which the
agency can hand out tax benefits.
Clearly, this leaves a large tax loophole in the code. H.R. 831 would
repeal this loophole and not, as my friend from Massachusetts said,
retroactively, but rather to January 17, at which time notice was given
by public press release that whatever action we took would begin on
that date. It is prospective beginning January 17, and I would say to
my friend from Massachusetts that if he supports the Democrat
substitute, it has the same effective date of January 17. So we should
disabuse ourselves of any charges of retroactivity that might occur in
what we do today.
The bill's other offset for the cost of making the 25-percent
deduction permanent is a tax change proposed by the Clinton
administration to deny the earned income tax credit to persons
[[Page H1916]] with more than $2,500 of taxable interest and dividend
income. The administration stated in its proposal that under current
law a taxpayer may have low earned income and therefore be eligible for
the EITC, even though he or she has significant interest or dividend
income. The EITC should be targeted to families with the greatest need.
The Committee on Ways and Means agrees with the administration.
However, rather than deny the entire EITC when interest and dividend
income reaches $2,500 as the administration proposed, H.R. 831 would
phase out the credit as interest and dividend income increases from
$2,500 to $3,150.
Thus, not only does H.R. 831 reinstate the self-employed's 25-percent
deduction for health insurance costs, it also makes several other
needed changes in our Tax Code. I urge my colleagues to support this
rule.
Mr. MOAKLEY. Mr. Speaker, it gives me great pleasure to yield 7
minutes to the gentleman from New York [Mr. Rangel].
(Mr. RANGEL asked and was given permission to revise and extend his
remarks.)
Mr. RANGEL. My colleagues, I hope we take a good look at what is
going on here today and see whether or not we want to project this type
of conduct in the future.
First of all, the health benefits that we are talking about expired
in December, and there should be very few, if any, Members in this
House that would not want to continue to make certain that we give a
deduction and we encourage the self-employed to have health insurance.
Now, the committee had notice that we were going to take care of this
from last year, but then comes the question of how we are going to pay
for this. And would Members believe the committee had no notice of how
we were going to pay for this until a day or two before the actual
meeting to markup.
Now, we have had the subcommittee of the Committee on Ways and Means
study the question of Viacom and to report back to the full committee.
Well, we have not had any report on this Viacom deal and how all of a
sudden this was selected to pay for the extension of the health
benefits.
Now, Members will tell you that Viacom received $400 million, $500
million as a result of selecting a minority, that a contract was signed
and that this was not the intention of the legislation because
originally it had something to do with radio and television people
getting rid of their property because of the law.
But we also know that this law was amended. And the person that was
the beneficiary of getting the minority station was working for the FCC
under President Carter. And he has subsequently gotten four pieces of
TV and/or radio stations as a result of the law.
And this one he was about to do except someone said it did not pass
the smell test. No one said it was illegal. No one said it was immoral.
No one said that it violated any regulations. And I assumed it would be
just out of taste to say that because this guy was black and was
enjoying the benefits of the law that was written by this Congress,
that we have now said we are going to stop the deal.
Now, if we have been doing this type of thing all along with every
S&L contract that did not pass the smell test, I would join in and say,
anything that Congress does not like, let us get involved and stop it.
It does not sound too Republican to me, keep the Government out of
business. Let the free marketplace work its will. But I just wonder if
we can issue a press release and put people on warning, is that the
type of reliance that we want on our Tax Code?
My good friend, the gentleman from Texas, Chairman Archer, says we
should not have the FCC making these determinations, that it should be
with the Treasury or should be with the IRS. I do not have any problem
with that. I never said it should be the FCC. But if we want to knock
out preferences that minorities get so that they, too, would be able to
be proud to see their images on the airwaves, that they would not have
to look at themselves as being clowns and walking slowly and telling
jokes and being demeaned as criminals or people on welfare, if we want
Hispanics to be able to say that they can look with pride at their own
programs, if we want the world to say that the United States is not
sterile, it is not white, it is not male, it is a beautiful combination
of a whole lot of cultures and the whole world is made up of these
people and we should make certain that we are not talking about
affirmative action and preferential treatment, we should have our board
rooms and our airwaves reflect what America really is, people of all
colors.
And if we are going to knock out the minority provision, we should at
least have hearings on it and do it in the open rather than look at
this one deal, knock this out retroactively and then say that, hey, by
the way, we have got to knock out the whole section because we do not
like the FCC involved in making the decision.
We could reform this. If we in our hearts wanted to make certain that
everyone had an equal chance, maybe this law was bad. Maybe we should
substitute it with something else. Maybe we could have hearings and
come up with something. But, no, they say that they want to make
certain that this does not happen again and they wipe it out
completely.
Now, I want Members to think with me, because I am not an economist,
but what we are saying here now is that somehow this Viacom was going
to make something from $400 million to $500 million in tax benefits and
deferred payments of their capital gains tax.
All I want to know is, if this deal was going to cause us to lose
$400 million in revenue, how does canceling the deal, where there is no
transaction, raise the money to pay for the health bill? We cannot
have it both ways. If the Viacom deal was based on taxes, and it was,
and we shattered the Viacom deal to Washington, where in the heck is
the money being raised? There is no transaction here.

I submit to my colleagues, if we have to do health, do health. If we
want to knock out set-asides, knock out set-asides. If we want to set
aside the hopes and the dreams of minorities that had this, well, go
ahead and do it. We have the votes to do it. But I am suggesting that
we do not have to do it in the middle of the night. This is the
beginning of a folly. It started in the campaign.
We now find some gentlemen who are running for President in the other
body suggesting that if elected they will strike out all preferences,
that 62 percent of angry white males voted for the Republican party.
Well, I tell my colleagues this: close to 50 percent of the American
people did not vote for anybody. I think America has gone a long way in
getting rid of the vestiges of racism. We have a long way to go. But if
we have differences in how to get along as brothers and sisters, if we
have differences in how all of us should make certain that we are
treated with equality, I say, do not do it in the middle of the night.
Come up. If we differ, let us fight about it. But this is no place to
be wiping out a minority tax preference and color it under the cloud
that we are trying to improve the quality of health for the self-
employed.
Mr. QUILLEN. Mr. Speaker, I yield 3 minutes to the distinguished
gentleman from Wisconsin [Mr. Roth].
Mr. ROTH. Mr. Speaker, I thank the gentleman for yielding time to me.
Mr. Speaker, I hope that this body today passes the rule and the
bill. This is real working people's legislation. We always talk about
helping middle-class America; this will truly help middle-class
America.
Mr. Speaker, if Mobil Corp. can deduct 100 percent in health
insurance costs, then why cannot Ann Kirchner, a farmer in Shiocton,
WI, deduct just 25 percent of her health insurance?
The answer is that Congress allowed the 25 percent health insurance
deduction for small business to expire last year.
Under the current Tax Code, big businesses may deduct the cost of
health insurance from their taxes. The self-employed farmer,
shopkeeper, entrepreneur, or small business owner, however, cannot
deduct a penny of their insurance costs.
Congress can right this wrong by passing this bill, H.R. 831, to
allow 25 percent deduction for the 1994 tax year and to make it
permanent thereafter.
[[Page H1917]] Since 1986, we have always had this annual renewal.
Let us make it permanent, and we are going to do that with this
legislation.
H.R. 831 will take us one step closer to the goal of leveling the
playing field between big business and the ordinary self-employed
American.
I would like to add that today's legislation should be just a
starting point in making our health care system fairer for the average
American. Congress must expand on today's work by making health
insurance 100 percent tax deductible for all Americans.
I hope that my fears are not well-founded, that we are going to go
with the 25 percent and then forget it. If 100 percent is good enough
for Mobil Corp., the big corporation in America, why is not 100 percent
good enough for the farmer, the shopkeepers and others?
Mr. VOLKMER. Mr. Speaker, will the gentleman yield?
Mr. ROTH. I yield to the gentleman from Missouri.
{time} 1740

Mr. VOLKMER. Mr. Speaker, I agree with the gentleman that 100 percent
is only the fair way to do it.
Would the gentleman, if given the opportunity, support an amendment
to make it 100 percent?
Mr. ROTH. Mr. Speaker, I would say to the gentleman, I would be happy
to do that. That is exactly the goal I am shooting for. I want to make
it 100 percent deductible for all Americans, from the farmer from rural
Wisconsin to the boardrooms of urban America.
There are 3.2 million people affected by this, and this is going to
be the first step in the Republican plan to restructure health care in
America so we have a fair Tax Code, and I hope we pass this legislation
to give the people a 25-percent deduction.
Then let us not forget that we want to make it as fair for the
average American as we have made it for corporate America, and go ahead
and have 100 percent deductibility for health care costs.
I thank the gentleman from Tennessee for yielding time to me.
Mr. VOLKMER. The gentleman can do it today, Mr. Speaker.
Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
Because of the plea of the gentleman at the mike, Mr. Speaker, I
think we will have a vote on the previous question, so the gentleman
can vote against the previous question, and then put the amendment the
gentleman wants in the bill.
Mr. Speaker, I yield 3 minutes to the gentleman from Maryland [Mr.
Cardin].
Mr. CARDIN. Mr. Speaker, I thank the gentleman for yielding me this
time.
This is a good follow-up to the last comment, Mr. Speaker. I went to
the Committee on Rules on H.R. 831, to put in order an amendment that
would increase the deduction for self-employeds to 80 percent, starting
in the second year.
First, I want to congratulate the gentleman from Texas [Mr. Archer]
and the gentleman from Florida [Mr. Gibbons] for bringing this bill
forward. This is a very important bill for self-employed individuals.
They are filing their tax returns now. We do not want them to have to
file amended returns, so it is important that we act promptly on this
legislation.
Mr. Speaker, I support the bill. I supported the bill in the
committee, and I will support the bill on the floor, but I was
disappointed that the Committee on Rules did not make in order an
amendment that would have allowed us to increase the 25 percent for the
self-employed deductions to 80 percent. It could have been made in
order. It was not.
Mr. Speaker, the tradition has been to protect many of the tax bills
that come out of the Committee on Ways and Means, but there are only
three other individuals was came forward to the Committee on Rules and
asked for amendments to be made in order.
It would not have made it disorderly for those amendments to be
placed in order by this rule, and I hope that we will not approve the
rule in its current form. This bill is different than the bill filed by
the gentleman from California [Mr. Thomas] to extend the 25 percent for
1944 only. Many of us thought that would be the bill we would be acting
on promptly. This bill extends it permanently, but at 25 percent.
My concern, Mr. Speaker, is if we extend it permanently at 25
percent, we are never going to get it up to the level of 80 percent,
which I think is the right level.
Why 80 percent? Because the average business in this country pays 80
percent of the insurance premiums of its workers and it is entitled to
deduct that entire 80 percent. To provide parity for self-employed
people, if we allow them to deduct 80 percent of their premiums, we
will have parity between the self-employed and the people who work for
companies.
Mr. Speaker, is it important? Yes, it is. In 1986 we adopted a 25
percent deduction for the self-employed. It is estimated that 400,000
more people are insured as a result of that tax provision. However,
there are still 3.1 million self-employed individuals who have no
health insurance.
They are one and a half times more likely to have no health insurance
than a company that can use the deduction of 80 percent, or what they
can deduct on their insurance premiums. If the Committee on Rules would
have made in order an amendment to increase this to 80 percent, we
could have gotten more people insured.
I do not understand the logic for why that was not made in order. It
was paid for in the amendment, it was in compliance with the rules, and
in a sense of fairness, where the House can decide whether it should be
25 percent or 80 percent, why not let that amendment come before the
House and be voted on by the House?
That is what my amendment and the amendment of the gentleman from
Massachusetts [Mr. Neal] provided for, and I would urge my colleagues
to defeat the rule or the previous question so we can make that
amendment in order, giving us the opportunity to vote for a higher
percentage than 25 percent.
The SPEAKER pro tempore. The gentleman from Tennessee [Mr. Quillen]
has the right to close.
The Chair recognizes the gentleman from Massachusetts [Mr. Moakley].
Mr. MOAKLEY. Mr. Speaker, I yield 4 minutes to my dear friend, the
gentleman from Massachusetts [Mr. Neal].
Mr. NEAL. Mr. Speaker, I thank the gentleman from Massachusetts for
yielding time to me.
Mr. Speaker, I rise in opposition to the rule for H.R. 831. This
legislation would restore and make permanent the 25 percent tax
deduction for health insurance premiums for the self-employed. The
deduction is paid for by a very controversial tax change.
This rule makes in order one and only one substitute. The markup
originally scheduled on this Committee on Ways and Means was to restore
the 25 percent deduction for 1994. It was my understanding at that time
that the committee wanted to act on this legislation quickly in order
to prevent individuals from filing amended returns. We are fast
approaching the tax filing deadline for 1994, and in fact for farmers
the tax filing deadline is on March 1.
It is also my belief that at a later date the committee was to
address the issue of making the deduction permanent and increasing the
amount of the deduction. However, the day before the markup we received
notice that the markup was to make the deduction permanent, and it
would be paid for with two tax provisions.
One of the revenue provisions, the repeal of Code section 1071, gives
the Federal Communications Commission the authority to grant tax
certificates deferring capital gains taxes on the sale or exchange of
broadcast facilities to minority individuals or minority-controlled
entities.
I am pleased the committee took action on restoring the 25 percent
deduction for 1994. However, I am very concerned that the 25 percent
deduction should be made permanent, but we should move on this very
quickly with additional changes that the gentleman from Maryland [Mr.
Cardin] and I have proposed. The deduction should be increased.
During the committee markup, the gentleman from Maryland [Mr. Cardin]
and I offered a specific amendment to restore the deduction for 1994
and to increase the deduction to 80 percent for 1995 and 1996. This
proposal would be financed by the same revenue offsets.
[[Page H1918]] The amendment unfortunately failed on a party-line vote.
Mr. Speaker, we have testified in front of the Committee on Rules
about our amendment. The Committee on Rules did not make our amendment
in order, although they gave us a very courteous hearing, and there
seemed to be general sympathy in the committee on both sides for our
proposal.
This legislation is very straightforward. The amendments presented to
the Committee on Rules by Committee on Ways and Means members were
germane and substantially related to 831. This was not a situation
where there were complicated issues in the legislation, or the
amendment contained new revenue offsets.
The 25-percent deduction is extremely important as an issue for the
self-employed. One quarter of self-employed Americans, 3.1 million
farmers, and craftsmen, professionals, and small business proprietors
have no health insurance. The self-employed are one and a half times
more likely to lack essential health care coverage.
Mr. Speaker, the Tax Code should encourage the self-employed to
pursue health insurance. The deduction would allow businesses to spend
more on health care. There are approximately 41 medically uninsured.
We need initiatives to encourage working people to provide for health
care coverage. An individuals's employment should not determine the tax
treatment of their health insurance. Most importantly, on this
occasion, this full House is fully capable of debating this issue
tonight.
This is important to self-employed Americans across this Nation, and
we should not have been denied the opportunity to offer the amendment
proposed by the gentleman from Maryland and I.
Mr. Speaker, I firmly oppose this rule, and I urge those on both
sides to proceed with a full debate and vote against this rule this
evening.
The SPEAKER pro tempore. The Chair would ask the gentleman from
Tennessee [Mr. Quillen] if he has additional request for time.
Mr. QUILLEN. Mr. Speaker, I have one additional speaker.
Mr. Speaker, I yield such time as he may consume to the gentleman
from New York [Mr. Solomon], the distinguished chairman of the
Committee on Rules.
Mr. SOLOMON. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, there may be a lot more acrimony, if we hear any more of
this rhetoric about closed rules around here.
Mr. Speaker, I just want to tell the Members in the minority, they
never had it so good. No other minority in the history of this Congress
was ever treated as good as they have been treated.
Mr. Speaker, let me tell the Members something else. We Republicans
said to the minority, we said to my very good friend, the gentleman
from Florida [Mr. Gibbons], the ranking member of the Committee on Ways
and Means, whatever he wants we will make in order. We want to be fair.
We made in order a rule that says the gentleman from Florida [Mr.
Gibbons] or his designee can offer any amendment that he wants. What is
more fair than that? Then I hear all this talk, Mr. Speaker, about how
some few Members are going to try to offer another amendment to shorten
this exemption for the self-employed that we are making permanent here
today.

{time} 1750

Let me tell you something. We Republicans are not going to foul up
the American people anymore. We are going to make this exemption
permanent forever. And no other amendments are going to be offered on
this floor that change that.
There is nothing more aggravating to a small businessman or to a
farmer than to have Congress continue to micromanage their life. And
that includes procrastinating and letting this exemption run out.
We should have done this bill last year, but, no, this Congress was
too busy fooling around trying to get reelected. It is about time we
got down to business. That is what this bill does.
I hear all this talk that some few Members are going to try to change
the funding provision in this bill so as to wipe out the estate tax
exemption. Nobody more than me, with 5 children and 4 grandchildren,
resents that more.
Members are not going to reduce the inheritance tax exemption that
citizens now have. We ought to be raising it to $1.2 million, not
cutting it down to $200,000, which is what some few Members want to do.
Let me tell you something. Let's get this rules debate over. Let's
get this bill out on the floor, and let's get up and vote for it one
way or the other. We know what we are voting for. We don't need all
this rhetoric.
Mr. NEAL. Mr. Speaker, will the gentleman yield?
Mr. SOLOMON. I yield to my good friend the gentleman from
Springfield, MA, whom I have a lot of respect for.
Mr. NEAL of Massachusetts. I thank the gentleman for yielding. By the
way, you were up for reelection last year, were you not, Mr. Chairman?
Mr. SOLOMON. I don't even remember it has been so long ago.
Mr. NEAL of Massachusetts. You are so confident, you do not have to
worry about reelection. Those of us on our side, we have to worry about
it.
Mr. SOLOMON. Let me tell the gentleman something. I represent a
district that is 45 percent Republican, and I get 75 percent of the
vote. That is how confident I am, because I represent the people. I
don't come down here and talk out of both sides of my mouth.
Mr. NEAL of Massachusetts. Let me ask the gentleman a specific
question if I might. I just want to say that in 7 years here I have
never received a more courteous hearing from anybody on my proposals,
when members on both sides of that committee agreed entirely with the
proposal, at least verbally, that the gentleman from Maryland [Mr.
Cardin] and I offered, and then, despite the fact that everybody said,
``Yes, this is the correct posture, this is the right position, you're
demonstrating the right attitude,'' and then we were told we could not
offer our alternative.
Everybody there in that room that day agreed with us, I say to the
gentleman from New York [Mr. Solomon]. Then they said, ``No, but you
can't offer it.'' But I do thank the gentleman for receiving me in a
courteous manner.
Mr. SOLOMON. If I had been in your shoes, I would have gone to my
minority leader, and I would have said, ``This is what I want in that
substitute.'' And I would have got it.
Mr. MOAKLEY. Mr. Speaker, I think the gentleman from New York [Mr.
Solomon] will have to apologize to a lot of Members that he could not
get their amendments through when he was the minority leader on the
committee.
Mr. Speaker, I yield 2 minutes to the gentleman from Missouri [Mr.
Volkmer].
Mr. VOLKMER. I thank the gentleman from Massachusetts for yielding me
this 2 minutes.
Here we go again, folks, another gag rule, just like we have been
having right along. I can well remember the day after we were sworn in,
the gentleman from New York said we were going to do open rules, at
least 70 percent open rules.
Let us look at this week. We have got a gag rule tonight, tomorrow we
get another gag rule, Thursday and Friday we get another gag rule. That
does not sound like very much openness. How about a good amendment? The
best amendment I have heard. ``You can't offer it.''
Some way, folks, you should realize that this House should be able to
determine whether or not our small-business people, my farmers, who are
paying $7,000, $8,000, $9,000 a year on health insurance but cannot
deduct a penny, they ought to be able to do like big business. Big
business controls down here. Big business gets a 100-percent deduction.
But they do not allow my small-business people and my farmers to do
that.
How can we do it? We can do it by defeating the previous question,
and once the previous question has been defeated, that amendment will
be in order. So a vote on the previous question is a vote whether or
not you want 100-percent deductibility for your farmers, for your
small-business people or if you do not want it. That is what it amounts
to, I say to the gentleman from New York, very clearly. It is very
clear for everybody. Nobody can deny the fact that if we defeat the
previous
[[Page H1919]] question, that amendment will be made in order.
So if you want to vote on it, now is the time, when we get right to
the previous question, vote down the previous question, get the
amendment in order, let the House decide this matter, and don't let it
be stymied by the Committee on Rules.
Mr. THOMAS. Mr. Speaker, will the gentleman yield briefly?
Mr. VOLKMER. I yield to the gentleman from California.
Mr. THOMAS. I would ask the gentleman from Missouri that if the
amendment to fund self-employed at 100 percent is offered, what will be
the revenue source to cover the cost?
Mr. VOLKMER. The gentleman from Maryland and others who have
developed the amendment have it. I do not know exactly, but they do
have it developed.
Mr. THOMAS. I see.
Mr. QUILLEN. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from California [Mr. Dreier], a very valuable member of the
Committee on Rules.
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Mr. Speaker, I thank the distinguished chairman emeritus
for yielding me this time.
Mr. Speaker, I rise in strong support of this rule. It is a fair and
balanced approach to a very important issue, trying to make permanent
this very important deduction which farmers and small business men and
women need if they are going to survive in this economy.
We have by addressing this apparently opened up the issue of health
care reform. Mr. Speaker, we plan, when we get beyond the first 100
days, to move meaningful market-oriented health care reform
legislation. But this is not the place to do that.
The measure here is very specific, it is being done under a fair and
balanced process. Everyone has acknowledged that we should not be
opening up the Tax Code for all kinds of amendments which could create
many serious problems. This is the way that it should be done. I hope
very much that my colleagues will join in supporting this balanced
rule.
Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Pennsylvania [Mr. Fattah].
Mr. FATTAH. Mr. Speaker, I thank the ranking member of the Committee
on Rules for yielding me the time.
It was once suggested that what would it really mean if you won the
world and lost your soul. It seems as though the great debate in the
majority party's camp has been won by the David Duke faction. Because
tonight under the guise of trying to help self-employed individuals,
they want to snatch the rug out from up under a program that has been
very meaningful for the tens of millions of African-Americans and
Hispanic Americans throughout this country.
Today in America, there are over 18,655 broadcast licenses for radio,
TV, and cable. Out of these 18,000 licenses, 332 are owned by
minorities. When this program was put in place in 1978, 0.5 percent of
these licenses were owned by minority group members. It is now 3
percent, a sixfold increase. Three percent of the 18,000 licenses, some
300 of them, because we encouraged through the Tax Code a process in
which some of the sales of radio and TV stations could move from the
old boys' network to a circumstance in which other people in this
country could participate.
So we have this sneak attack this evening on the floor of the U.S.
Congress. I guess even David Duke would not be proud because he was
making it very plain about what his position was.
I guess now the majority, as the chairman, as the gentleman from New
York suggests, is why don't they just be more open about what it is
they attempt to do. Their Presidential candidates have suggested that
this is going to be a critical issue and they want to win votes by
dividing our country.
It is an unfortunate hour for this Congress and for our country.
Mr. MOAKLEY. Mr. Speaker, I urge a ``no'' vote on the previous
question to make in order the Rangel amendment, the Cardin amendment,
the Stark amendment, and the Mfume amendment.
Mr. Speaker, I yield back the balance of my time.
Mr. QUILLEN. Mr. Speaker, to close the debate on this side, I yield 2
minutes to the gentleman from Illinois [Mr. Weller].

{time} 1800

Mr. WELLER. Mr. Speaker, I wish to thank the gentleman from Tennessee
for the courtesy of yielding me 2 minutes of his time.
Mr. Speaker, I rise today to express my strong support for this rule
and for H.R. 831 which will bring tax fairness to the little guy and
especially millions of middle-class working Americans. This bill will
restore the 25 percent health care deduction insurance for the self-
employed. This sorely needed tax deduction was held hostage, as many
will remember, by the Clinton government-run health care plan that was
eventually rejected by the voters this past fall.
As a result 3.2 million families, including my own parents, self-
employed farmers, will now be unable to deduct even 25 percent of the
cost of health insurance for themselves and their families, unless we
enact this legislation.
Major corporations are able to write off 100 percent of the costs of
their health insurance. Yet, self-employed individuals, like my parents
who run a fifth generation hog farm, may have to forgo insuring their
family because they cannot afford the added cost. This situation will
undoubtedly lead to thousands of Americans being added to the millions
of those already uninsured.
H.R. 831 will restore at least part of the tax break that is
currently available to corporations which the self-employed have come
to rely on. This bill not only restores the deduction for last year,
but also makes it permanent so that the self-employed do not have to
travel down this road again, year in and year out.
Mr. Speaker, finally we have a Congress which is committed to
bringing tax fairness to all Americans. Restoring the 25 percent health
care deduction for the self-employed will help make health care more
affordable. H.R. 831 is an important first step that must not be
delayed.
Let us make the right vote and vote aye for the rule and H.R. 831.
Mr. QUILLEN. Mr. Speaker, I urge adoption of the rule. It is time
that we get down to full debate on this measure and consider the
substitute and go on with our business.
Mr. Speaker, I yield back the balance of my time, and I move the
previous question on the resolution.
parliamentary inquiry

Mr. RANGEL. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore (Mr. Hefley). The gentleman will state his
parliamentary inquiry.
Mr. RANGEL. Mr. Speaker, it is my understanding that all points of
order have been waived by the Committee on Rules, and my parliamentary
inquiry is that if in fact there is no funding mechanism for the
provision of extending health care for the self-employed, does the
waiver of the point of order prevent anyone from going into the funding
mechanism as it relates to the Budget Act?
The SPEAKER pro tempore. The rule does indeed waive all points of
order against consideration of the bill.
Mr. RANGEL. I knew that.
But I am asking the Chair, when we have a violation of the Budget
Act, and this is something that is very sacred to Republicans and
Democrats, that the only thing that we have to do when we do not
provide the funding for a particular piece of legislation is go to the
Committee on Rules and ask them to waive any violation that we have as
relates to the Budget Act? I mean is that the Chair's ruling?
Mr. SOLOMON. Mr. Speaker, I do not believe that is a parliamentary
inquiry.
The SPEAKER pro tempore. The Chair will respond that the waiving of
all points of order includes waiving of points of order when it
concerns rules under the Budget Act.
Mr. RANGEL. So my last parliamentary inquiry is if we want a bill
funded and we do not have the money for it, all we have to do is go to
the Committee on Rules and tell them to waive it, and then we do not
even have to fund it, is that correct? Is that correct, Mr. Speaker?
[[Page H1920]] The SPEAKER pro tempore. The Committee on Rules does
have the authority to waive all necessary points of order.
Mr. RANGEL. My point, Mr. Speaker, is that you can bust the budget.
The SPEAKER pro tempore. Does the gentleman have a further inquiry?
The gentleman should not restate the inquiry over and over again. If
the gentleman has another inquiry let him state it.
Mr. RANGEL. Then the Budget Act is not relevant when the point of
order is being waived by the Committee on Rules?
Mr. SOLOMON. Mr. Speaker, that is not a parliamentary inquiry.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. VOLKMER. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
Pursuant to the provision of clause 5 of rule XV, the Chair announces
that he will reduce to a minimum of 5 minutes the period of time within
which a vote by electronic device, if ordered, will be taken on the
question of agreeing to the resolution.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 230,
nays 191, not voting 13, as follows:

[Roll No. 146]

YEAS--230

Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Boucher
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cox
Crane
Cremeans
Cubin
Cunningham
Davis
Deal
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Ganske
Gekas
Gilchrest
Gillmor
Gilman
Goodlatte
Goodling
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hancock
Hansen
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson (SD)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martinez
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Paxon
Petri
Pombo
Porter
Portman
Pryce
Quillen
Quinn
Ramstad
Regula
Riggs
Roberts
Rogers
Rohrabacher
Ros-Lehtinen
Roth
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tate
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Torricelli
Upton
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer

NAYS--191

Abercrombie
Ackerman
Andrews
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Brewster
Browder
Brown (CA)
Brown (OH)
Bryant (TX)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Coleman
Collins (IL)
Collins (MI)
Condit
Conyers
Costello
Coyne
Cramer
Danner
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dixon
Doggett
Dooley
Doyle
Durbin
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Geren
Gibbons
Gordon
Green
Gutierrez
Hall (OH)
Hall (TX)
Hamilton
Harman
Hastings (FL)
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson-Lee
Jacobs
Jefferson
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
LaFalce
Lantos
Laughlin
Levin
Lewis (GA)
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
McNulty
Meehan
Menendez
Mfume
Miller (CA)
Mineta
Minge
Mink
Moakley
Mollohan
Montgomery
Moran
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Parker
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Pickett
Pomeroy
Poshard
Rahall
Rangel
Reed
Reynolds
Richardson
Rivers
Roemer
Rose
Roybal-Allard
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Skelton
Slaughter
Spratt
Stark
Stenholm
Stokes
Studds
Stupak
Tanner
Tauzin
Taylor (MS)
Tejeda
Thompson
Thornton
Thurman
Torres
Towns
Traficant
Tucker
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Wilson
Wise
Woolsey
Wyden
Wynn
Yates

NOT VOTING--13

Borski
Brown (FL)
Cooley
Crapo
de la Garza
Dingell
Ehlers
Gallegly
Gonzalez
Meek
Radanovich
Rush
Williams

{time} 1823

Ms. DANNER, and Messrs. OWENS, SPRATT, and FAZIO changed their vote
from ``yea'' to ``nay.''
Mr. FLANAGAN and Mr. CHRYSLER changed their vote from ``nay'' to
``yea.''
So the previous question was ordered.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Hefley). The question is on the
resolution.
The question was taken, and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. LINDER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 229,
nays 188, not voting 17, as follow:

[Roll No. 147]

YEAS--229

Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Boucher
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cooley
Cox
Crane
Cremeans
Cubin
Cunningham
Davis
DeLay
Diaz-Balart
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Ganske
Gekas
Gilchrest
Gillmor
Gilman
Goodlatte
Goss
Graham
Greenwood
Gunderson
Gutierrez
Gutknecht
Hancock
Hansen
Hastert
Hastings (WA)
Hayworth
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Kleczka
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Menendez
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Montgomery
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Parker
Pastor
Paxon
Petri
Pombo
[[Page H1921]] Porter
Portman
Pryce
Quillen
Quinn
Ramstad
Regula
Riggs
Roberts
Rogers
Rohrabacher
Ros-Lehtinen
Roth
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Stearns
Stockman
Stump
Tate
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Upton
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer

NAYS--188

Abercrombie
Ackerman
Andrews
Baesler
Baldacci
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Brewster
Browder
Brown (CA)
Brown (OH)
Bryant (TX)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Coleman
Collins (IL)
Collins (MI)
Condit
Conyers
Costello
Coyne
Cramer
Danner
Deal
DeFazio
DeLauro
Dellums
Deutsch
Dicks
Dixon
Doggett
Dooley
Doyle
Durbin
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Geren
Gibbons
Gordon
Green
Hall (OH)
Hall (TX)
Hamilton
Harman
Hastings (FL)
Hayes
Hefley
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson-Lee
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Klink
LaFalce
Lantos
Laughlin
Levin
Lewis (GA)
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
McNulty
Meehan
Mfume
Miller (CA)
Mineta
Minge
Mink
Moakley
Mollohan
Moran
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Pomeroy
Poshard
Rahall
Rangel
Reed
Reynolds
Richardson
Rivers
Roemer
Rose
Roybal-Allard
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Skelton
Slaughter
Spratt
Stark
Stenholm
Stokes
Studds
Stupak
Tanner
Tauzin
Taylor (MS)
Tejeda
Thompson
Thornton
Thurman
Torres
Torricelli
Towns
Traficant
Tucker
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Wilson
Wise
Woolsey
Wyden
Wynn
Yates

NOT VOTING--17

Borski
Brown (FL)
Crapo
de la Garza
Dingell
Ehlers
Gallegly
Gonzalez
Goodling
Jacobs
Meek
Pickett
Radanovich
Rush
Spence
Talent
Williams

{time} 1831

So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
The SPEAKER pro tempore (Mr. Hefley). Pursuant to House Resolution 88
and rule XXIII, the Chair declares the House in the Committee of the
Whole House on the State of the Union for the consideration of the
bill, H.R. 831.

{time} 1834

in the committee of the whole

Accordingly the House resolved itself into the Committee of the Whole
House on the State of the Union for the consideration of the bill (H.R.
831) to amend the Internal Revenue Code of 1986 to permanently extend
the deduction for the health insurance costs of self-employed
individuals, to repeal the provision permitting nonrecognition of gain
on sales and exchanges effectuating policies of the Federal
Communications Commission, and for other purposes, with Mr. McInnis in
the chair.
The Clerk read the title of the bill.
The CHAIRMAN. Pursuant to the rule, the bill is considered as having
been read the first time.
Under the rule, the gentleman from Texas [Mr. Archer] will be
recognized for 30 minutes, and the gentleman from Florida [Mr. Gibbons]
will be recognized for 30 minutes.
The Chair recognizes the gentleman from Texas [Mr. Archer].
Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I am proud that the first bill out of the Committee on
Ways and Means in this Congress is one that is so important to our
Nation's small business community. H.R. 831 will finally make the self-
employed's 25-percent deduction for health insurance costs permanent,
ending the uncertainty that is accompanied in this provision since its
enactment in 1986. H.R. 831 enjoys strong bipartisan support and strong
support from the Nation's small business community. In fact, the
National Federation of Independent Businesses has strongly endorsed
H.R. 831 and opposes the McDermott substitute, and the NFIB will
consider a vote on this bill as a key vote for the 104th Congress.
Mr. Chairman, I reserve the balance of my time.
Mr. GIBBONS. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman
from New York [Mr. Rangel].
(Mr. RANGEL asked and was given permission to revise and extend his
remarks.)
Mr. RANGEL. Mr. Chairman, my colleagues, some time ago some remarks
were attributed to me indicating that I was calling my colleagues
Hitler or suggesting that they were Nazis, and I want to publicly
apologize to anyone that was offended or thought that the inference, as
related to Hitler or to Nazis, had anything at all to do with the
people I work with every day.
The point that I was trying to make and I make today, and perhaps not
as well as I wish I could, is that during the time of the Holocaust,
when the Jews were the targets of the failure of the German Government
to provide a decent economy, he decided that he was going to scapegoat
the Jews, but so many people that were also on his list, they never
heard about what was going on. They did not believe that they were
involved. The Christians were not involved. The Pope did not know what
happened. Even Franklin Roosevelt never knew what happened. And today
there are some people who say it did not happen at all.
An analogy that I was making, as bad as it may have been, is that
there is an assault today on the poorest of the poor in the United
States, an assault on Medicaid, an assault on our aged. There is an
assault now even for minorities who are trying so desperately hard to
be on an even playing field.

{time} 1840

It is not that I am talking about affirmative action. Heck. White
folks have had affirmative action all their lives and their daddy's
lives and granddaddy's lives. The only time blacks get affirmative
action really is when it is time to go to combat and you see who is in
the infantry and see who is flying the planes.
All we are saying is those airwaves belong to us just like they
belong to you. And we are not asking for you to give us the money to
buy them. This is some scheme that was created that allowed the seller
to look for minorities, so that they would be able to be the
beneficiary of what they do in the old boys club.
Now, I am saying if you do not like the scheme, let us come up with a
better one. But do not use health care as a reason to knock out a
preference that we have to allow Hispanics and Asians and native
Americans just to be able to look at television and see on it something
that we like to see for your wives an our families.
How dare anyone say that it is fair to tie up a good bill to extend
health care to the self-employed with this vicious act without a
hearing, without a report, just because someone says that this black
guy got too big a deal.
I am telling you, if you do not like this deal and you feel that
retroactively you can put out a press release or pass a law and knock
out the deals, I wish I had known this when we had the savings and loan
thing coming across, because we had some deals there that never passed
the smell test. But this is what we are doing for the future.
Let me tell you this: You are firing the first shot across the bow
regarding knocking out affirmative action and preferential treatment.
We can use that tax code for other things too.
Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume,
simply to reply to the gentleman that
[[Page H1922]] there was a full and open hearing in the oversight
subcommittee of the Committee on Ways and Means on January 27 where all
witnesses who were interested in the subject were invited to come and
present their views.
Mr. Chairman, I yield 2 minutes to my friend, the gentleman from
Texas, Mr. Sam Johnson, who has fought for the interests of all
Americans, who nearly gave his life, and who holds the record for the
longest period of time in solitary confinement of any military person
in the history of this country, who sacrificed not just for one type of
American, but for all types of Americans.
Mr. SAM JOHNSON of Texas. Mr. Chairman, I want to clear the air. This
bill is not about race or about a Republican plan to dismantle
affirmative action. This is about providing a permanent 25-percent
deduction for health insurance to the 3.2 million hard-working self-
employed Americans.
In order to provide funding for this deduction the Ways and Means
Committee repealed section 1071 which is simply an FCC tax give away.
Section 1071 was created in 1943 by the FCC to give tax certificates
to radio station owners that were forced to sell one station. Under FCC
regulations, at that time, an owner could not have two stations in one
market.
Since 1943, the FCC has ballooned section 1071 into a voluntary,
loosely defined, unsupervised, open-ended tax giveaway entitlement
program.
They have kept sparse records of the tax loss to the taxpayers, and
how if at all, the program has enriched minority ownership. It is a
program that has outlived its usefulness. Not to mention the fact that
an independent agency should never be in the position of implementing
tax policy, this has and will invite disaster. Tax policy is only made
by Congress and should be carried out by the IRS.
Mr. Chairman, it is time to focus on the real issue at hand, giving
the self-employed a richly deserved deduction to help cover their
health costs for themselves and their families. Americans want, need
and deserve relief. We say support the self-employed, support the
passage of this bill.
Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from
California [Mr. Stark].
(Mr. STARK asked and was given permission to revise and extend his
remarks.)
Mr. STARK. Mr. Chairman, I thank the gentleman for yielding.
Mr. Chairman, we will be offering a motion to recommit, and I would
like to talk with you a little bit about what this will do and what it
will not do.
It will provide some peace of mind to 3.5 million Americans who, as
we debate tonight, are counting the months until they lose their health
insurance. If nothing else, Mr. Chairman, this changes nothing in the
bill except to extend their coverage as we granted them in 1985 by a
unanimous vote of the Committee on Ways and Means.
These people will lose their extended coverage because it expires
between 18 and 36 months from the time they had a change in family
status or lost their jobs for other reasons, and thereby would have
lost their employee health insurance. No one will have to subsidize
anyone. This is merely allowing those people to pay the full cost of
their insurance, at no cost to the employer, no cost to the taxpayer.
How can we deny these people, 16 million families have taken
advantage of this since 1985. There are each year 3 or 4 million people
who because of divorce, disability, the plant closes, would not have
insurance, voluntary private sector insurance. How can we deny those
people the opportunity to extend their insurance, protect their
families in the best American way?
Mr. Chairman, I urge you to consider this amendment. It has had
bipartisan support. It is humane. It will not deter us from giving the
deductibility to the self-employed.
So I ask my friends on both sides of the aisle to consider tonight a
motion to recommit which will not deter us from what many of us
support, and that is the deductibility of insurance cost for the self-
employed. But let us take the fear out of the hearts of 3.5 million
Americans tonight who will know that they may extend this coverage for
their families, themselves, their disabled children, whomever, at no
cost. No cost to the budget, no cost to the employer, no cost to anyone
except those people who will have to work hard to pay the premiums to
the private insurance company under which they are covered.
I urge Members to think hard and long about bipartisan support for
the motion to recommit.
Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the respected
gentlewoman from Connecticut, [Mrs. Johnson], the chairman of the
Subcommittee on Oversight of the Committee on Ways and Means, who so
ably conducted the hearings that brought this bill before the House
today.
Mrs. JOHNSON of Connecticut. Mr. Chairman, I rise in strong support
of H.R. 831, a bill that permanently extends the 25-percent deduction
for health insurance costs to the self-employed.
Mr. Chairman, for too long, millions of self-employed workers have
lived with the uncertainty of not knowing whether they could deduct
some portion of their health insurance costs from year to year. Enacted
on a temporary basis in 1986, the deduction was extended several times,
expired at the end of 1993 and was not renewed throughout 1994. Today,
we finally have an opportunity to provide the certainty of a permanent
deduction to the millions of small business men and women who form the
backbone of our economy, driving its inventiveness and job growth.
I also want to emphasize that the cost of making the 25-percent
deduction permanent is fully funded by tax changes that make our Tax
Code fairer and simpler.
The major change is repeal of code section 1071, which allows the
Federal Communications Commission to grant tax benefits with respect to
sales of radio, television, and other properties. Enacted in 1943 to
address problems with respect to the involuntary sales of radio
stations arising from wartime restrictions on the availability of new
radio property, this provision has been significantly expanded by FCC
action to cover television stations, cable TV systems, personal
communications services, and in 1978 to promote minority ownership of
broadcast facilities by offering tax certificates to those who
voluntarily sell stations to minority individuals or minority-
controlled entities.
Not only has the FCC changed the purpose of tax certificates, but
also increased the size of the transactions they are allowed to cover.
The size of transactions receiving tax benefits under section 1071
has also expanded. The total Federal and State tax benefits for one
transaction, Viacom's sale of its cable TV systems recently in the
news, may be in excess of half a billion dollars.
The Subcommittee on Oversight, which I chair, found in hearings that
section 1071 gives the FCC unfettered authority to hand out tax breaks
to promote whatever policies it deems appropriate. No other Federal
agency has such authority and no Federal agency should have such
authority.
In fact, when the FCC sought to review the worthiness of its tax
certificate program, Congress stepped in and literally forbade the FCC
from any oversight work at all. In sum, 1071 provides big bucks for a
few with no demonstrative effect on minority ownership or program
diversity.
The other major financing provision in this bill is a variation on a
proposal in President Clinton's fiscal year 1996 budget to deny the
EITC to individuals who have more than $2,500 in taxable interest and
dividend income. The Ways and Means Committee believed it was more
appropriate to phase out the credit, rather than have it end abruptly
when dividend and interest income hits $2,500. H.R. 831 phases out the
credit for taxpayers who receive between $2,500 and $3,150 of dividend
and interest income.
To achieve this level of dividend and interest income, a taxpayer
would need to have over $50,000 in savings assets. The administration
believes--and I strongly agree--that the benefits of the EITC should go
to low-income workers. It should not go to taxpayers with significant
assets who otherwise have low earned income.
Mr. Chairman, making the 25-percent deduction permanent is extremely
important. In addition, the funding provisions in H.R. 831 are changes
that will
[[Page H1923]] improve the fairness or administration of our tax laws.
H.R. 832 deserves your strong support.

{time} 1850

Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from
Maryland [Mr. Cardin].
Mr. CARDIN. Mr. Chairman, I thank the gentleman for yielding time to
me.
This is important legislation that we need to pass. The 25-percent
deduction for self-employed individuals is an important tool for self-
employed to have health insurance. And we need to pass it. I regret
that the Committee on Rules and the rule that we passed does not allow
me to offer an amendment, a bill that I have filed that would have
increased the 25 percent to provide parity for the self-employed
individual to what a business can deduct on the insurance premiums that
they have for their employees.
We still have 3.1 million people who are self-employed who do not
have health insurance. The 25 percent provision is important, but we
should have had the opportunity to increase that to a fairer level so
that self-employed people could have the same type of a tax advantage
as those people who run businesses.
But we will have two other opportunities during this debate to expand
access to health insurance to allow the private sector to provide more
health insurance for their employees. The first will be on the Gibbons-
McDermott substitute, which incorporates an amendment offered by the
gentleman from California [Mr. Stark] that will allow the employees of
the self-employed companies to be able to deduct their insurance
premiums if their employer does not provide it up to the 25 percent.
This gives the employees the same parity as the company self-employed
person has, and I would urge my colleagues to support the substitute
for that reason to expand access to health care.
The second opportunity will be on the motion to recommit that will be
offered by the gentleman from California [Mr. Stark]. That will extend
COBRA beyond the 18-month period current law. This is at no cost to the
employer. An employee who no longer is employed of a company, who wants
to continue that health insurance in that group at 100 percent,
actually it is 102 percent, by the cost of the employee would be able
to continue that health insurance protection.
When we are seeing more and more people without health insurance
today, why should not Congress, why should not this House provide
greater opportunities for an individual to be able to get health
insurance at no cost to the employer or government? So I would urge my
colleagues to support the Gibbons-McDermott substitute. Support the
motion to recommit that will be offered by the gentleman from
California [Mr. Stark] so that we can expand health access with health
insurance.
This bill is an important bill. We need to take care of this current
tax year for the self-employed. But we also have the opportunity to go
further, and I urge my colleagues to do that.
Mr. ARCHER. Mr. Chairman, will the gentleman yield?
Mr. CARDIN. I yield to the gentleman from Texas.
Mr. ARCHER. I thank the gentleman for his interest in raising the
percentage of deductibility for the self-employed. I can assure the
gentleman, as we move on into this year and we get into health care
overall, it is intention of the chairman to try to move that percentage
up.
Mr. CARDIN. I thank the gentleman very much. I know he is interested
in that issue.
Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from
Illinois [Mr. Crane], a member of the Committee on Ways and Means.
(Mr. CRANE asked and was given permission to revise and extend his
remarks.)
Mr. CRANE. Mr. Chairman, first I would like to salute my
distinguished chairman for his efforts here to restore and make
permanent the 25-percent health insurance deduction for the self-
employed, something that should have occurred a long time ago, and he
has finally adroitly addressed it.
Second, another reform in it is repeal of section 1071 of the tax
code which has permitted an unconstitutional usurpation of the
exclusive jurisdiction on the part of Congress and more specifically
the House to originate tax policy. Tax policy has degenerated over a
period of years and the lack of appropriate oversight into something
that has been taken over in part in this instance by a Federal agency.
Finally, it ends the discriminatory provision that falls under the
definition of affirmative action, because if affirmative action is
dealing with minority rights, then what are the rights of minorities
who are of Polish descent, of Irish descent, of Italian descent, German
descent, Hungarian descent? It is long since overdue. I salute my
distinguished chairman for having done it.
Mr. Chairman, I am proud to say that the first bill that has been
reported to the House floor by the Ways and Means Committee this year,
H.R. 831, sets us on a good course for tax policy in the 104th
Congress.
The primary purpose of this bill is to permanently extend for the
self-employed the 25-percent tax deduction for health insurance
expenses. I would put emphasis on the word ``permanently'' because it
raises a point that is worth noting in terms of tax policy. There are a
number of deductions/credits in the tax code that are temporary in
nature. Rather frequently, the Ways and Means Committee must decide
whether to extend various expiring provisions. Consequently, every year
hundreds of proponents flock to the Hill to lobby in support of the
various provisions. This process is not only time consuming, costly,
and unnecessary, but the temporary nature of these provisions is
frankly unfair to the taxpayer. Taxpayers and businesses often never
know from year to year whether they can count on a particular deduction
or credit. In this case, the self-employed deduction expired December
31, 1993, meaning that those filing their returns for the 1994 taxable
year with the April 15, 1995, deadline, still do not know whether they
can take the deduction. This legislation will ensure that these hard-
working individuals will not have to go through this kind of
uncertainty again.
In my view, either these temporary deductions/credits are worthwhile
or they aren't. If they are, let's make them permanent, and if they are
not, let's eliminate them from the code altogether. I believe it is the
intention of the Ways and Means Committee under the leadership of our
fine new chairman, Bill Archer, to move in that direction. I will
certainly do all I can to encourage the membership of the committee and
the House to proceed accordingly. Moreover, I will look forward to the
opportunity at a later date to consider raising the 25-percent
deduction to a higher percentage. In the meantime, having the certainty
that the deduction is going to be there is critical. As a member of the
Ways and Means Committee who has dealt with this issue for many years,
I can say with confidence that this credit helps literally thousands of
individuals by encouraging health insurance coverage without the heavy
hand of Federal bureaucrats.
Having touched on the principal purpose of this legislation, another
aspect of the bill must be discussed. There are two items in H.R. 831
that have been incorporated into the bill to pay for the extension of
the self-employed deduction. One of these items, specifically that
portion of the bill which repeals section 1071 of the Internal Revenue
Code, deserves further comment.
The history of this section is fully recited in the Ways and Means
Committee Report 104-32. In a nutshell, current law attempts to promote
minority ownership of broadcast facilities ``by offering an FCC
[Federal Communications Commission] tax certificate to those who
voluntarily sell such facilities to minority individuals or minority-
controlled entities.'' This tax certificate results in substantial tax
savings for the sellers in the transaction and that fact alone should
be enough for those little imagination to realize how such a provision
might be utilized.
Basically, as section 1071 has evolved, it is designed to work as an
affirmative action program to encourage minority ownership of broadcast
facilities. To be blunt, I view affirmative action programs as reverse
discrimination and believe that in the long run they are detrimental to
the efforts of minorities to break down some of the discrimination
barriers that still exist because of the resentment such policies
generate in the various classes of people not given the benefit.
However, even if one supports the concept of affirmative action, it is
not all clear that this program has actually resulted in long-term
minority ownership of broadcast facilities as was intended. Rather,
from the information that is available on the FCC program, it would
appear that many of the deals are accomplished purely to take advantage
of the certificate because we find the minority interest evaporating in
a short period of time after the transaction has been triggered. Put
another way, many of the deals
[[Page H1924]] that take advantage of section 1071 are consummated with
little or no interest in ensuring long-term minority ownership.
Finally, I would contend that the FCC should not be making these type
of decisions anyway--I do not believe it is wise to give the FCC the
authority to carry out Federal tax policy. In short, it is my strong
opinion that section 1071 of the code is ill-advised and must be
eliminated.
Mr. Chairman, I urge my colleagues to vote in favor of this important
legislation because it embodies sound tax policy.
Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from
Massachusetts [Mr. Neal].
Mr. NEAL of Massachusetts. Mr. Chairman, I thank the gentleman for
yielding time to me.
I rise in support of the Gibbons-McDermott substitute to H.R. 831.
This substitute provides an appropriate alternative to H.R. 831.
H.R. 831 extends the deduction for the health insurance costs of
self-employed individuals. However, this provision is paid for with a
controversial provision. This legislation would repeal Code section
1071, a provision giving the Federal Communication Commission [FCC]
authority to grant tax certificates deferring capital gain taxes on the
sale or exchange of broadcast facilities. The FCC has offered tax
certificates to those who voluntarily sell facilities to minority
individuals or minority-controlled entities.
We can successfully argue that there are some problems with Code
section 1071. It has been estimated that a recent proposed sale of
cable systems could result in deferred gain of $1.1 billion to $1.6
billion. Code section 1071 does need improvement, but it does not need
to be eliminated.
I do not believe the original intention of this proposal was to give
billion dollar tax breaks to the wealthy. The gentleman from Florida
[Mr. Gibbons] and the gentleman from Washington [Mr. McDermott] have
developed an alternative which provides a much better solution. The
Gibbons-McDermott substitute gives the section 1071 tax certificate
program a smaller scope by limiting the amount of gain on the tax
certificate to $50 million. This proposal would transfer administration
of the program to the IRS.
The proposal adds several important safeguards to the certificate
program. These changes are appropriate. We should try to fix section
1071 before we enact an outright repeal. The Gibbons-McDermott
substitute preserves the purpose of the program and will eliminate the
abuses.
We can all agree the 25-percent deduction for health insurance is
important. This proposal also creates a 25-percent deduction for the
purchase of health insurance by employees who do not receive employer-
sponsored health insurance. I urge you to support the Gibbons-McDermott
substitute. This substitute is a responsible vote. The self-employed
will receive the deduction they deserve and the FCC certificate program
will not be repealed without the proper consideration.
Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the
gentleman from Michigan [Mr. Camp], a valued member of the committee.
(Mr. CAMP asked and was given permission to revise and extend his
remarks.)
Mr. CAMP. Mr. Chairman, I thank the distinguished gentleman for
yielding time to me, and I rise in support of H.R. 831.
Mr. Chairman, I rise in support of H.R. 831. This measure is a
critical first step in eliminating a severe injustice to the self-
employed in this country.
By allowing small business people, farmers, and entrepreneurs to
deduct 25 percent of health care costs for them and their families, we
are taking a first step to encourage people to provide health care for
themselves and their families.
It is time that this Government realize that self-reliance is
something to be encouraged, not discouraged.
This legislation will help provide a good environment for self-
employed people, particularly in my district where many farm families
are self-employed and desperately need this provision so they can
afford adequate health care.
I also contend that we must view this as a beginning. I hope my
colleagues will not only support this measure to permanently extend
this deduction but also join me in pursuing legislation that will allow
a 100-percent deduction for these vital members of our community.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to another valued member
of the committee, the gentleman from Ohio [Mr. Portman].
Mr. PORTMAN. Mr. Chairman, I thank the gentleman for yielding time to
me.
As a former member of the small business committee who worked hard to
get to this point last year, I can just say it is my great privilege to
stand here tonight in support of the bill of the gentleman from Texas,
Chairman Archer.
I am very pleased that we are here. In talking to people in my
district, the two things I hear about the most is the need for fairness
and consistency in our tax laws.
I think this bill goes a long way to ensure both. It is fair because
here finally we are helping those people who have taken the risk,
pursued the American dream and been out working for themselves and in
turn have provided jobs for others.
These are the hairdressers, barbers, farmers, small business owners,
shopkeepers, the self-employed. If corporations can duck their health
care insurance costs, it is only fair that these people can as well, so
this bill is about fairness.
It is also about certainty and consistency, certainty because it
permanently reinstates the deductibility, which is extremely important,
as the gentlewoman from Connecticut [Mrs. Johnson has noted previously.
At a time when we are trying to figure out how to get as many people
as possible covered by health insurance, this is exactly the sort of
thing we should be doing. This gives an incentive to the 3.2 million
people out there who are self-employed who would like to get into
health care insurance. It gives them an incentive to do so, and takes
away the current disincentive.
Rather than just proposing a Government takeover of health care, we
are actually trying to give the American people what I think they want,
which is the ability to help themselves.
In Ohio alone this bill will make health insurance more affordable to
more than 50,000 farm families, not to mention, again, the self-
employed plumbers, mechanics, mom and pop grocery store owners, and so
on.
The bottom line is that by beginning to level the playing field
between individuals and businesses, we will allow many of the self-
employed to purchase health insurance who would not do so otherwise.
This is not just theory. I have had plenty of farmers come up to me
in my district and say it is worth taking the risk of not going with
coverage because their families are relatively healthy, without the
deduction.
With the deduction, doing their own cost-benefit analysis, which they
do, they would in fact buy health insurance. Therefore, it is going to
help, and it is exactly what we should be encouraging in health care. I
am particularly pleased to see we are moving quickly to put this before
the 1994 returns.
Again, I congratulate the gentleman for bringing this bill to the
floor.
Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from
New Jersey [Mr. Payne].
(Mr. PAYNE of New Jersey asked and was given permission to revise and
extend his remarks.)
Mr. PAYNE of New Jersey. Mr. Chairman, I rise in opposition to H.R.
831; more specifically, the section of the legislation that deals with
the repeal of section 1071 of the Internal Revenue Code, tax assistance
for minority broadcasters. The bill represents the beginning of a war
waged by the Republican Party against any program that even suggests a
hint of minority assistance.
Mr. Chairman, I am simply amazed by the level of hypocrisy exhibited
by the majority leadership with regard to this particular issue. The
Republican leadership claims that the repeal of section 1071 is
necessary to offset the expenses created by the 25 percent tax
deduction of health insurance costs for self-employed individuals,
which is also proposed in H.R. 831.
This is totally false. The repeal of 1071 will not raise tax
revenues. Most communications transactions, such as AT&T-Lin
Broadcasting, Time-Warner, Viacom, and at least a dozen other enormous
television transactions have been accomplished on a tax deferred
basis.
[[Page H1925]] Eliminating the minority tax certificate program will
not result in additional tax revenue. Rather, sellers of communications
properties will simply employ other tax deferred techniques, such as
mergers, stock swaps, and public offerings.
If the tax certificate program is killed, minority sales will not
occur. They will be restructured and accomplished by only large
corporations.
Mr. Chairman, I heard someone mention, what about the Hungarians,
what about the Romanians, what about the other people? There are 11,303
licenses so far. 300 of these are in the hands of minorities. When the
question is asked, where are all these other people, they are in the
11,000 licenses which are held by the majority of people.
As we look at this proposed agreement between Viacom and Mr. Frank
Washington, it was an opportunity for a minority entrepreneur to become
321 out of the numbers.
Mr. Chairman, I urge defeat of H.R. 831.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from
Kansas [Mrs. Meyers].
Mrs. MEYERS of Kansas. Mr. Chairman, I rise in support of this very
important legislation which will permanently extend the 25 percent
health care deduction for the self-employed, and retroactively
implement the deduction so that our small business people can use this
deduction in preparing their 1994 tax returns.
This legislation is very similar to a bill I introduced last year,
and again in January, and I commend the chairman of the Ways and Means
Committee for his expeditious handling of this important and much-
needed legislation.
Our Small Business Committee held a hearing on this issue on January
20, and witnesses testified that approximately 400,000 people are able
to purchase health insurance because of this deduction.
As important as it is to make this deduction available to our small
business people for 1994, just as important is the provision to make
the deduction permanent. In the past, Congress has dangled the
deduction over the self-employed every year, temporarily extending the
deduction since 1986. In passing this bill, we will be assuring small
owners that they will be able to deduct 25 percent of their health
premiums in the future. They can plan
on it. We have heard from Small Business that because of lower cash-
flows, the ability to plan is imperative if they are going to offer
health insurance. Making this bill permanent and retroactive is
probably the number one business issue that we have heard about this
year.

But it is important to remember that even with a permanent 25-percent
deduction, small owners are not given the same benefits which the
Federal Government provides to corporations: The ability to deduct 100
percent of their health care premiums.
Later this week, I will be introducing legislation which will
incrementally increase the 25-percent deduction for self-employed to
100 percent. Incentives to provide health insurance should be
equitable, and my bill will increase the 25-percent deduction to 50
percent in 1997 and 1998, to 75 percent in 1999 and 2000, and 100
percent of premiums would be deductible beginning in 2001 and
thereafter. Our small entrepreneurs deserve the same breaks we provide
for large corporations. Please join me as a cosponsor of this bill. It
is another real step toward a goal we all support--providing health
care coverage for everyone.
Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman
from Florida, Ms. Ileana Ros-Lehtinen.
(Ms. ROS-LEHTINEN asked and was given permission to revise and extend
her remarks.)
Ms. ROS-LEHTINEN. Mr. Chairman, I support the Gibbons-McDermott
substitute protecting section 1071, which has helped to open up
broadcast licenses to minorities. It will also tighten the provisions
of this tax incentive to prevent potential abuse and insure that it
will truly benefit minority owners.
If we fail to adopt this substitute, Mr. Chairman, we will be sending
a message that we do not wish to continue this effort to encourage
greater ownership by African-Americans, Hispanic-Americans, and other
minorities in broadcasting. This provision was aimed at strengthening
the FCC's efforts to make scarce broadcast air waves available to all
Americans.
Minority participation in the ownership of radio and television
stations has increased dramatically under this policy. Before 1978,
minorities owned less than one-half of 1 percent of broadcast licenses.
Today, 3 percent of all radio and television stations are owned and
controlled by over 300 minority owners.
Many minority owners have testified that without this tax program, it
would be difficult, if not impossible, for them to secure broadcast
facilities. Section 1071 has made it possible for many to experience
the American dream. By better serving the needs of the marketplace, it
is truly a successful way of allowing our free enterprise to work for
the benefit of all Americans.
Mr. Chairman, let us not participate in a rush to judgment to destroy
this program, which has helped to open up access to the Nation's air
waves for all of us.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Oregon [Mr. Bunn].
Mr. BUNN of Oregon. Mr. Chairman, I rise to offer my support to H.R.
831, the bill to restore the 25-percent tax deduction for health care
premiums of the self-employed.
Mr. Chairman, as we know, President Clinton and the Democrat Congress
got together in 1993 and passed the largest tax increase in our
history. Their claim was that it only raised taxes on the richest 1
percent.
Yes, it did raise taxes on the rich, along with many others. It also
raised taxes on some senior citizens who collect Social Security. It
also raised taxes on self-employed individuals who pay for their own
health insurance.
Last year, Mr. Chairman, Congress took away, with the President's
approval, the 25-percent tax deduction for the health care premiums of
the self-employed. It somehow conveyed the message that we care about
the cost of corporations providing health care, we care about the
employees of the corporations, but we do not care about the self-
employed.
Mr. Chairman, it was a bad idea to remove the 25-percent deduction,
and what we are doing today rights that wrong. I am pleased with our
action.
Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentlewoman from
Connecticut [Mrs. Kennelly].
Mrs. KENNELLY. Mr. Chairman, I rise in support of permanently
extending the health care deduction for individuals, those that are
self-employed, and I particularly salute the committee for making this
change in the Tax Code permanent. There should be no doubt about that
deduction and the existence of that deduction.
I also salute the committee for perfecting the Earned Income Tax
Credit tax preference so it is much better written, so those who
really, truly are in need will get what they have to have in order to
be able to work and continue to take care of their family.
However, Mr. Chairman, I do disagree with the third part of this
piece of legislation before us. We will have a substitute later in the
evening that strengthens this program to assure that minorities have a
real stake in the ownership that they want so desperately. It transfers
this program from the FCC to the Internal Revenue Code, where it
belongs, and it makes it possible for us to have fairness in our
communications.

{time} 1910

Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Maryland [Mr. Bartlett], who has spent so much time and effort in
seeing that the self-employed would continue to get this 25-percent tax
deductibility on their insurance premiums.
Mr. BARTLETT of Maryland. Mr. Chairman, I rise in strong support of
this legislation. It addresses a matter of fairness. For years now
corporations have been able to deduct the full cost of health care
premiums for their employees. The self-employed have been able to
deduct only 25 percent. In the future we need to address this inequity.
But tonight we address even a worse inequity. That is, that even this
25 percent is not now available. This is because this was a casualty of
the failed health care debate in the last Congress.
[[Page H1926]] When we look at who this affects and recognize that
companies that had from zero to 4 employees produced more than 90
percent of all of the new jobs during the past recovery, we see that
this is a group that can ill-afford this kind of discrimination.
For this reason I submitted H.R. 696 and am delighted that this bill
to reinstate this for 1994 is incorporated in the present legislation.
Now self-employed people all across the country can file their tax
returns and take the 25-percent deduction for their health care
premiums.
Again I would like to thank the chairman of the committee. We have
now interrupted our 100-day contract legislation to enact this
legislation. This sends a message how important we think this is for
the American people.
Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from North Dakota [Mr. Pomeroy].
Mr. POMEROY. Mr. Chairman, I rise in strong support of taking
immediate action to restore the 25-percent deduction on health
insurance. This deduction has long been available, should never have
been allowed to expire last year, and prompt action tonight can
retroactively reinstate this important deduction for self-employed
people. Swift action will allow them to take the deduction without
having to go through the expense and hassle of amending their returns.
We must recognize, however, Mr. Chairman, that this action is but
step 1 of the road to parity in treatment of health insurance.
Businesses, corporations have a 100-percent deduction. Individuals
should be allowed no less. That is the concept implicit in H.R. 52,
legislation I drafted on the first day of the 104th Congress which now
enjoys the cosponsorship of 74 additional Members of this Chamber, both
Republican and Democrat in roughly equal measure.
The reasons are clear. It will first of all restore tax fairness and
tax equality, corporation to individual. Second, it promotes the
affordability of health insurance coverage so that in this time when
too many people cannot afford the coverage, coverage becomes more
affordable through allowing the deduction.
Action is necessary tonight on this measure. Because while many
people, most Americans face an April 15 tax filing deadline, the
farmers I represent in North Dakota and throughout the country face a
March 1 filing deadline. Prompt action this measure will allow this
deduction. That is why I so strongly support this bill.
Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from
Pennsylvania [Mr. English], a valued new member of the Committee on
Ways and Means and a New Member of the House.
Mr. ENGLISH of Pennsylvania. Mr. Chairman, I rise in strong support
of H.R. 831. In it we propose to permanently expand access to health
care for farmers and other small business people and to finance it by
closing a grotesque tax loophole whose time has come and gone. The tax
preference we are eliminating does not help the underclass. It does not
help the poor and disadvantaged. It only helps the rich and well-
connected who know how to game the system.
The American people cannot understand why we have a tax loophole that
allows investors in a $2.3 billion conglomerate to save over $500
million on their taxes in order to give a $2 million profit to one
businessman who happens to be a minority. That businessman as it turns
out is the same retired Federal bureaucrat who designed this tax
program in the first place.
Mr. Chairman, I urge my colleagues to end this abuse, improve health
care for the self-employed, and pass this bill.
Mr. GIBBONS. Mr. Chairman, I reserve the balance of my time.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from New
York [Mr. Forbes].
Mr. FORBES. Mr. Chairman, I rise today in favor of H.R. 831, a bill
to permanently restore the 25 percent tax deduction for health care
premiums paid by the self-employed.
The last Congress refused to renew this provision and it is important
to the small business community. On eastern Long Island, small
businesses are the job creators, the staple of our local economy. From
Montauk to Smithtown and Patchogue to Port Jefferson, the hard-working,
self-employed owners of small businesses are struggling under excessive
taxes and burdensome regulations. These entrepreneurs cannot afford to
hire new employees and rejuvenate our lagging local economy while the
Federal Government demands more and more of small business earnings.
Permanently restoring the 25 percent health care deduction for the
self-employed is a good step in the right direction.
The issue is really about fairness. Currently large businesses are
allowed to deduct the entire cost of health care premiums for their
employees and their families. On the other hand, self-employed business
owners must pay 100 percent. It is basically unfair and this reverses
that unfairness.
The Nation's small businesses are the backbone of our economy, and it
is time we gave them this break. I urge my colleagues to embrace H.R.
831.
Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from California [Mr. Tucker].
Mr. TUCKER. I thank the gentleman for yielding me the time.
Mr. Chairman, I rise in strong opposition to H.R. 831. My colleagues
have pointed out that this is the right problem to attack. As a member
of the Committee on Small Business, I certainly appreciate the need for
a 25-percent deduction for self-employed business owners.
Mr. Chairman, this may be the right problem, but it is certainly the
wrong solution. It is the wrong approach and the wrong attempt to
corret this problem.
I have heard people talk about fairness. Certainly this is totally
unfair. We are talking about trying to address one situation on the
backs and on the burden of something that is totally unrelated. What I
call it is laser-beam legislation. We have reached throughout the whole
mass of laws and of matters and have zeroed in on one particular
transaction dealing with Viacom and said that it would now be
retroactive in order to repeal minority preferences and minority set-
asides in order to fund this particular need for health care insurance
for self-employed or businesses.
Once again, Mr. Chairman, it is the right problem but it is the wrong
solution. As has been pointed out by my colleague, the gentleman from
New York [Mr. Rangel], certainly these savings are not savings at all.
The reasoning is fallacious. So the $400 million that my colleagues
have said would be saved are chickens that are really not counted.
In actuality what we are talking about is a very egregious attempt to
dismantle and to disempower minority businesses and minority access to
the FCC.
Mr. Chairman, it is for these reasons that I strongly oppose H.R.
831.
Mr. ARCHER. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from Pennsylvania [Mr. Fox].
Mr. FOX of Pennsylvaniva. Mr. Chairman, I rise to speak in behalf of
H.R. 831. Recently a Member of this body compared in a press commentary
the actions of Congress to those of Adolf Hitler and the Third Reich.
As a Member of the Congress of Jewish faith, I am personally troubled
by those kinds of inappropriate comparisons. Invoking the image of
Hitler, especially in contrast to this great body, is an insult, I
believe, to Jews and anyone who respects the American Congress and the
important work we were sent here to do.
As the gentleman from Texas [Mr. Archer], the chairman, has stated,
``By the use of inflammatory comments, you do democracy a deep
injustice.'' This is all the more surprising with the fact that the
Holocaust Museum is only 1 mile from the Capitol.

{time} 1920

The United States in 1995 is vastly different from Germany in 1941
when people were exterminated for simply being who they were.
I support this legislation, a sound measure which will benefit the
people of all races and is not intended to harm anyone. We need to pass
this legislation, Mr. Chairman, so all people without regard to race,
creed, national origin, or sex can afford health care insurance.
[[Page H1927]] This bill permanently extends the now lapsed 25-
percent deduction for health insurance costs. This is not an assault on
the poor nor an issue of us and you. This is not about race. This is an
opportunity for millions of Americans to have health care which they
would not otherwise be able to afford.
Small business owners throughout my district of Montgomery County, PA
come to me and ask for assistance to acquire health care. That is a
good bill which benefits all people and deserves our support.
Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman
from Texas [Ms. Jackson-Lee].
(Ms. JACKSON-LEE asked and was given permission to revise and extend
her remarks.)
Ms. JACKSON-LEE. Mr. Chairman, how pained I am to have to stand here
this evening to be able to talk about two jangled chords again. I
certainly do appreciate the gentleman from Texas in his effort to deal
with issues that all of us wholeheartedly agree on, and that is working
men and women. But I have to rise to support the Gibbons and McDermott
substitute which is not yet on the floor, which is about to raise the
issue of health insurance suggesting that we can do this in a better
way.
We clearly can provide for those who are self-employed, but in
addition to that we can provide a tax deduction for employees whose
employers do not subsidize their health care. We can do this in
conjunction with not turning back the clock that has been so evenly
supported by Republican and Democratic Presidents alike, Reagan,
Clinton, and Bush.
I think it is important to realize, as William Raspberry said in his
column in the Washington Post, are we really there yet, the kind of
question your little one would ask you on a 100-mile trip. We are not
there yet for equal opportunity for minorities. Why would we want to
match and mix-match the issues of self-employed and working Americans
with the question of opportunity in the purchase of Broadcast media for
minorities which is long overdue?
We really need to emphasize that the electronic media and the
opportunity to access purchasing media by minority business persons is
a good thing to have happen. It is a good thing to have happen under
conditions established by the Federal Government because it can
document that minorities have a long way to go to own these stations.
Let us do the right thing; be fair to the self-employed. Let us be
fair to those who are employed by the self-employed and let us be fair
to minorities who would seek an opportunity to buy these wonderful
stations that would serve the American people.
Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from
Massachusetts [Mr. Torkildsen].
Mr. TORKILDSEN. Mr. Chairman, I thank the gentleman from Texas for
yielding me this time. I rise in strong support of H.R. 831, the
bipartisan bill to restore the permanent 25-percent health insurance
deduction for self-employed Americans.
Presently, self-employed Americans cannot deduct any of their health
insurance premiums. In contrast, corporations, both large and small,
enjoy 100 percent deductibility, as a cost of doing business.
This deduction is a positive first step to help the self employed
provide themselves with health insurance, while providing a boost to
our economy and adding a small degree of fairness to the tax code.
Eventually, I hope we will increase this deduction to 100 percent for
the self employed.
Self-employed business owners are not asking for a government hand-
out. They are simply asking for fairness and the same tax break that
every corporation receives.
Perhaps the most positive part of this legislation is that it is
permanent. As any business owner knows, the ability to plan long-term
and set business priorities over time is critical to not only growth
and prosperity, but also survival. In the past, self-employed business
men and women have been at the mercy of congressional reauthorization.
I urge my colleagues to vote for this bill.
Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentlewoman from
California [Ms. Waters].
(Ms. WATERS asked and was given permission to revise and extend her
remarks.)
Ms. WATERS. Mr. Chairman, so far the debate has been about the
proposed 25-percent health deduction for the self-employed. Now I
support that. And I support that part of the substitute that allows for
tax deduction for workers whose employers do not contribute to their
health plans.
But let me speak about the unspeakable. I am opposed to this bill
because it dismantles an extremely viable and important program that
allows participation by minorities in the broadcast industry. And the
concept is now new.
Back in 1943 the U.S. Government created an affirmative action
program which authorized the FCC to provide tax relief for broadcast
owners who were essentially part of monopolies. That was during World
War II. This was not an affirmative action law for programs for blacks
or Hispanics or women. It was affirmative action for white broadcast
owners.
Twenty years later the FCC used the same framework, the same law to
provide the tax preference for those broadcast companies who would sell
to minority-owned firms. This was done to open up ownership
opportunities to minorities and to basically promote diversity in an
all white, male-dominated industry.
Now today we are asked to vote to dismantle this program. There are
those who would argue it is too expensive and those who would say it is
race-based. Is it too expensive that the Viacom deal will respond to
get these tax benefits? They are only using the law in the way that it
was framed. It is only fair that we continue to allow those who are
playing by the rules to do so. Viacom will get its tax deferments. They
should not be looked on as someone who is doing something wrong.
I ask Members to oppose this bill because it is basically unfair and
it attempts to eliminate those who are simply trying to play by the
rules.
Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from Iowa
[Mr. Latham].
Mr. LATHAM. Mr. Chairman, I thank the gentleman for yielding me this
time.
Mr. Chairman, I rise today to commend our Ways and Means Committee
Chairman, the gentleman from Texas, Mr. Bill Archer on his outstanding
efforts to retroactively reinstate the 25 percent deductability of
health insurance for self-employed. Small business people and farmers.
This is one of the most important issues in my congressional district
where tens of thousands of working families must purchase their own
health insurance policies. More than a dozen other freshmen
representatives joined me late last week in sending a letter to the
leadership in both Houses requesting the earliest possible movement on
this issue.
I understand that there are great time pressures we have imposed on
ourselves with the Contract With America and members of the minority
party want to delay our timetable with a motion to recommit.
However, restoring this tax deductability before March 1, in time for
farm families to file their returns should be a point of bipartisan
cooperation, and I hope we can move forward quickly.
Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the
gentleman from New York [Mr. Flake].
(Mr. FLAKE asked and was given permission to revise and extend his
remarks.)
Mr. FLAKE. Mr. Chairman, I rise in support of the McDermott
substitute, and against any rescissions of preference for minority
broadcasters.
I rise today to speak on H.R. 831, the health insurance deduction/
minority broadcast preference.
Mr. Chairman, by all means, I support extending health care benefits
to all Americans. However, the question now becomes how do we pay for
this measure?
Mr. Chairman, I believe that it is extremely cynical for this
Republican Congress to propose eliminating the minority broadcast
preference in order to fund an important health care provision when
just last year they killed the health care bill.
Mr. Chairman, sometime in the near future, we will visit the welfare
reform debate, and I can assure you that the deficit hawks will favor
reducing entitlement programs and converting
[[Page H1928]] funds into block grants to the States in an effort to
reduce moneys spent on welfare programs.
Mr. Chairman, my colleagues on the other side consistently argue that
Americans should work hard and play by the rules. However, Mr.
Chairman, it appears from this bill that when some Americans work hard
and play by the rules the rules are arbitrarily changed.
Mr. Chairman, this bill is being rushed through this Congress with
virtually no debate. But more appalling, this bill is retrospective to
January 17, 1995 for the sole purpose of eliminating the viacom deal.
Mr. Chairman, let us as Americans rise above the racial divisiveness
that cripples our great nation.
Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from
Minnesota [Mr. Oberstar].
(Mr. OBERSTAR asked and was given permission to revise and extend his
remarks.)
Mr. OBERSTAR. Mr. Chairman, for our national broadcasting
communications system, which operates on the public airwaves, to serve
our diverse population, ownership of broadcast stations must reflect
that diversity.
The purpose of the minority tax certificate program is to offer
minorities a means to own broadcasting facilities.
This is not a quota system and it is not a setaside. It is the use of
tax law to achieve a desirable social goal--opportunity for minorities
to buy and operate broadcasting stations.
One such minority-owned station, KBJR-TV in Duluth, MN, in my
district, is owned by Granite Broadcasting Corp. KBJR-TV has long
offered thoughtful, informative coverage of native Americans in
northeastern Minnesota.

{time} 1930

If there are abuses with the program, they ought to be assessed,
addressed, and repaired. They should not be an excuse to eliminate this
program, which the committee bill would do.
The Gibbons-McDermott substitute will retain and reform the existing
tax preference for sales of broadcast companies to minority-owned
firms.
I fully support the health insurance deduction provisions of the bill
and especially support the McDermott substitute.
Mr. ARCHER. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from Louisiana [Mr. McCrery], a very valued member of our committee.
Mr. McCRERY. Mr. Chairman, I rise in support of H.R. 831, a bill
which will make permanent the 25 percent deduction for health insurance
for the self-employed. We should strive to make health insurance more
affordable, and this bill does that. It will make business expenditures
by small businesses more certain, as they will be able to rely on the
25 percent deduction for purchase of their health insurance, unlike
past years when the temporary deduction expired, leaving the self-
employed in doubt as to their true costs.
Should we go further by increasing the percentage of the health
insurance costs of the self-employed which are deductible, or by
extending this deduction to workers whose employers do not provide them
with health insurance? Yes, and some of us will be working hard in the
months ahead to include those even more attractive incentives in the
Tax Code. But for now, it is important that we take this step in the
right direction, important to make permanent this tax deduction that
the self-employed have come to rely on.
And a quick word, Mr. Chairman, about the proposal in Mr. Stark's
motion to recommit to extend indefinitely the period of time which a
former employee may remain on his former employer's health insurance.
Mr. Cardin stated that such an extension would impose no additional
costs on employers. In fact, Mr. Chairman, an indefinite extension of
Cobra benefits not only imposes increased costs on employers, but,
either directly or indirectly, imposes increased costs on the remaining
employees in the business. The data shows that, when faced with paying
their own premiums, former employees who are healthy seldom opt to
continue their insurance, taking a chance that they will not require
substantial medical care before getting another job which provides
insurance. On the other hand, former employees with health problems
continue on their former employer's insurance which drives up the cost
for the whole group.
Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from
Louisiana [Mr. Jefferson].
Mr. JEFFERSON. Mr. Chairman, I rise to oppose section 2 of H.R. 831
regarding the ``Repeal of Nonrecognition on FCC Certified Sales and
Exchanges.'' I strongly support the objectives of H.R. 831 concerning
the need to permanently extend the deduction for health insurance costs
of self-employed individuals, however, I oppose the funding mechanisms
suggested.
Passing H.R. 831 would in effect repeal the FCC's Tax Certificate
Program that the FCC administers under I.R.C. section 1071. The Tax
Certificate Program was implemented to allow sellers of broadcast or
cable facilities to defer capital gains taxes on the sales of broadcast
or cable facilities. Because this is only a deferral of tax and not a
waiver or elimination of it, ultimately, all parties involved will pay
capital gains tax on the profits.
The mischaracterization of this program as one which is a tax
exemption is incorrect.
I.R.C. section 1071 was enacted to effectuate the FCC's policies and
goals relating to: First, promoting a diversity in obtaining broadcast
licenses; second, preventing possible monopoly ownership of broadcast
facilities, and third, stimulating reinvestment in the broadcasting
business.
Despite the efforts of the FCC to achieve diversity, the results have
been less than impressive. Specifically, when the FCC implemented the
provision relating to minority ownership, minorities owned less than 1
percent of all broadcast licenses. Since the adoption of the Tax
Certificate Program, approximately 300 tax certificates have been
awarded by the FCC for broadcast licenses and cable sales in the 17-
year history of the program. During the same period, however, there
have been approximately 15,000 broadcast license transactions. These
figures demonstrate that although the program has led to an increase in
minority ownership, the increase only represents approximately 3
percent of ownership since the enactment of the Tax Certificate
Program. Clearly, more must be done to provide an opportunity for
minorities to fully participate in the ownership of broadcast licenses,
thereby providing programming diversity. More importantly, the number
of licenses issued to minority-owned business would likely be far less
without the Tax Certificate Program.
Mr. Chairman, there has been no reliable documentation demonstrating
that the repeal of the Tax certificate Program will result in any
additional tax revenue in the future. It is far more likely that
sellers will find alternative methods to structure broadcast license
sales that minimize the tax impact of the transaction. Additionally,
cancellation of the program will eliminate a vital means for minorities
to acquire ownership of broadcasting licenses, thereby reducing the
FCC's goals of providing programming diversity.
To ensure achievement of these goals and policies of the FCC, the FCC
should be allowed to reform the current tax certificate program to
provide implementation as provided in the Gibbons--McDermott
substitute.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Georgia [Mr. Collins], a valued new member of the committee.
Mr. COLLINS. of Georgia. Mr. Chairman, I thank the gentleman, the
chairman of the Committee on Ways and Means, for yielding me this time.
Mr. Chairman, I rise in support of H.R. 831, and I commend the
chairman and the members of the Committee on Ways and Means for brining
this measure to the floor of the House. It is an important issue, that
of restoring and making permanent the deduction for the self-employed,
those who purchase health care insurance for them and their families.
I am pleased, too, to hear the chairman say that later on this year
we are going to address the issue again, and we are going to increase
that deductibility from 25 percent upward to hopefully 80 or 100
percent.
Also I support repealing the authority of the FCC to grant special
tax favors to those who sell communications assets. I regret there are
those in this
[[Page H1929]] body who want to lead others to believe that this is
going to prevent the sale of any asset or any communications system.
There is no provision in H.R. 831 that will prevent the sale to anyone.
H.R. 831 will, though, require anyone who does sell such assets to
pay taxes on the gain of that sale, just the same as any other working
American pays taxes on the profits that they earn or the income that
they earn or any business, who sells an asset and has a gain.
Mr. Chairman, I urge the support of the passage of 831, and I urge
opposition to any substitute or any motion to recommit.
Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, as I said earlier in the debate, we are cleaning up
some messes that began way back in World War II. They need to be
corrected. I am sorry we did not get to them sooner. Some of them just
became apparent recently.
In the McDermott-Gibbons substitute, and I have designated the
gentleman from Washington [Mr. McDermott] to handle that time and that
proposal under the rule, we will make some substantial and some
equitable changes in the broadcast licenses provision and also in the
health care provision. The McDermott-Gibbons substitute takes the
licensing provision and makes it a true minority participation device
and not the kind of device that now exists. It is an improvement on the
spirit of the provision as it was inculcated in the law way back in the
1940's.
Also, the Gibbons-McDermott, or McDermott-Gibbons, substitute
provides for a more equitable distribution of the health care benefits
that we are passing out here. As I pointed out in general debate, this
is largely a leftover event from World War II where the whole idea of
fringe benefits and the exclusion of health care insurance benefits
from taxation all came about in a World War II accident that occurred
here on the floor.

{time} 1940

So, cleaning up those matters--and they ought to be done--and then
Mr. Stark will come in with a motion to recommit that helps us by
extending the COBRA benefits indefinitely to people who want to pay,
out of their own pocket, the health insurance they had when they were
an employee.
So those are the kinds of things we are advocating here.
Mr. Chairman, I yield the remaining time to the gentleman from South
Carolina [Mr. Clyburn].
The CHAIRMAN. The gentleman from South Carolina [Mr. Clyburn] is
recognized for 30 seconds.
(Mr. CLYBURN asked and was given permission to revise and extend his
remarks.)
Mr. CLYBURN. I thank the gentleman for yielding time to me.
Mr. Chairman, I wish to support the alternative to what is being
proposed. As Members know, all of us agree that there ought to be a way
to pay for the 25-percent deduction of health insurance. This issue is
not about that at all. I think that we know, from those of us who have
been dealing with health insurance and its reform, that this is
something we support.
Mr. Chairman, I rise in opposition to this legislation. Let me first
make this clear, I strongly support a 25-percent deduction for health
insurance costs for self-employed individuals. This deduction has long
been allowed and should continue. However, the financing for the
permanent extension should not come from the repeal of the minority tax
certificate program administered by the Federal Communications
Commission.
Since 1978, the FCC has developed its program of tax certificates,
under Internal Revenue Code section 1071, which encourages minority
ownership of telecommunications properties. The program has led to a
five-fold increase in minority ownership of radio and television
broadcast stations, and to an increase in minority ownership of cable
systems, as well.
This program, which allows a seller of a telecommunications property
to defer gain on an FCC-approved sale to a minority interest, has
enjoyed bipartisan support. In 1982, a Reagan administration-controlled
FCC both extended the policy to cable systems and expanded the program
to include investors who contribute to the stabilization of a capital
base of a minority enterprise. Every year, from 1987 to 1994, Congress
has repeatedly supported this program in annual appropriations
legislation. Through a legislative rider, Congress has, among other
edicts, prohibited the FCC to retroactively apply changes to this
program. The current rider expires at the end of the 1995 fiscal year.
While the FCC is currently forbidden by law to retroactively affect
the tax certificate program, this legislation is now asking Congress to
do just that: Repeal the minority tax certificate program retroactively
to January 17, 1995, which we all know is targeted at a deal between
the Viacom company and an African-American businessman. This request
comes after lightning-quick and less than adequate consideration of
this program by the Committee on Ways and Means. On February 8, 1995,
the full committee, acting solely on the one hearing on the issue,
reported H.R. 831 without amendment.
Tax certificates make it possible for minorities to gain access to
two vital ingredients needed to achieve ownership: information
available about broadcast properties and access to capital. Tax
certificates encourage brokers to seek out minorities as prospective
buyers of broadcast properties. Without the program, minorities are
less likely to be informed of prospective sales.
The importance of the tax certificate program to all participants in
the telecommunications field, the inadequate consideration by the
Committee on Ways and Means, the bill's retroactive effect raise
serious questions about the direction this body is going in, with
respect to affirmative action.
Mr. Chairman, I urge my colleagues to vote against this legislation.
Mr. ARCHER. Mr. Chairman, to close debate, I yield the balance of our
time to the gentleman from California [Mr. Thomas], chairman of the
Subcommittee on Health, who has done such an outstanding job already in
this Congress.
(Mr. THOMAS asked and was given permission to revise and extend his
remarks.)
Mr. THOMAS. Mr. Chairman, I thank the chairman of the committee for
yielding this time to me.
Mr. Chairman, I have to say to my colleagues over on this side of the
aisle in the minority that this is not your only opportunity to solve
the health care problem. I know some of you may be anxious. We waited
the entire 103d Congress for a health care measure to reach the floor.
We waited in vain. Here we have an opportunity to deal with health care
in the first month or so, and you may be thinking this is the only
train. To that I say no; you will get ample opportunity to make changes
to solve our health care problems in subcommittee, in committee, and,
yes on the floor.
I think this underscores the fact that we are under new management. I
want to make three points about being under new management.
First, the Democrats, in 1986, gave the self-employed a token 25
percent deduction for health care. And kept them on a hot skillet
dancing ever since.
In 1994, the self-employed deduction expired. And now, as tax time
comes, the self-employed are wondering whether or not they are going to
be made whole since the provision expired in 1993. The answer is
``yes.''
In subcommittee we heard ample testimony that this is absolutely
needed.
Is it enough? Of course not. But all we are trying to do in this
measure is extend current law and cover those people who, through no
fault of their own, were left exposed last year. That is all we are
doing. A modest measure.
We are not trying to rethink the inequities of the tax code for all
people, including those individuals who work for a corporation who are
not provided their health insurance by that corporation.
The self-employed are second-class citizens, the McDermott amendment
wants to make those individuals who work for corporations who do not
provide health care third-class citizens. They do not even get the
self-employed level of deduction up front. So, clearly, you have
concerns, Gee, I wish your concerns had been made more apparent in the
last Congress; we could have moved legislation in this area.
The second point I want to make is the rules under which we are
examining this legislation. Not only was the minority afforded a
substitute of their choice, but; my colleagues on the Democratic side
have said we want this and this and this. You had an opportunity to put
your package together. You did that.
Not only that, the majority provided the motion to recommit. So you
get
[[Page H1930]] two bites of the apple. That is something that we on
this side of the aisle in the minority of the past would like to have
had but often times were denied. We are not denying that to you.
Clearly, there has been a change.
In committee, you had in front of you the legislative language that
is in front of you now, and you had it ahead of time. That rarely
occurred under the old management. The complaint that you only had the
legislative language a day or two ahead of time pales when we used to
deal with conceptual approaches announced the day of the hearing.
Third, what November was really all about.
The election in November was about change, not just doing the
positive things legislatively as we are doing now and will do more of,
but it was also to examine laws on the books that do not make any sense
and get rid of them. And that is exactly what we are doing here
tonight.
You have heard this provision, which is funding health care for the
self-employed, characterized a number of different ways.
I think you need to know that, one, we are talking about turning what
is now a tax break for millionaires, not minorities, the people who
have the companies get the tax break, not the people who are buying
them; and we are turning those tax breaks into health care for ordinary
citizens.
When you look at all of those self-employed, you are talking about
millions of Americans but, more importantly, you are talking about a
provision that on average provided benefits for 14 millionaires every
year and converting that to 350,000 African-Americans and Hispanic-
American business owners getting provided some health insurance. That,
it seems to me, is what November was all about, take a tax break for
the rich and provide benefits for the many. That is what November was
all about. That is what H.R. 831 is all about.
Support H.R. 831.
Mrs. LINCOLN. Mr. Chairman, as the author of my own bill to extend a
tax deduction to the self-employed for health insurance, I rise today
in support of the efforts of the House to restore and permanently
extend the tax deduction for 25 percent of health insurance costs for
self-employed individuals. However, it is my opinion that we should go
even further by providing a 100-percent tax deduction.
During this Congress, I introduced the Health Insurance Equity Act of
1995, which would have given this 100 percent deduction to our self-
employed. I believe that the small businessmen and farmers who are the
economic backbone of my district, and rural America in general, should
enjoy this same privilege that corporate America currently enjoys.
However, if we are to provide relief to our self-employed workers who
are paying high prices for health insurance, we must support the
legislation that is presented before us tonight. In addition, we have
an opportunity to vote to extend the 25 percent tax deduction for
health insurance premiums to employees whose employers do not subsidize
their health insurance. If our goal is to help people help themselves,
then I see no reason why we should not support this provision.
Mr. Chairman, it is time to face the facts about purchasing health
coverage today. Many of the 37 million uninsured are small business
owners. Health care costs averaged $3,160 per person in 1992, with
current increases projected to run in double digits through the end of
the century. Prescription drug costs in many cases have risen more than
60 percent since 1985. My constituents are asking for relief.
It is imperative that we enact this piece of legislation today to
show our constituents that we understand the problems they are facing.
Therefore, I urge my colleagues to support congressional efforts to
provide much-needed relief by helping to make health insurance more
affordable for the hard-working citizens of our country.
Mr. ORTON. Mr. Chairman, I rise in strong support of H.R. 831,
legislation to restore and make permanent the 25-percent deduction for
health insurance costs for the self-employed.
In fact, I have cosponsored and supported similar legislation since
first being elected to Congress. I cosponsored H.R. 784 in the 102d
Congress and H.R. 162 in the last Congress. Both bills would have made
this deduction permanent and expanded it to 100 percent over time.
Mr. Chairman, this is a simple matter of fairness. When Chapter C
corporations provide health insurance benefits for their officers and
other employees, they enjoy full tax deductibility. However, if
individuals take the initiative and start their own business, we deny
them the right to deduct health insurance premiums.
Prior to the end of 1993, we did allow a 25-percent deduction for
health benefits. However, due to congressional infighting and the need
to comply with PAYGO requirements, this meager 25-percent deduction
expired. Last summer proposals to reinstate and expand this to 100-
percent deductibility were incorporated into comprehensive health care
reform proposals. When health care reform died, so did chances for
reinstatement of this provision.
We need to do two things. First, we need to pass H.R. 831 and get it
enacted into law quickly. The odds are overwhelming that we will pass
this eventually. Let's do it quickly to avoid the burden of taxpayers
having to file first without the deduction, then refile at a later
date, claiming a refund.
Second, we should move to enact 100-percent deductibility in the very
near future. There is no policy justification for a mere 25-percent
provision. That has come about from our inexcusable failure to resolve
this issue on a permanent basis. As we consider a wide range of tax
proposals this spring, I hope we will make enactment of a 100-percent
health care deduction for the self-employed a high priority.
Mrs. KELLY. Mr. Chairman, I rise in strong support of H.R. 831, which
will take the long-overdue step of permanently extending the 25 percent
deduction for health insurance costs for the self-employed.
Small business is the country's most important motivator for
innovation, job creation and economic growth. Creating a successful
small business takes guts, determination, and hard work, but it
represents the very best of the American dream.
I know this firsthand, Mr. Chairman. Both myself and my husband are
small business owners. We both have experienced the satisfaction of
creating successful small businesses, creating new jobs, and
contributing to our community.
However, we have also felt the onerous tax and regulatory burdens
that stand in the way of successful small businesses today. Self-
employed small business owners face a number of very unique problems,
and the disparity in the tax treatment of health insurance costs
represents one of the more troublesome of these.
I believe tonight's vote is a referendum on tax fairness. Our Tax
Code currently provides large corporations with a 100 percent deduction
for health care insurance premiums. Unless we act and pass this
legislation, however, self-employed entrepreneurs will be forced to
shoulder the full cost of their insurance premiums.
Making permanent the 25-percent deduction will take a small but
needed step toward restoring a degree of equity in the manner in which
we treat small business in this country.
Let's support our small businesses, Mr. Chairman, by passing H.R.
831. And once we have accomplished this goal, I believe we should take
the next logical step and raise the deductibility for the self-employed
to 100 percent.
Mr. STOKES. Mr. Chairman, I rise in strong opposition to H.R. 831. I
must first make it clear that I have consistently supported the
extension of a health insurance deduction for self-employed
individuals, but I cannot support the unacceptable way this bill seeks
to pay for such a deduction. This legislation represents the majority's
first direct attempt to attack affirmative action. If is cynical and
repugnant to me that this bill seeks to--under the guise of helping
Americans--attack an equal opportunity for all Americans. This flawed
and hurried legislation should not only be defeated because it fails to
consider the consequences of the bill, but represents a clear attack on
equal opportunity for minorities in America.
The bill before us will not only attempt to undo an important civil
rights accomplishment of the U.S. Congress, but also seeks to undermine
the spirit of legislation intended to promote freedom of speech and
economic opportunities for minorities.
The stated purposes of H.R. 831 is to extend health insurance
benefits. This bill would retroactively eliminate section 1071 of the
Internal Revenue Code, that authorizes the Federal Communications
Commission to provide certificates to sellers of broadcast properties
to minorities. These certificates allow the seller to defer taxation on
the gain from the sale, and encourage minority participation in
broadcasting. Section 1071 creates a preference that is designed to
achieve a remedial and legitimate public policy goal.
While I agree that Congress should make health care available to all
Americans, the despicable attempt to play self-employed
[[Page H1931]] workers in need of health insurance against minorities
in need of business opportunities is reprehensible. This tactic
represents the worst in politics and I am ashamed that such a racially
divisive measure has even been proposed. This legislation goes well
beyond its legitimate objective of providing health care. In fact, this
bill is specifically designed to inhibit the will and conscience of the
American people by eliminating financial incentives for a program the
current majority has long sought to weaken, if not totally eliminate:
Affirmative action.
A measure of this kind requires detailed analysis of the impact it
may have on the American people, but no such review has or will take
place. The facts show that this bill is now before us without the
requisite hearings, subcommittee oversight or even sufficient time to
review the bill itself.
Adding to the cynical approach employed by this legislation, I am sad
to see that this law is retroactive and has been engineered to take the
unprecedented step of eliminating a particular transaction. This kind
of legislation against individuals establishes a dangerous precedent.
As a representative of the urban district of Cleveland, OH, I have
witnessed the severity of the racial and economic problems this Nation
and its inner cities now face. The need for diversity in the media is
clear. Ending monopoly ownership by a single community of the primary
means for informing, educating and entertaining Americans is essential
in a free society that seeks the free and diverse expression of ideas.
Prior to the implementation of section 1071, the FCC unsuccessfully
attempted to diversify broadcast ownership. It has only been with the
implementation of section 1071 that many minorities who grew up in
segregated America have had a real chance to participate in
broadcasting.
All Americans loose with the legislation because the elimination of
opportunities to make broadcasting look more like America perpetuates
the stereotypes, racist attitudes, and misunderstandings that always
accompany ignorance. In today's global economy we must overcome such
ignorance in favor of a more open and inclusive broadcast system.
Perhaps the most negative impact of this proposed legislation will be
on congressional efforts to end discrimination and exclusion through
affirmative action. Within the last two decades, affirmative action has
been the primary tool that has allowed minority and women workers to
break through the many barriers of discrimination that have helped to
keep them unemployed, underpaid, and in a place where there is little
or no opportunity for advancement.
Despite the steps our Nation has taken to move forward in the area of
affirmative action, this legislation represents a new onslaught on
civil rights. Congressional opponents of affirmative action should
realize that equal opportunity does not belong specifically to one race
of people. Black Americans born in this country also have a contract
with America. That contract, by virtue of birth, is rooted in both the
Constitution and the Declaration of Independence. When it comes to
opportunity in this country they have every right to believe in the
doctrine, ``We hold these truths to be self evident, that all men are
created equal.''
Mr. Speaker, the truth of affirmative action programs is that they do
not grant preferential treatment to selected Americans, but provide for
a means of equal opportunity employment for members of our society
whose voices have been choked off by the destructive and brutal
oppression of racism and exclusion.
It is my belief that H.R. 831 and the circumstances under which it is
presented in this House attempt to mislead and American people to
believe that cookie cutter, simplistic solutions will cure what ails
this Nation. Nothing could be further from the truth. As our Nation
faces and epidemic discrimination and poverty, the solution to these
problems will not be found in quick fixes like this bill. The American
people elected us to act in their best interest, not compromise their
welfare because government refuses to have the courage to meet its
obligation to maintain equal opportunity for the citizens who need it
the most. I urge my colleagues to vote against this bill.
Mrs. MEEK of Florida. Mr. Chairman, the bill on the floor today, H.R.
831, is a thinly-veiled effort to muzzle the voices of minorities in
this country.
For the past two decades, under Democratic and Republican
administrations, the policy of the United States has been to provide
tax benefits to encourage and promote the sale of radio, television,
and cable companies to minority-owned firms.
The present leadership of the House talks a lot about empowerment,
but it is obvious from this bill that empowerment does not extend to
minorities who want to break into the broadcast industry--an industry
which has extraordinary barriers to entry. Minorities are still vastly
underrepresented in the broadcast business. More than 97 percent of all
broadcast licenses are held by white men. The number of licenses issued
to minority-controlled businesses would be even less without this
program.
The goal of the tax provision that H.R. 831 would repeal is to allow
African-Americans, Hispanic-Americans, Asian-Americans and other
minorities the opportunity to break into the relatively closed society
of broadcast entrepreneurs and to promote the diversity of broadcast
viewpoints. There is a great national need for American minority
communities to have the media outlets and the opportunity to express
themselves.
However, under the guise of providing help to self-employed people by
allowing them to deduct from their taxes part of their expenses for
health insurance, H.R. 831 would wipe out the minority ownership
incentives in the tax law--incentives that have led to a five-fold
increase in minority ownership of radio and television broadcast
stations, and to an increase in minority ownership of cable systems as
well.
Mr. Chairman, I strongly favor legislative changes to tighten up the
administration of this tax incentive program to make ironclad certain
that minority Americans demonstrate real equity ownership in the media
properties they buy. Diversity is important, and I want to insure that
real gains are made by minorities in the broadcast industry.
But repeal is not reform. It is merely a muzzle on voices straining
against great odds to be heard.
Mr. FOGLIETTA. Mr. Chairman, I rise today against this legislation
which seeks to dismantle the minority preference program run by the
FCC.
We all know that the best way to get people out of poverty's reach is
to provide them with jobs and opportunity. However, my Republican
colleagues want to pay for one valid tax provision by repealing another
which assists in empowering so many minority entrepreneurs across the
country. This is dead wrong.
I know that this small sector of the economy is especially successful
for minorities, because my hometown of Philadelphia is home to a number
of African-American-owned radio, television, and cable networks. They
empower people through employment. As we are closing down so many roads
to opportunity, I want to see this avenue remain open. The Gibbons-
McDermott substitute will make it work better.
Maybe my Republican colleagues have tuned in and they don't like what
they're hearing--broad opposition to the Contract With America.
I urge my colleagues not to turn down the volume on these minority
voices. Vote against H.R. 831.
Mr. EMERSON. Mr. Chairman, I rise today in strong support of H.R.
831. In the 103d Congress I cosponsored legislation to make this
deduction permanent, thus eliminating the need for yearly self-renewal.
Unfortunately, this legislation fell victim to end-of-the-session
wrangling. This deduction is very important to residents of the Eighth
District of Missouri. Ideally, I would like to see this deduction
increased to 100 percent, the amount currently enjoyed by most large
corporations. It is my hope that we can increase the deduction to this
amount in the future.
The House Small Business Committee estimates that the 25-percent tax
deduction enabled as many as 400,000 Americans to obtain health care
coverage which otherwise was out of their economic reach. Most small
business owners, including farmers and ranchers, need coverage as much
as folks who work in Fortune 500 firms, but oftentimes are without the
on-hand economic resources to pay for preventive care--let alone the
costs should an illness occur.
Over the last 2 years, we have learned what Americans want and don't
want when it comes to health care reform. Providing access to coverage
through our tax code seems to be an easily accomplished option and one
that should cross party lines. It is a bit of an insurance policy to
help small businesses bolster our Nation's economic engine and provide
jobs for more Americans, while looking after some vital health care
interests at the same time. I urge passage of this important
legislation.
Mrs. VUCANOVICH. Mr. Chairman, I rise in support of H.R. 831, to
reinstate and make permanent the 25-percent tax deduction for health
insurance to self-employed individuals.
For too long, a disparity has been in existence in our tax system.
Our system has given a preference to employees of large corporations,
harming the self-employed individuals in the process. Small
businessowners, farmers, ranchers, have had to come to Congress time
and time again to ask that a tax deduction be granted and extended to
them. Unfortunately, the 103d, Congress dropped the ball, allowing this
important deduction to expire in 1993. Promises were made that the
deduction would be reinstated, but intertwined in the debacle of
national health care reform--no action was taken.
[[Page H1932]] Well, its been over a year since then and the new team
is taking possession of the ball and going all the way with a slam dunk
with this legislation. It is time we give tax fairness to our self-
employed and H.R. 831 is the right vehicle to do just that. I give my
support to this measure and I encourage my colleagues to back their
constituents by supporting the measure too.
Mr. BUYER. Mr. Chairman, H.R. 831, a bill to allow permanent
deductibility of health insurance costs for the self-employed is long
overdue and I enthusiastically support it. The old saying, ``It may be
late but it's not too late,'' is so true in this case.
I applaud my colleague from Texas, Mr. Bill Archer, for recognizing
the huge injustice that would fall upon many self-employed if this
legislation would not pass. It is my belief that the Tax Code should be
fair to all. Under current law, employees of a company that provides
health benefits are allowed to exclude those benefits from their
taxable incomes; the self-employed enjoy no such benefit.
To the estimated 3 million who would file for the 25-percent
deduction, H.R. 831 prevents a tax increase many self-employed would
most likely incur on this year's returns.
Mr. Chairman, restoring the deductibility for small businessowners,
the self-employed, and family farmers is of great interest to residents
of the Fifth District of Indiana. They are the backbone to the rural
economy and should be provided the same benefits that the big
corporations are permitted in major metropolitan areas. The Tax Code
must not be discriminatory.
Furthermore, I support Mr. Archer's scrutiny of our current tax law
and the Ways and Means Committee's efforts to establish a system of law
and public policies that are indifferent to race or gender.
Mr. Chairman, it is becoming more and more clear that section 1071 of
the Internal Revenue Code has increasingly been abused. For example, of
the minority-owned radio stations that received FCC tax certificates
between 1979-92, only 29 percent of those stations were still
controlled by the original minority purchaser at the end of 1992.
In many cases, such investors often turn around and sell their stake
in the company for millions of dollars above their initial interest.
Thus, by allowing a section 1071 in many of these cases, hundreds of
millions of dollars--even billions of dollars--have been lost to the
American taxpayer. Section 1071 has been abused for too long. It has
become one of the most grotesque abuses of our tax system I have seen
in all my years.
Let us close the loopholes, reform our Tax Code so it is race and
gender blind, and allow our small businessmen, self-employed, and
family farmers to receive the same benefits the giant corporations are
privy to. In short, H.R. 831 is a beginning to make the Tax Code more
friendly and fair.
Mr. KLECZKA. Mr. Chairman, I would like to express my support for
H.R. 831, the health premium deduction for the self-employed. This bill
would permanently extend the 25-percent health insurance deduction for
the self-employed, and would do so retroactively so that these
individuals may take advantage of it when they file their tax returns
this Spring. My colleagues, self-employed individuals are waiting for
us to act, and we owe it to them to pass this legislation
expeditiously.
This much needed deduction has been extended, and extended, and
extended again. It is time to provide some stability for the many small
employers who rely on this assistance by extending it once and for all.
If this deduction is good policy--and I believe it is--then let us give
it the credibility it deserves and make it a stable part of our tax
law.
Restoring the 25-percent deduction is a matter of simple fairness.
Corporations can deduct 100 percent of the costs of providing insurance
to their employees, but self-employed people, mostly small businesses
and farmers, can no longer deduct even the meager 25 percent that they
used to be able to deduct. The least we can do is restore this minimal
assistance to them. While the 25-percent amount is not nearly what the
large employer receives, it is an important first step toward leveling
the playing field in a responsible manner.
Permanently restoring this deduction is also consistent with the goal
of encouraging health insurance coverage for all Americans. According
to the Small Business Administration, there are 2.6 million uninsured
self-employed Americans--making that group one of the largest groups of
uninsured citizens. Without the 25-percent deduction, the number of
uninsured in this segment of the population would likely increase.
Hopefully, by making the tax break permanent, we can encourage more of
the self-employed to buy insurance.
Passing H.R. 831 is the fair thing to do. It is good for small
business and will help encourage health care coverage. Moreover, the
bill enjoys bipartisan support. Mr. Chairman, I urge that we adopt this
provision.
The CHAIRMAN. All time for general debate has expired.
Pursuant to the rule, the amendment printed in the bill is considered
as adopted, and the bill, as amended, is considered as having been
read.
The text of the bill, as amended, is as follows:

H.R. 831

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. PERMANENT EXTENSION OF DEDUCTION FOR HEALTH
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

(a) In General.--Subsection (l) of section 162 of the
Internal Revenue Code of 1986 (relating to special rules for
health insurance costs of self-employed individuals) is
amended by striking paragraph (6).
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
1993.

SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND
EXCHANGES.

(a) In General.--Subchapter O of chapter 1 of the Internal
Revenue Code of 1986 is amended by striking part V (relating
to changes to effectuate FCC policy).
(b) Clerical Amendment.--The table of parts for such
subchapter O is amended by striking the item relating to part
V.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to--
(A) sales and exchanges on or after January 17, 1995, and
(B) sales and exchanges before such date if the FCC tax
certificate with respect to such sale or exchange is issued
on or after such date.
(2) Binding contracts.--
(A) In general.--The amendments made by this section shall
not apply to any sale or exchange pursuant to a written
contract which was binding on January 16, 1995, and at all
times thereafter before the sale or exchange, if the FCC tax
certificate with respect to such sale or exchange was applied
for, or issued, on or before such date.
(B) Sales contingent on issuance of certificate.--A
contract shall be treated as not binding for purposes of
subparagraph (A) if the sale or exchange pursuant to such
contract, or the material terms of such contract, were
contingent, at any time on January 16, 1995, on the issuance
of an FCC tax certificate. The preceding sentence shall not
apply if the FCC tax certificate for such sale or exchange is
issued on or before January 16, 1995.
(3) FCC tax certificate.--For purposes of this subsection,
the term ``FCC tax certificate'' means any certificate of the
Federal Communications
Commission for the effectuation of section 1071 of the
Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of this Act).

SEC. 3. NONRECOGNITION OF INVOLUNTARY CONVERSIONS NOT TO
APPLY IF REPLACEMENT PROPERTY ACQUIRED FROM
RELATED PERSON.

(a) In General.--Section 1033 of the Internal Revenue Code
of 1986 (relating to involuntary conversions) is amended by
redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) Nonrecognition Not To Apply if Replacement Property
Acquired From Related Person.--Subsection (a) shall not apply
if the replacement property or stock acquired is acquired
from a related person. For purposes of the preceding
sentence, a person is related to another person if the
relationship between such persons would result in a
disallowance of losses under section 267 or 707(b).''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to replacement property or stock acquired on or
after February 6, 1995.

SEC. 4. PHASEOUT OF EARNED INCOME CREDIT FOR INDIVIDUALS
HAVING MORE THAN $2,500 OF TAXABLE INTEREST AND
DIVIDENDS.

(a) In General.--Section 32 of the Internal Revenue Code of
1986 is amended by redesignating subsections (i) and (j) as
subsections (j) and (k), respectively, and by inserting after
subsection (h) the following new subsection:
``(i) Phaseout of Credit for Individuals Having More than
$2,500 of Taxable Interest and Divendends.--If the aggregate
amount of interest and dividends includible in the gross
income of the taxpayer for the taxable year exceeds $2,500,
the amount of the credit which would (but for this
subsection) be allowed under this section for such taxable
year shall be reduced (but not below zero) by an amount which
bears the same ratio to such amount of credit as such excess
bears to $650.''
(b) Inflation Adjustment.--Subsection (j) of section 32 of
such Code (relating to inflation adjustments), as
redesignated by subsection (a), is amended by striking
paragraph (2) and by inserting the following new paragraphs:
``(2) Interest and dividend income limitation.--In the case
of a taxable year beginning in a calendar year after 1996,
each dollar amount contained in subsection (i) shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 1995'
[[Page H1933]] for `calendar year 1992' in subparagraph (B)
thereof.
``(3) Rounding.--If an amount as adjusted under paragraph
(1) or (2) is not a multiple of $10 such dollar amount shall
be rounded to the nearest multiple of $10.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1995.

The CHAIRMAN. No further amendment is in order except the amendment
in the nature of a substitute printed in House Report 104-38.
The amendment in the nature of a substitute may be offered only by
the gentleman from Florida, Mr. GIBBONS, or his designee. It shall be
considered as having been read and is not subject to amendment.
The debate on the amendment will be equally divided and controlled by
the proponent and an opponent of the amendment in the nature of a
substitute.
Mr. GIBBONS. Mr. Chairman, I rise to yield my time to the gentleman
from Washington [Mr. McDermott]. I endorse the amendment. I would like
to give the gentleman from Washington credit for having worked this
out. I yield my time and the ability to yield such time as he may deem
necessary to the gentleman from Washington [Mr. McDermott].
The CHAIRMAN. Does the gentleman from Florida [Mr. Gibbons] designate
the gentleman from Washington [Mr. McDermott] as his designee?
Mr. GIBBONS. I do so designate the gentleman from Washington [Mr.
McDermott] as the Member to handle the amendment, and I yield to him at
this time.
(Mr. McDDERMOTT asked and was given permission to revise and extend
his remarks.)

amendment in the nature of a substitute offered by mr. mcdermott

Mr. McDERMOTT. Mr. Chairman, I offer the amendment in the nature of a
substitute, printed in House Report 104-38.
The CHAIRMAN. The Clerk will designate the amendment in the nature of
a substitute.
The CLERK. The text of the amendment in the nature of a substitute is
as follows:

Amendment in the nature of a substitute offered by Mr.
McDermott.
Strike all after the enacting clause and insert the
following:
TITLE I--PROVISIONS RELATING TO HEALTH CARE

SEC. 101. RETROACTIVE RESTORATION OF DEDUCTION FOR HEALTH
INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

(a) In General.--Paragraph (6) of section 162(l) of the
Internal Revenue Code of 1986 (relating to special rules for
health insurance costs of self-employed individuals) is
amended by striking ``December 31, 1993'' and inserting
``December 31, 1995''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
1993.

SEC. 102. PERMANENT DEDUCTION FOR HEALTH INSURANCE COSTS OF
EMPLOYEES AND SELF-EMPLOYED INDIVIDUALS.

(a) In General.--Part VII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to additional
itemized deductions) is amended by redesignating section 220
as section 221 and by inserting after section 219 the
following new section:

``SEC. 220. HEALTH INSURANCE COSTS.

``(a) In General.--In the case of an individual, there
shall be allowed as a deduction an amount equal to 25 percent
of the amount paid during the taxable year for insurance
which constitutes medical care for the taxpayer, his spouse,
and dependents.
``(b) Limitation Based on Earned Income.--No deduction
shall be allowed under subsection (a) to the extent that the
amount of such deduction exceeds the sum of--
``(1) the taxpayer's wages, salaries, tips, and other
employee compensation includible in gross income, plus
``(2) the taxpayer's earned income (as defined in section
401(c)(2)).
``(c) Other Coverage.--Subsection (a) shall not apply to
any taxpayer for any calendar month for which the taxpayer is
eligible to participate in any subsidized health plan
maintained by any employer of the taxpayer or of the spouse
of the taxpayer.
``(d) Phasein of Deduction for Employees.--In the case of
taxable years beginning before January 1, 2000, to the extent
that the amount paid for insurance referred to in subsection
(a) is allocable to coverage for a month for which the
individual has no earned income (as defined in section
401(c)(2)), subsection (a) shall be applied with respect to
such amount by substituting the percentage determined in
accordance with the following table for `25 percent'.

``In the The percentage
years beginning in calendais:
1996...................................................15 percent
1997...................................................15 percent
1998...................................................20 percent
1999..................................................20 percent.

``(e) Special Rules.--
``(1) Coordination with medical deduction, etc.--Any amount
paid by a taxpayer for insurance to which subsection (a)
applies shall not be taken into account in computing the
amount allowable to the taxpayer as a deduction under section
213(a).
``(2) Treatment of certain s corporation shareholders.--
This section shall apply in the case of any individual
treated as a partner under section 1372(a), except that--
``(A) for purposes of this section, such individual's wages
(as defined in section 3121) from the S corporation shall be
treated as such individual's earned income (within the
meaning of section 401(c)(1)), and
``(B) there shall be such adjustments in the application of
this section as the Secretary may by regulations prescribe.
``(3) Deduction not allowed for self-employment tax
purposes.--The deduction allowable by reason of this section
shall not be taken into account in determining an
individual's net earnings from self-employment (within the
meaning of section 1402(a)) for purposes of chapter 2.''
(b) Conforming Amendments.--
(1) Subsection (l) of section 162 of such Code is hereby
repealed.
(2) Subsection (a) of section 62 of such Code is amended by
inserting after paragraph (15) the following new item:
``(16) Health insurance costs of self-employed
individuals.--The deduction allowed by section 220 but only
to the extent that the amount of the deduction does not
exceed the taxpayer's earned income (as defined in section
401(c)(2)) for the taxable year.''
(3) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by striking the last item
and inserting the following new items:

``Sec. 220. Health insurance costs.
``Sec. 221. Cross reference.''

(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1995.
TITLE II--MODIFICATION OF RULES FOR NONRECOGNITION OF GAIN UNDER F.C.C.
TAX CERTIFICATE PROGRAM AND FOR INVOLUNTARY CONVERSIONS
SEC. 201. LIMITATIONS ON NONRECOGNITION OF GAIN UNDER F.C.C.
TAX CERTIFICATE PROGRAM.

(a) In General.--Section 1071 of the Internal Revenue Code
of 1986 (relating to gain from sale or exchange to effectuate
policies of F.C.C.) is amended by redesignating subsection
(b) as subsection (c) and by inserting after subsection (a)
the following new subsection:
``(b) Limitations.--
``(1) In general.--Subsection (a) shall apply only if the
sale or exchange is a qualified telecommunications
transaction.
``(2) Limitation on amount of nonrecognition.--The amount
of gain which is not recognized under subsection (a) with
respect to a qualified telecommunications transaction (or a
series of related transactions) shall not exceed $50,000,000.
``(3) Qualified telecommunications transaction.--For
purposes of this subsection, the term `qualified
telecommunications transaction' means any sale or exchange of
property if--
``(A) the Commission certifies that the sale or exchange is
in furtherance of the Commission's Minority Ownership Policy,
and
``(B)(i) such property is owned by an eligible person at
all times during the 3-year period beginning on the date of
such sale or exchange, or
``(ii) if the property sold or exchanged was acquired by
the taxpayer by reason of a qualified contribution to the
capital of an eligible corporation or an eligible
partnership, such corporation or partnership was an eligible
person at all times during the 3-year period beginning on the
date of such contribution.
``(4) Eligible person.--For purposes of this subsection--
``(A) In general.--The term `eligible person' means--
``(i) any eligible individual,
``(ii) any eligible corporation, and
``(iii) any eligible partnership.
``(B) Eligible individual.--The term `eligible individual'
means any individual if an FCC tax certificate could have
been issued under the Commission's Minority Ownership Policy
for any sale or exchange of property to such individual.
``(C) Eligible corporation.--The term `eligible
corporation' means any corporation in which eligible
individuals directly or indirectly own--
``(i) stock possessing more than 50 percent of the total
voting power of the stock of such corporation, and
``(ii) stock having a value equal to more than 20 percent
of the total value of the stock of such corporation.
``(D) Eligible partnership.--The term `eligible
partnership' means any partnership in which eligible
individuals directly or indirectly--
``(i) have actual control of the partnership, and
``(ii) own partnership interests having a value equal to
more than 20 percent of the total value of the partnership
interests of such partnership.

[[Page H1934]]

``(5) Treatment of buy-sell arrangements, etc.--For
purposes of paragraphs (3) and (4)--
``(A) In general.--Property held by an eligible person
shall be treated as held by an ineligible person if--
``(i) an ineligible person has an option or other right to
acquire such property, or
``(ii) the eligible person has an option or other right to
require an ineligible person to acquire such property.
``(B) Treatment of warrants, etc.--If an ineligible person
holds a warrant, convertible security, or similar instrument
issued by any entity, such person shall be treated as holding
the interest in the entity which such person could have
acquired on the exercise of his rights under the instrument.
``(C) Ineligible person.--For purposes of this paragraph,
the term `ineligible person' means any person who is not an
eligible person.
``(6) Other definitions.--For purposes of this subsection--
``(A) FCC tax certificate.--The term `FCC tax certificate'
means any certificate of the Commission for the effectuation
of this section for purposes of carrying out the Commission's
Minority Ownership Policy.
``(B) Minority ownership policy.--The term `Minority
Ownership Policy' means the Commission's policy, as in effect
on January 16, 1995, to encourage ownership of
telecommunications facilities and licenses by women and
members of minority groups.
``(C) Qualified contribution to capital.--The term
`qualified contribution to capital' means any contribution to
the capital of an eligible corporation or an eligible
partnership pursuant to the contribution to capital
provisions of the Commission's Minority Ownership Policy.
``(D) Commission.--The term `Commission' means the Federal
Communications Commission.
``(7) Extension of statute of limitation.--
``(A) Deficiencies.--The statutory period for the
assessment of any deficiency attributable to any failure to
meet the requirements of paragraph (3)(B) shall not expire
before the close of the 3-year period beginning on the date
that the taxpayer certifies to the Secretary that such
requirements have been met, and such deficiency may be
assessed before the expiration of such 3-year period
notwithstanding the provisions of any law or rule of law
which would otherwise prevent such assessment.
``(B) Overpayments.--A refund or credit of any overpayment
of tax attributable to any failure to meet the requirements
of paragraph (3)(B) may be allowed or made (notwithstanding
the operation of any law or rule of law (including res
judicata)) if claim therefor is filed before the close of the
3-year period referred to in subparagraph (A).
``(8) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of this subsection, including regulations aggregating
transactions for purposes of paragraph (2).''
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to--
(A) sales and exchanges on or after January 17, 1995, and
(B) sales and exchanges before such date if the FCC tax
certificate with respect to such sale or exchange is issued
on or after such date.
(2) Binding contracts.--
(A) In general.--The amendments made by this section shall
not apply to any sale or exchange pursuant to a written
contract which was binding on January 16, 1995, and at all
times thereafter before the sale or exchange, if the FCC tax
certificate with respect to such sale or exchange was applied
for, or issued, on or before such date.
(B) Sales contingent on issuance of certificate.--A
contract shall be treated as not binding for purposes of
subparagraph (A) if the sale or exchange pursuant to such
contract, or the material terms of such contract, were
contingent, at any time on January 16, 1995, on the issuance
of an FCC tax certificate. The preceding sentence shall not
apply if the FCC tax certificate for such sale or exchange is
issued on or before January 16, 1995.
(3) FCC tax certificate.--For purposes of this subsection,
the term ``FCC tax certificate'' has the meaning given to
such term by section 1071(b) of the Internal Revenue Code of
1986, as amended by this section.

SEC. 202. NONRECOGNITION ON INVOLUNTARY CONVERSIONS NOT TO
APPLY IF REPLACEMENT PROPERTY ACQUIRED FROM
RELATED PERSON.

SEC. 301. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS
HAVING MORE THAN $2,500 OF INVESTMENT INCOME.

(a) In General.--Subpart A of part II of subchapter N of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 877 the following new section:

``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

``(a) General Rules.--For purposes of this subtitle--
``(1) Citizens.--If any United States citizen relinquishes
his citizenship during a taxable year, all property held by
such citizen at the time immediately before such
relinquishment shall be treated as sold at such time for its
fair market value and any gain or loss shall be taken into
account for such taxable year.
``(2) Certain residents.--If any long-term resident of the
United States ceases to be subject to tax as a resident of
the United States for any portion of any taxable year, all
property held by such resident at the time of such cessation
shall be treated as sold at such time for its fair market
value and any gain or loss shall be taken into account for
the taxable year which includes the date of such cessation.
``(b) Exclusion for Certain Gain.--The amount which would
(but for this subsection) be includible in the gross income
of any taxpayer by reason of subsection (a) shall be reduced
(but not below zero) by $600,000.
``(c) Property Treated as Held.--For purposes of this
section, except as otherwise provided by the Secretary, an
individual shall be treated as holding--
``(1) all property which would be includible in his gross
estate under chapter 11 were such individual to die at the
time the property is treated as sold,
``(2) any other interest in a trust which the individual is
treated as holding under the rules of section 679(e)
(determined by treating such section as applying to foreign
and domestic trusts), and
``(3) any other interest in property specified by the
Secretary as necessary or appropriate to carry out the
purposes of this section.
``(d) Exceptions.--The following property shall not be
treated as sold for purposes of this section:
``(1) United states real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the date the
individual relinquishes his citizenship or ceases to be
subject to tax as a resident, meet the requirements of
section 897(c)(2).
``(2) Interest in certain retirement plans.--
``(A) In general.--Any interest in a qualified retirement
plan (as defined in section 4974(d)), other than any interest
attributable to contributions which are in excess of any
limitation or which violate any condition for tax-favored
treatment.
``(B) Foreign pension plans.--
``(i) In general.--Under regulations prescribed by the
Secretary, interests in foreign pension plans or similar
retirement arrangements or programs.
``(ii) Limitation.--The value of property which is treated
as not sold by reason of this subparagraph shall not exceed
$500,000.
``(e) Definitions.--For purposes of this section--
``(1) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
date the United States Department of State issues to the
individual a certificate of loss of nationality or on the
date a court of the United States cancels a naturalized
citizen's certificate of naturalization.
``(2) Long-term resident.--
``(A) In general.--The term `long-term resident' means any
individual (other than a citizen of the United States) who is
a lawful permanent resident of the United States and,
[[Page H1935]] as a result of such status, has been subject
to tax as a resident in at least 10 taxable years during the
period of 15 taxable years ending with the taxable year
during which the sale under subsection (a) is treated as
occurring.
``(B) Special rule.--For purposes of subparagraph (A),
there shall not be taken into account--
``(i) any taxable year during which any prior sale is
treated under subsection (a) as occurring, or
``(ii) any taxable year prior to the taxable year referred
to in clause (i).
``(f) Termination of Deferrals, Etc.--On the date any
property held by an individual is treated as sold under
subsection (a)--
``(1) any period deferring recognition of income or gain
shall terminate, and
``(2) any extension of time for payment of tax shall cease
to apply and the unpaid portion of such tax shall be due and
payable.
``(g) Election by Expatriating Residents.--Solely for
purposes of determining gain under subsection (a)--
``(1) In general.--At the election of a resident not a
citizen of the United States, property--
``(A) which was held by such resident on the date the
individual first became a resident of the United States
during the period of long-term residency to which the
treatment under subsection (a) relates, and
``(B) which is treated as sold under subsection (a),
shall be treated as having a basis on such date of not less
than the fair market value of such property on such date.
``(2) Election.--Such an election shall apply to all
property described in paragraph (1), and, once made, shall be
irrevocable.
``(h) Deferral of Tax on Closely Held Business Interests.--
The District Director may enter into an agreement with any
individual which permits such individual to defer payment for
not more than 5 years of any tax imposed by subsection (a) by
reason of holding any interest in a closely held business (as
defined in section 6166(b)) other than a United States real
property interest described in subsection (d)(1).
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.
``(j) Cross Reference.--

``For termination of United States citizenship for tax purposes, see
section 7701(a)(47).''

(b) Definition of Termination of United States
Citizenship.--Section 7701(a) of such Code is amended by
adding at the end the following new paragraph:
``(47) Termination of united states citizenship.--An
individual shall not cease to be treated as a United States
citizen before the date on which the individual's citizenship
is treated as relinquished under section 877A(e)(1).''
(c) Conforming Amendments.--
(1) Section 877 of such Code is amended by adding at the
end the following new subsection:
``(f) Termination.--This section shall not apply to any
individual who is subject to the provisions of section
877A.''
(2) Paragraph (10) of section 7701(b) of such Code is
amended by adding at the end the following new sentence:
``This paragraph shall not apply to any individual who is
subject to the provisions of section 877A.''
(d) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 of such Code is
amended by inserting after the item relating to section 877
the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

(e) Effective Date.--The amendments made by this section
shall apply to--
(1) United States citizens who relinquish (within the
meaning of section 877A(e)(1) of the Internal Revenue Code of
1986, as added by this section) United States citizenship on
or after February 6, 1995, and
(2) long-term residents (as defined in such section) who
cease to be subject to tax as residents of the United States
on or after such date.

SEC. 312. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.

(a) In General.--Section 6048 of the Internal Revenue Code
of 1986 (relating to returns as to certain foreign trusts) is
amended to read as follows:
``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN
TRUSTS.

``(a) Notice of Certain Events.--
``(1) General rule.--On or before the 90th day (or such
later day as the Secretary may prescribe) after any
reportable event, the responsible party shall--
``(A) notify each trustee of the trust of the requirements
of subsection (b), and
``(B) provide written notice of such event to the Secretary
in accordance with paragraph (2).
``(2) Contents of notice.--The notice required by paragraph
(1)(B) shall contain such information as the Secretary may
prescribe, including--
``(A) the amount of money or other property (if any)
transferred to the trust in connection with the reportable
event,
``(B) the identity of the trust and of each trustee and
beneficiary (or class of beneficiaries) of the trust, and
``(C) a statement that each trustee of the trust has been
informed of the requirements of subsection (b).
``(3) Reportable event.--For purposes of this subsection,
the term `reportable event' means--
``(A) the creation of any foreign trust by a United States
person,
``(B) the transfer of any money or property to a foreign
trust by a United States person, including a transfer by
reason of death,
``(C) a domestic trust becoming a foreign trust,
``(D) the death of a citizen or resident of the United
States who is a grantor of a foreign trust, and
``(E) the residency starting date (within the meaning of
section 7701(b)(2)(A)) of a grantor of a foreign trust
subject to tax under section 679(a)(3).
Subparagraphs (A) and (B) shall not apply with respect to a
trust described in section 404(a)(4) or 404A.
``(4) Responsible party.--For purposes of this subsection,
the term `responsible party' means--
``(A) the grantor in the case of a reportable event
described in subparagraph (A) or (E) of paragraph (3),
``(B) the transferor in the case of a reportable event
described in paragraph (3)(B) other than a transfer by reason
of death,
``(C) the trustee of the domestic trust in the case of a
reportable event described in paragraph (3)(C), and
``(D) the executor of the decedent's estate in the case of
a transfer by reason of death.
``(b) Trust Reporting Requirements.--If a foreign trust, at
any time during a taxable year of such trust--
``(1) has a grantor who is a United States person and--
``(A) such grantor is treated as the owner of any portion
of such trust under the rules of subpart E of part I of
subchapter J of chapter 1, or
``(B) any portion of such trust would be included in the
gross estate of such grantor if the grantor were to die at
such time, or
``(2) directly or indirectly distributes, credits, or
allocates money or property to any United States person
(whether or not the trust has a grantor described in
paragraph (1)),

then such trust shall meet the requirements of subsection (c)
(relating to trust information and agent) and subsection (d)
(relating to annual return).
``(c) Contents of Section 6048 Statement.--
``(1) In general.--The requirements of this subsection are
met if the trust files with the Secretary a statement which
contains such information as the Secretary may prescribe and
which--
``(A) identifies a United States person who is the trust's
limited agent to provide the Secretary with such information
that reasonably should be available to the trust for purposes
of applying sections 7602, 7603, and 7604 with respect to any
request by the Secretary to examine trust records or produce
testimony related to any transaction by the trust or with
respect to any summons by the Secretary for such records or
testimony, and
``(B) contains an agreement to comply with the requirements
of subsection (d).
``(2) Special rule.--A foreign trust which appoints an
agent described in paragraph (1)(A) shall not be considered
to have an office or a permanent establishment in the United
States solely because of the activities of such agent
pursuant to this section. For purposes of this section, the
appearance of persons or production of records by reason of
the creation of the agency shall not subject such persons or
records to legal process for any purpose other than
determining the correct treatment under this title of the
activities and operations of the trust.
``(d) Annual Returns and Statements.--The requirements of
this subsection are met if--
``(1) the trust makes a return for the taxable year which
sets forth a full and complete accounting of all trust
activities and operations for the taxable year, and contains
such other information as the Secretary may prescribe; and
``(2) the trust furnishes such information as the Secretary
may prescribe to each United States person--
``(A) who is treated as the owner of any portion of such
trust under the rules of subpart E of part I of subchapter J
of chapter 1,
``(B) to whom any item with respect to the taxable year is
credited or allocated, or
``(C) who receives a distribution from such trust with
respect to the taxable year.
``(e) Time and Manner of Filing Information.--Any notice,
statement, or return required under this section shall be
made at such time and in such manner as the Secretary shall
prescribe.
``(f) Modification of Return Requirements.--Secretary is
authorized to suspend or modify any requirement of this
section if the Secretary determines that the United States
has no significant tax interest in obtaining the required
information.''
(b) Penalties.--Section 6677 of such Code (relating to
failure to file information returns with respect to certain
foreign trusts) is amended to read as follows:

``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO
CERTAIN FOREIGN TRUSTS.

``(a) Failure To Report Certain Events.--
``(1) In general.--In the case of a reportable event
described in any subparagraph of section 6048(a)(3) for which
a responsible party does not file a written notice meeting
the requirements of section 6048(a)(2) within the time
specified in section 6048(a)(1), the responsible party shall
pay a penalty of
[[Page H1936]] $10,000. If any failure described in the
preceding sentence continues for more than 90 days after the
day on which the Secretary mails notice of such failure to
the responsible party, such party shall pay a penalty (in
addition to the $10,000 amount) of $10,000 for each 30-day
period (or fraction thereof) during which such failure
continues after the expiration of such 90-day period.
``(2) 35-percent penalty.--In the case of a reportable
event described in subparagraph (A), (B), or (C) of section
6048(a)(3) (other than a transfer by reason of death), the
aggregate amount of the penalties under paragraph (1) shall
not be less than an amount equal to 35 percent of the gross
value of the property involved in such event (determined as
of the date of the event).
``(3) Responsible Party.--For purposes of this subsection,
the term `responsible party' has the meaning given to such
term by section 6048(a)(4).
``(b) Failure To Make Certain Statements and Returns.--
``(1) In general.--In the case of any failure to meet the
requirements of section 6048(b), the appropriate tax
treatment of any trust transactions or operations shall be
determined by the Secretary in the Secretary's sole
discretion from the Secretary's own knowledge or from such
information as the Secretary may obtain through testimony or
otherwise.
``(2) Monetary penalty.--In the case of any failure to meet
the requirements of section 6048(b) with respect to a trust
described in such section by reason of paragraph (1) thereof,
the grantor described in such paragraph (1) shall pay a
penalty of $10,000 for each taxable year with respect to
which the foreign trust fails to meet such requirements. If
any failure described in the preceding sentence continues for
more than 90 days after the day on which the Secretary mails
notice of such failure to such grantor, such grantor shall
pay a penalty (in addition to any other penalty) of $10,000
for each 30-day period (or fraction thereof) during which
such failure continues after the expiration of such 90-day
period.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed by this section on any failure which is shown to be
due to reasonable cause and not due to willful neglect. The
fact that a foreign jurisdiction would impose a civil or
criminal penalty on the taxpayer (or any other person) for
disclosing the requested documentation is not reasonable
cause.
``(d) Deficiency Procedures Not To Apply.--Subchapter B of
chapter 63 (relating to deficiency procedures for income,
estate, gift, and certain excise taxes) shall not apply in
respect of the assessment or collection of any penalty
imposed by this section.''
(c) Clerical Amendments.--
(1) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by
striking the item relating to section 6048 and inserting the
following new item:

``Sec. 6048. Information with respect to certain foreign trusts.''

(2) The table of sections for part I of subchapter B of
chapter 68 of such Code is amended by striking the item
relating to section 6677 and inserting the following new
item:

``Sec. 6677. Failure to file information with respect to certain
foreign trusts.''

(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply--
(A) to reportable events occurring on or after February 6,
1995, and
(B) to the extent such amendments require reporting for any
taxable year under section 6048(b) of the Internal Revenue
Code of 1986 (as added by this section), to taxable years
beginning after the date of the enactment of this Act.
(2) Notices.--For purposes of section 6048(a) of such Code,
the 90th day referred to therein shall in no event be treated
as being earlier than the 90th day after the date of the
enactment of this Act.
SEC. 313. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS
HAVING ONE OR MORE UNITED STATES BENEFICIARIES.

(a) In General.--Section 679 of the Internal Revenue Code
of 1986 (relating to foreign trusts having one or more United
States beneficiaries) is amended to read as follows:
``SEC. 679. FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES
BENEFICIARIES.

``(a) Transferor Treated as Owner.--
``(1) In general.--A United States person who directly or
indirectly transfers property to a foreign trust (other than
a trust described in section 404(a)(4) or section 404A) shall
be treated as the owner for his taxable year of the portion
of such trust attributable to such property if for such year
there is a United States beneficiary of such trust.
``(2) Exception.--
``(A) In general.--Paragraph (1) shall not apply to any
sale or exchange of property to a trust if--
``(i) the trust pays fair market value for such property,
and
``(ii) all of the gain to the transferor is recognized at
the time of transfer.
``(B) Certain obligations not taken into account.--For
purposes of subparagraph (A), in determining whether the
transferor received fair market value, there shall not be
taken into account--
``(i) any obligation of--

``(I) the trust,
``(II) any grantor or beneficiary of the trust, or
``(III) any person who is related (within the meaning of
section 643(i)(3)) to any grantor or beneficiary of the
trust, and

``(ii) except as provided in regulations, any obligation
which is guaranteed by a person described in clause (i).
``(C) Treatment of deemed sale election under section
1057.--For purposes of subparagraph (A), a transfer with
respect to which an election under section 1057 is made shall
not be treated as a sale or exchange.
``(3) Special rules applicable to foreign grantor who later
becomes a united states person.--A nonresident alien
individual who becomes a United States resident within 5
years after directly or indirectly transferring property to a
foreign trust shall be treated for purposes of this section
and section 6048 as having transferred such property, and any
undistributed income (including all realized and unrealized
gains) attributable thereto, to the foreign trust immediately
after becoming a United States resident. For this purpose, a
nonresident alien shall be treated as becoming a resident of
the United States on the residency starting date (within the
meaning of section 7701(b)(2)(A)).
``(b) Beneficiaries Treated as Transferors in Certain
Cases.--For purposes of this section and section 6048, if--
``(1) a citizen or resident of the United States who is
treated as the owner of any portion of a trust under
subsection (a) dies,
``(2) property is transferred to a foreign trust by reason
of the death of a citizen or resident of the United States,
or
``(3) a domestic trust to which any United States person
made a transfer becomes a foreign trust,

then, except as otherwise provided in regulations, the trust
beneficiaries shall be treated as having transferred to such
trust (as of the date of the applicable event under paragraph
(1), (2), or (3)) their respective interests (as determined
under subsection (e)) in the property involved.
``(c) Trusts Acquiring United States Beneficiaries.--If--
``(1) subsection (a) applies to a trust for the
transferor's taxable year, and
``(2) subsection (a) would have applied to the trust for
the transferor's immediately preceding taxable year but for
the fact that for such preceding taxable year there was no
United States beneficiary for any portion of the trust,

then, for purposes of this subtitle, the transferor shall be
treated as having received as an accumulation distribution
taxable under subpart D an amount equal to the undistributed
net income (as determined under section 665(a) as of the
close of such immediately preceding taxable year)
attributable to the portion of the trust referred to in
subsection (a).
``(d) Trusts Treated as Having a United States
Beneficiary.--
``(1) In general.--For purposes of this section, a trust
shall be treated as having a United States beneficiary for
the taxable year unless--
``(A) under the terms of the trust, no part of the income
or corpus of the trust may be paid or accumulated during the
taxable year to or for the benefit of a United States person,
and
``(B) if the trust were terminated at any time during the
taxable year, no part of the income or corpus of such trust
could be paid to or for the benefit of a United States
person.

To the extent provided by the Secretary, for purposes of this
subsection, the term `United States person' includes any
person who was a United States person at any time during the
existence of the trust.
``(2) Attribution of ownership.--For purposes of paragraph
(1), an amount shall be treated as paid or accumulated to or
for the benefit of a United States person if such amount is
paid to or accumulated for a foreign corporation, foreign
partnership, or foreign trust or estate, and--
``(A) in the case of a foreign corporation, more than 50
percent of the total combined voting power of all classes of
stock of such corporation entitled to vote is owned (within
the meaning of section 958(a)) or is considered to be owned
(within the meaning of section 958(b)) by United States
shareholders (as defined in section 951(b)),
``(B) in the case of a foreign partnership, a United States
person is a partner of such partnership, or
``(C) in the case of a foreign trust or estate, such trust
or estate has a United States beneficiary (within the meaning
of paragraph (1)).
``(e) Determination of Beneficiaries' Interests in Trust.--
``(1) General rule.--For purposes of this section, a
beneficiary's interest in a foreign trust shall be based upon
all relevant facts and circumstances, including the terms of
the trust instrument and any letter of wishes or similar
document, historical patterns of trust distributions, and the
existence of and functions performed by a trust protector or
any similar advisor.
``(2) Special rule.--In the case of beneficiaries whose
interests in a trust cannot be determined under paragraph
(1)--
``(A) the beneficiary having the closest degree of kinship
to the grantor shall be treated as holding the remaining
interests in the
[[Page H1937]] trust not determined under paragraph (1) to be
held by any other beneficiary, and
``(B) if 2 or more beneficiaries have the same degree of
kinship to the grantor, such remaining interests shall be
treated as held equally by such beneficiaries.
``(3) Constructive ownership.--If a beneficiary of a
foreign trust is a corporation, partnership, trust, or
estate, the shareholders, partners, or beneficiaries shall be
deemed to be the trust beneficiaries for purposes of this
section.
``(4) Taxpayer return position.--A taxpayer shall clearly
indicate on its income tax return--
``(A) the methodology used to determine that taxpayer's
trust interest under this section, and
``(B) if the taxpayer knows (or has reason to know) that
any other beneficiary of such trust is using a different
methodology to determine such beneficiary's trust interest
under this section.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''
(b) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years ending on or after February 6, 1995.
(2) Section 679(a).--Paragraphs (2) and (3) of section
679(a) of the Internal Revenue Code of 1986 (as added by this
section) shall apply to--
(A) any trust created on or after February 6, 1995, and
(B) the portion of any trust created before such date which
is attributable to actual transfers of property to the trust
on or after such date.
(3) Section 679(b).--
(A) In general.--Paragraphs (1) and (2) of section 679(b)
of such Code (as so added) shall apply to--
(i) any trust created on or after the date of the enactment
of this Act, and
(ii) the portion of any trust created before such date
which is attributable to actual transfers of property to the
trust on or after such date.
(B) Section 679(b)(3).--Section 679(b)(3) of such Code (as
so added) shall take effect on February 6, 1995, without
regard to when the property was transferred to the trust.
SEC. 314. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER
GRANTOR TRUST RULES.

(a) In General.--So much of section 672(f) of the Internal
Revenue Code of 1986 (relating to special rule where grantor
is foreign person) as precedes paragraph (2) is amended to
read as follows:
``(f) Subpart Not To Result in Foreign Ownership.--
``(1) In general.--Notwithstanding any other provision of
this subpart, this subpart shall apply only to the extent
such application results in an amount being included
(directly or through 1 or more entities) in the gross income
of a citizen or resident of the United States or a domestic
corporation. The preceding sentence shall not apply to any
portion of an investment trust if such trust is treated as a
trust for purposes of this title and the grantor of such
portion is the sole beneficiary of such portion.''
(b) Credit for Certain Taxes.--Paragraph (2) of section
665(d) of such Code is amended by adding at the end the
following new sentence: ``Under rules or regulations
prescribed by the Secretary, in the case of any foreign trust
of which the settlor or another person would be treated as
owner of any portion of the trust under subpart E but for
section 672(f), the term `taxes imposed on the trust'
includes the allocable amount of any income, war profits, and
excess profits taxes imposed by any foreign country or
possession of the United States on the settlor or such other
person in respect of trust income.''
(c) Distributions by Certain Foreign Trusts Through
Nominees.--
(1) Section 643 of such Code is amended by adding at the
end the following new subsection:
``(h) Distributions by Certain Foreign Trusts Through
Nominees.--For purposes of this part, any amount paid to a
United States person which is derived directly or indirectly
from a foreign trust of which the payor is not the grantor
shall be deemed in the year of payment to have been directly
paid by the foreign trust to such United States person.''
(2) Section 665 of such Code is amended by striking
subsection (c).
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
(e) Transitional Rule.--If--
(1) by reason of the amendments made by this section, any
person other than a United States person ceases to be treated
as the owner of a portion of a domestic trust, and
(2) before January 1, 1996, such trust becomes a foreign
trust, or the assets of such trust are transferred to a
foreign trust,
no tax shall be imposed by section 1491 of the Internal
Revenue Code of 1986 by reason of such trust becoming a
foreign trust or the assets of such trust being transferred
to a foreign trust.
SEC. 315. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN
CORPORATIONS.

(a) In General.--Subchapter C of chapter 80 of the Internal
Revenue Code of 1986 (relating to provisions affecting more
than one subtitle) is amended by adding at the end the
following new section:
``SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN
CORPORATIONS.

``(a) In General.--Any property (including money) that is
purportedly a direct or indirect gift by a partnership or a
foreign corporation to a person who is not a partner of the
partnership or a shareholder of the corporation,
respectively, may be recharacterized by the Secretary to
prevent the avoidance of tax. The Secretary may not
recharacterize gifts made for bona fide business or
charitable purposes.
``(b) Statements on Recipient's Return.--A taxpayer who
receives a purported gift subject to subsection (a) shall
attach a statement to his income tax return for the year of
receipt that identifies the property received and describes
fully the circumstances surrounding the purported gift.
``(c) Exemption.--Subsection (a) shall not apply to
purported gifts received by any person during any taxable
year if the amount thereof is less than $2,500.
``(d) Regulations.--The Secretary may prescribe such rules
as may be necessary or appropriate to carry out the purposes
of this section.''
(b) Clerical Amendment.--The table of sections for such
subchapter C of such Code is amended by adding at the end the
following new item:

``Sec. 7874. Purported gifts by partnerships and foreign
corporations.''

(c) Effective Date.--The amendments made by this section
shall apply to amounts received after the date of the
enactment of this Act.
SEC. 316. INFORMATION REPORTING REGARDING LARGE FOREIGN
GIFTS.

(a) In General.--Subpart A of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
inserting after section 6039E the following new section:

``SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN
PERSONS.

``(a) In General.--If the value of the aggregate foreign
gifts received by a United States person (other than an
organization described in section 501(c) and exempt from tax
under section 501(a)) during any taxable year exceeds
$100,000, such United States person shall furnish (at such
time and in such manner as the Secretary shall prescribe)
such information as the Secretary may prescribe regarding
each foreign gift received during such year.
``(b) Foreign Gift.--For purposes of this section, the term
`foreign gift' means any amount received from a person other
than a United States person which the recipient treats as a
gift or bequest. Such term shall not include any qualified
transfer (within the meaning of section 2503(e)(2)).
``(c) Penalty For Failure To File Information.--
``(1) In general.--If a United States person fails to
furnish the information required by subsection (a) with
respect to any foreign gift within the time prescribed
therefor (including extensions)--
``(A) the tax consequences of the receipt of such gift
shall be determined by the Secretary in the Secretary's sole
discretion from the Secretary's own knowledge or from such
information as the Secretary may obtain through testimony or
otherwise, and
``(B) such United States person shall pay (upon notice and
demand by the Secretary and in the same manner as tax) an
amount equal to 5 percent of the amount of such foreign gift
for each month for which the failure continues (not to exceed
25 percent of such amount in the aggregate).
``(2) Reasonable cause exception.--Paragraph (1) shall not
apply to any failure to report a foreign gift if the United
States person shows that the failure is due to reasonable
cause and not due to willful neglect.
``(d) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this section.''.
(b) Clerical Amendment.--The table of sections for such
subpart is amended by inserting after the item relating to
section 6039E the following new item:

``Sec. 6039F. Notice of large gifts received from foreign persons.''

(c) Effective Date.--The amendments made by this section
shall apply to amounts received after the date of the
enactment of this Act in taxable years ending after such
date.
SEC. 317. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS
WHICH ARE NOT GRANTOR TRUSTS.

(a) Modification of Interest Charge on Accumulation
Distributions.--Subsection (a) of section 668 of the Internal
Revenue Code of 1986 (relating to interest charge on
accumulation distributions from foreign trusts) is amended to
read as follows:
``(a) General Rule.--For purposes of the tax determined
under section 667(a)--
``(1) Sum of interest charges for each throwback year.--The
interest charge (determined under paragraph (2)) with respect
to any distribution is the sum of the interest charges for
each of the throwback years to which such distribution is
allocated under section 666(a).
``(2) Interest charge for year.--Except as provided in
paragraph (6), the interest charge for any throwback year on
such year's allocable share of the partial tax computed under
section 667(b) with respect to any distribution shall be
determined for the period--
[[Page H1938]] ``(A) beginning on the due date for the
throwback year, and
``(B) ending on the due date for the taxable year of the
distribution,
by using the rates and method applicable under section 6621
for underpayments of tax for such period. For purposes of the
preceding sentence, the term `due date' means the date
prescribed by law (determined without regard to extensions)
for filing the return of the tax imposed by this chapter for
the taxable year.
``(3) Allocable partial tax.--For purposes of paragraph
(2), a throwback year's allocable share of the partial tax is
an amount equal to such partial tax multiplied by the
fraction--
``(A) the numerator of which is the amount deemed by
section 666(a) to be distributed on the last day of such
throwback year, and
``(B) the denominator of which is the accumulation
distribution taken into account under section 666(a).
``(4) Throwback year.--For purposes of this subsection, the
term `throwback year' means any taxable year to which a
distribution is allocated under section 666(a).
``(5) Periods of nonresidence.--The period under paragraph
(2) shall not include any portion thereof during which the
beneficiary was not a citizen or resident of the United
States.
``(6) Throwback years before 1996.--In the case of any
throwback year beginning before 1996--
``(A) interest for the portion of the period described in
paragraph (2) which occurs before the first taxable year
beginning after 1995 shall be determined by using an interest
rate of 6 percent and no compounding, and
``(B) interest for the remaining portion of such period
shall be determined as if the partial tax computed under
section 667(b) for the throwback year were increased (as of
the beginning of such first taxable year) by the amount of
the interest determined under subparagraph (A).''
(b) Rule When Information Not Available.--Subsection (d) of
section 666 of such Code is amended by adding at the end the
following: ``In the case of a distribution from a foreign
trust to which section 6048(b) applies, adequate records
shall not be considered to be available for purposes of the
preceding sentence unless such trust meets the requirements
referred to in such section. If a taxpayer is not able to
demonstrate when a trust was created, the Secretary may use
any reasonable approximation based on available evidence.''
(c) Abusive Transactions.--Section 643(a) of such Code is
amended by inserting after paragraph (6) the following new
paragraph:
``(7) Abusive transactions.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to carry
out the purposes of this part, including regulations to
prevent avoidance of such purposes.''
(d) Treatment of Use of Trust Property.--Section 643 of
such Code (relating to definitions applicable to subparts A,
B, C, and D) is amended by adding at the end the following
new subsection:
``(i) Use of Foreign Trust Property.--
``(1) General rule.--For purposes of subparts B, C, and D,
if, during a taxable year of a foreign trust a trust
participant of such trust directly or indirectly uses any of
the trust's property, the use value for such taxable year
shall be treated as an amount paid to such participant (other
than from income for the taxable year) within the meaning of
sections 661(a)(2) and section 662(a)(2).
``(2) Exemption.--Paragraph (1) shall not apply to any
trust participant as to whom the aggregate use value during
the taxable year does not exceed $2,500.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Use value.--Except as provided in subparagraph (B),
the term `use value' means the fair market value of the use
of property reduced by any amount paid for such use by the
trust participant or by any person who is related to such
participant.
``(B) Special rule for cash and cash equivalent.--A direct
or indirect loan of cash, or cash equivalent, by a foreign
trust shall be treated as a use of trust property by the
borrower and the full amount of the loan principal shall be
the use value.
``(C) Use by related party.--
``(i) Use by a person who is related to a trust participant
shall be treated as use by the participant.
``(ii) If property is used by any person who is a related
person with respect to more than one trust participant, then
the property shall be treated as used by the trust
participant most closely related, by blood or otherwise, to
such person.
``(D) Property includes cash and cash equivalents.--The
term `property' includes cash and cash equivalents.
``(E) Trust participant.--The term `trust participant'
means each grantor and beneficiary of the trust.
``(F) Related person.--A person is related to a trust
participant if the relationship between such persons would
result in a disallowance of losses under section 267(b) or
707(b). In applying section 267 for purposes of the preceding
sentence--
``(i) section 267(e) shall be applied as if such person or
the trust participant were a pass-thru entity,
``(ii) section 267(b) shall be applied by substituting `at
least 10 percent' for `more than 50 percent' each place it
appears, and
``(iii) in determining the family of an individual under
section 267(c)(4), such section shall be treated as including
the spouse (and former spouse) of such individual and of each
other person who is treated under such section as being a
member of the family of such individual or spouse.
``(G) Subsequent transactions regarding loan principal.--If
any loan described in subparagraph (B) is taken into account
under paragraph (1), any subsequent transaction between the
trust and the original borrower regarding the principal of
the loan (by way of complete or partial repayment,
satisfaction, cancellation, discharge, or otherwise) shall be
disregarded for purposes of this title.''
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after the date of the enactment of this Act.
(2) Interest charge.--The amendment made by subsection (a)
shall apply to interest for throwback years beginning before,
on, or after the date of the enactment of this Act.
SEC. 318. RESIDENCE OF ESTATES AND TRUSTS.

(a) Treatment as United States Person.--Paragraph (30) of
section 7701(a) of the Internal Revenue Code of 1986 is
amended by striking subparagraph (D) and by inserting after
subparagraph (C) the following:
``(D) any estate or trust if--
``(i) a court within the United States is able to exercise
primary supervision over the administration of the estate or
trust, and
``(ii) in the case of a trust, one or more United States
fiduciaries have the authority to control all substantial
decisions of the trust.''
(b) Conforming Amendment.--Paragraph (31) of section
7701(a) of such Code is amended to read as follows:
``(31) Foreign estate or trust.--The term `foreign estate'
or `foreign trust' means any estate or trust other than an
estate or trust described in section 7701(a)(30)(D).''
(c) Effective Date.--The amendments made by this section
shall apply--
(1) to taxable years beginning after December 31, 1996, and
(2) at the election of the trustee of a trust, to taxable
years beginning after the date of the enactment of this Act
and on or before December 31, 1996.
Such an election, once made, shall be irrevocable.
____

The CHAIRMAN. The gentleman from Washington [Mr. McDermott] will be
recognized for 30 minutes, and the gentleman from Texas [Mr. Archer]
will be recognized for 30 minutes.
The Chair recognizes the gentleman from Washington [Mr. McDermott].
Mr. McDERMOTT. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, you have heard a lot of talk today about fairness. The
amendment I propose today is as simple as it is fair. It simply extends
to employees who must buy their own health insurance exactly the same
tax deduction that the majority has proposed for the self-employed.
In other words, it gives employees the same 25-percent deduction of
the cost of health insurance that the Contract on America offers to
employers.
Now, how can Congress justify giving a deduction to small employers,
but not to the people who work for small employers? Would you give a
tax break to a self-employed lawyer who must buy his own health
insurance, but not to his secretary who works for the lawyer and who
also must buy his or her own insurance? Both are engaged in exactly the
same conduct of purchasing health insurance. Providing tax incentives
to purchase health insurance serves the same policy goals for both
employers and employees.
For many, this tax deduction will be the difference between being
able to afford health insurance and not. To provide a deduction for the
employer but not for the employee cannot be defended. We must be the
Congress of all the people.
The question you ask then is how do we pay for it? How do we pay for
those hard-working Americans who are shut out by the Republican
proposal?
{time} 1945

The lion's share of the money to pay for the employee getting the
same deduction as their employers comes from changing the capital gains
tax rules on Americans who renounce their citizenship for tax purposes.
What better way could there be to enable hard-working, patriotic
Americans to purchase health insurance than by increasing the capital
gains on extraordinarily wealthy individuals who renounce this country?
Certainly, Mr. Chairman, no one can vote to protect tax breaks for
those who turn their backs on America. The remainder of the money comes
from changing the tax rules on foreign
[[Page H1939]] trusts and on reforming the FCC minority ownership
program Members have heard talked about.
The reform of the FCC program will assure that the original purpose
of the incentive program is fulfilled, to encourage the communications
industry to sell minority businesses interested in entering the
communications field. When this program started in 1978, less than a
half of a percent of broadcasts were done by minorities. Today we are
up to 3 percent. It is not a perfect program, but it has worked.
To assure the long-term viability of this program, my substitute caps
the amount of the capital gain deferral each transaction can receive at
$50 million.
This reform in the FCC program preserves the highest goals of equal
opportunity and retains an incentive, this word ``incentive,'' that
great market tool consistently advocated by the Speaker and the
majority leader and the whole majority, an incentive to develop new
business opportunities.
The total elimination of the FCC program initiated at the last minute
by the chairman of the Committee on Ways and Means has nothing to do
with the ostensible purpose of H.R. 831, whichever everyone on this
floor agrees with, which is to provide a tax deduction to enable people
to buy insurance on their own.
The overriding purpose of this amendment is to return the bill to its
original purpose, one which would give a unanimous vote and include
hard-working employees who do not get health insurance through their
jobs.
The number of Americans without health insurance increased by 1
million last year, mainly because more employers either dropped health
insurance or failed to offer it.
The number of employees offering health insurance has been steadily
declining since 1980. Nobody on this floor should have any illusions
that these deductions to employers and employees will solve the
overwhelming problem we have.
At best, it is a lottery, whether anybody could actually buy
insurance as an individual. But these deductions give people a small
margin that enables them to hold onto some health insurance until the
Congress, as we are promised by the gentleman from California [Mr.
Thomas] and others, will be ready to address the fundamental problem of
health insurance.
I hope we can show the American people that every Member of the House
will act today to assure that all Americans who cannot obtain health
insurance through their job will get a 25-percent deduction to assist
their own efforts to insure themselves. The line drawn by this bill
between employers and employees as proposed is a false one and cannot
be defended. For that reason, I have offered this amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. ARCHER. Mr. Chairman, I rise in opposition to the amendment.
The CHAIRMAN. The gentleman from Texas [Mr. Archer] is recognized for
30 minutes.
Mr. ARCHER. Mr. Chairman, I yield myself 4 minutes.
Mr. Chairman, the McDermott substitute would continue the FCC's
policy of promoting minority ownership of broadcast facilities through
special individualized tax breaks for millionaire sellers of those
facilities. This loophole of up to $17 million per seller under the
McDermott amendment has no justifiable place in the tax code and cries
out for repeal.
In essence, the FCC awards or denies tax benefits based on the race
or ethnic background of the buyer. This is wrong. Tax benefits should
not be conditioned on classifications such as race or ethnicity. Our
Nation's tax laws should be, as I am, color blind.
Those supporting the McDermott substitute argue that repeal of
section 1071 represents, and I quote them, ``the driving of a wedge
within our society between people based on racial and ethnic grounds.''
But is that not exactly what the FCC minority policies do? The
minorities favored under the FCC tax certificate program are black,
Hispanic, Asian, Alaska Natives and American Indians. Does it make any
sense
for our tax laws to be used to favor one person because he is African
American or Asian while disfavoring another because he is white? Does
this not in fact drive a wedge in our society between people based on
racial and ethnic grounds?

Under the FCC's policies, a family descended from Spanish Jews,
forced from Spain in 1492 by Ferdinand and Isabella, thereby qualified
for the minority tax certificate program because they were judged by
the FCC to be Hispanic. Yet non-Hispanic Jewish Americans perhaps
driven from Europe by the Holocaust do not qualify. Is this not exactly
the kind of racial and ethnic wedge the proponents of section 1071 say
they are worried about? But McDermott would continue this. What is a
minority? Should the FCC look into the family tree as to the ancestors
of every American before determining whether they qualify or not?
The FCC minority tax certificate program is not even needs based.
Indeed some of the minority investors who have reportedly benefited
from the program are millionaires like Oprah Winfrey, Bill Cosby, and
Dave Winfield. You cannot convince me that radio and TV station owners
will not sell to these individuals without the benefit of a special
rifle shot tax loophole.
Unfortunately, despite the progress that has been made in recent
decades, yes, there still can be discrimination in our society. And I
strongly believe that remedies must be available to provide redress to
individuals who experience discrimination because of their race. But
the discrimination inherent in the FCC's minority ownership policy is
not intended to remedy racial discrimination. In fact, the FCC has
never claimed that there was any discrimination in the allocation of
radio or TV licenses.
Does the FCC believe there is a particular minority viewpoint that
will be expressed only by minority owners? Such a concept implies that
people's thoughts and views are based on the color of their skin, a
concept which I would have thought most Americans would find offensive
today.
Greater minority participation in all of the bounty our Nation has to
offer is a goal shared by every Member of Congress, but the way to
achieve that goal is not by giving special preference to some at the
expense of opportunity to others.
Programs which try to achieve an ideal racial mix in ownership of
businesses by discriminating in the name of anti-discrimination are
doomed to failure.
I urge a vote against the McDermott substitute.
Mr. Chairman, I reserve the balance of my time.
Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from
Florida [Mr. Diaz-Balart].
Mr. DIAZ-BALART. Mr. Chairman, I thank the gentleman from Washington
for yielding time to me.
This is obviously a very serious issue. It is an issue that is not to
be taken lightly, and I have extraordinary respect for Members on both
sides of this issue.
I think that what we are facing here really is something that is
somewhat the use of a hatchet or an axe or a sword, when we can and we
should use a scalpel.
The reality of the matter is that in 1978, it has been stated, less
than half a percent of radio and television stations in this country
were owned by blacks or Hispanics. Not 20 percent, which should be the
quota, that is not what we sought by this FCC policy permitted under
this section of the law. No one is talking about a quota. But, rather,
an encouragement for people like in my community, who literally got off
the boat a couple of decades ago, have been saving and with a lot of
hard work and perseverance, are able to buy, a couple of them, have
been able to buy radio stations because of 1071. So I am not an expert
on this, but I know that it worked with regard to people that have the
ability to permit the first amendment to be a reality and not simply a
piece of paper in the telecommunications age.

{time} 1950

Therefore, Mr. Chairman, with the decibels low, with respect for all
points of view in this issue, without raising the decibels with
accusations, which I think are unwarranted, like racism and this kind
of thing, I do think, though, that this is a very serious issue, and
that we should address it seriously.
[[Page H1940]] Like Kondracke, Morton Kondracke said just a week ago
in Roll Call, and I agree with him:

We would do well to approach the coming conflict in a
spirit of reform. . . . We would be better off to amend
preferences rather than sweep them away. . . . This society
is already angry enough.

I think we should remember those words as we face these issues,
especially with successful programs that have permitted, as I have said
before, the first amendment to be a reality in the telecommunications
age.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
California [Mr. Thomas], chairman of the Subcommittee on Health of the
Committee on Ways and Means.
(Mr. THOMAS asked and was given permission to revise and extend his
remarks.)
Mr. THOMAS. Mr. Chairman, as we look at this McDermott substitute, I
think it is really important to keep in mind recent history.
For example, Mr. Chairman, the gentleman from Washington [Mr.
McDermott] offered legislation in the last Congress in the area of
health care reform. He criticized the Republican offer because he
demanded fundamental reform before the year 2000. By 1998, he said we
had to have the system completely reformed.
He stands before us tonight in the name of equity, and he said, Mr.
Chairman, he said these folks who work for corporations who do not
provide health insurance are going to be treated the same as self-
employed.
I just did a reality check. I thought what we were doing, Mr.
Chairman, was reaching back to the last year and giving the self-
employed 25 percent. That would be 1994. In 1995 we are going to give
them 25 percent. In 1996 we are going to give them 25 percent, in 1997,
and so on.
What I found out in the McDermott amendment is that these folks do
not get anything for 1994, nor for 1995. He starts them out at 15
percent for 1996. What do they do in 1997? Another 15 percent. In the
year 1998, when he demanded fundamental reform for everybody or the
program was not any good, he is going to give them 20 percent.
Let us look at this for what it is. It is a gimmick. Mr. Chairman, I
urge the Members, come to my subcommittee as we offer full health care
reform. I want to hear all the ideas. I would say to the gentleman from
Washington [Mr. McDermott], I did not hear this idea in subcommittee.
I am looking forward to testimony so we can make sure that all
Americans are treated fairly and equally, rather than trying some token
gimmick to try to head off the first measure coming to the floor. I do
hope people look at the specifics and understand why the McDermott
amendment is being offered. Support H.R. 831. It is a fairness issue.
Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from
New York [Mr. Rangel].
Mr. RANGEL. Mr. Chairman, I thank my friend, the gentleman from
Washington, for attempting to really try to help the self-employed in
getting deductions for their insured, for insurance.
The truth is, Mr. Chairman, health insurance has nothing to do with
what is on the floor today. Health insurance is the sugarcoating for
repealing the FCC provision.
Mr. Chairman, I do not mind that happening, but if they are going to
shoot me down, do it with a hearing. My distinguished chairman tells me
that he is color blind. Mr. Chairman, I thought he was putting me on
when he first said it, but then I checked with some of his friends, and
I understand he does have a physical problem in detecting color.
However, when we go into the board rooms in these great United
States, and let me make it abundantly clear, there is no greater
country in the world for anybody than these great United States, but
somehow, Mr. Chairman, we have to believe that not everyone has the
same defect. They are not color blind. If we go into the television
board rooms, the editorial board rooms, the people that tell us what
America is all about, they are not color blind.
If we want to correct the injustices that are here, let us have
hearings and let us do it right. To do it in the middle of the night is
not fair, and to make it retroactive is not good law.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Kentucky [Mr. Bunning], a respected member of the committee.
(Mr. BUNNING of Kentucky asked and was given permission to revise and
extend his remarks.)
Mr. BUNNING of Kentucky. Mr. Chairman, I rise in strong support of
H.R. 831 and in opposition to the McDermott substitute.
With H.R. 831, the House is for once doing the right thing. It
permanently extends the health insurance deduction for the self-
employed and repeals an aberration in the Tax Code. It is a clean
simple bill that deserves to sail through this House.
Mr. Chairman, our Tax Code should be color blind. Neither Congress
nor the IRS should be in the business of passing out tax breaks or tax
increases based on creed or color. H.R. 831 repeals the only provision
in the Tax Code that bases its treatment on skin color.
H.R. 831 is a straightforward bill that is paid for without smoke or
mirrors. On the other hand, the McDermott substitute offers up one
revenue raiser dealing with foreign trusts that its sponsor could not
even explain to the Rules Committee.
The McDermott substitute also proposes that we keep intact the only
provision in the Tax Code that passes out tax breaks based on creed or
color.
Mr. Chairman, the 25 percent deduction for the self-employed lapsed
over a year ago, but after a lot of hemming and hawing the House is
only now getting around to extending it permanently. The administration
and the then-Democratic majority talked the talk all last year about
helping the self-employed, but they never got around to really doing
anything about it.
Now that the new majority is walking the walk the new minority wants
to delay things again. It's time to help the self-employed by
permanently extending the deduction and to help the taxpayers by
closing a loophole.
Mr. Chairman, over 3 million Americans are relying on us to extend
the law that allows them to deduct their health insurance costs. The
farmers and the self-employed in my district are counting on us to do
the right thing.
I strongly urge my colleagues to support H.R. 831 and to oppose the
McDermott substitute.
Mr. Chairman, I rise in strong support of H.R. 831. For once, the
House is doing the right thing.
The Tax Code provision that gives over 3 million self-employed
workers the ability to deduct their health insurance costs lapsed over
a year ago. Since then these people have been slowly twisting in the
wind, wondering if Congress was going to step up and restore their
deduction for the 1994 tax year.
This is an issue of the utmost importance to the many small farmers
and other self-employed individuals in my congressional district. If
Congress does not act before April 15, these individuals will not be
able to deduct these costs from their 1994 taxes and will be left high
and dry.
The House now has the chance to step in and help extract these people
from tax limbo. A strong vote today will hopefully help convince those
in the other body to take up this matter quickly so that we can get a
bill to the President's desk as soon as possible.
Mr. Chairman, H.R. 831 also gives us the chance to kill two birds
with one stone. To pay for the 25 percent deduction, the bill repeals
section 1071 of the Tax Code that allows the FCC to issue tax
certificates to companies that sell telecommunications properties to
businesses with minority interests. The selling companies are allowed
to indefinitely defer taxes on any gains on the sale of radio broadcast
facilities. It's part of the code that needs to be repealed.
The legislative history of section 1071 makes it clear that Congress
originally passed this provision to provide tax deferrals only in
instances where a sale or exchange of communications-related property
was an involuntary divestiture to comply with the FCC's rules regarding
ownership of broadcast facilities.
But, in the 1970's, without congressional approval, the FCC broadened
the meaning of section 1071 and began allowing tax deferrals for
voluntary divestitures that met certain criteria. In 1978, the FCC
adopted a policy in which it would grant tax deferrals to companies or
individuals who voluntarily sold their
[[Page H1941]] broadcast facilities to an entity that had a minority
controlled interest.
Now, section 1071 is the only provision of the tax code that allows a
Federal agency to administer what is essentially an entitlement program
to big businesses that understand how to unfairly manipulate the rules
that promote minority control of media outlets.
For instance, under this provision of the code, a recent deal between
Viacom, the minority controlled Mitgo Corp., and InterMedia Partners
qualifies for a tax deferral and would end up costing the American
taxpayers over $600 million.
The upshot of the Viacom deal is that Viacom will get an indefinite
tax deferral of $640 million, and the African-American owner of Mitgo
will walk away from the deal in several years with roughly $5 million
in profits after having sold his interest in Viacom's cable television
systems to Telecommunications, already the largest cable TV operator in
the country. Everybody wins but the taxpayers.
The bottom line is that the FCC is now using section 1071 to promote
a policy that was never part of the original congressional intent for
that part of the code. Without congressional approval, the agency
expanded its power to grant tax breaks, and it's now time for Congress
to rein in the FCC.
Mr. Chairman, I think that the Internal Revenue Code should be color
blind. Individuals should not get tax breaks nor should they get taxed
more because of their skin color; there should not be carve-outs in the
code for businesses just because a minority interest is involved. I see
no reason why the Tax Code should not be used as another arm of
Affirmative Action and it's time to remove section 1071 from the code.
As a side note, Mr. Chairman, I need to note how ironic I find that
the House is only now getting around to extending the self-employed
health insurance deduction after haggling for over 2 years about how to
pass a health care reform that provides health care coverage to more
Americans.
Ever since the 25-percent deductibility for the self-employed lapsed
at the end of 1993, the administration and the then-Democratic majority
lamented how they wanted to help these individuals with their health
insurance costs.
But because of the administration's all-or-nothing strategy on health
care reform last year, the self-employed got just that--nothing. At any
point over the past 14 months, the administration or the then-majority
could have moved legislation at any time to permanently, or even
temporarily, extend the 25 percent deduction for the elf-employed. They
did not do so.
The 25 percent deduction for the self-employed was held hostage
because the President refused to consider any health-related
legislation except for a radical health care bill. When health care
reform legislation died at the end of the last Congress, so did any
hopes for passing the 25 percent deduction.
Now, finally, it is getting passed. The administration and the then-
majority talked a pretty good talk about helping the self-employed pay
for health insurance, but it is the new majority that is walking the
walk.
Frankly, I would like to see the self-employed be able to deduct 100
percent of their health insurance costs. Businesses can claim the full
deduction for their employees' insurance costs, and I see no reason why
the self-employed should be treated any differently under the Tax Code.
There just is not any reason for this disparate treatment.
H.R. 831 is only the first step in permanently establishing parity in
this area between the self-employed and every other business in
America. The sooner that Congress gives the self-employed workers in
this country the same tax break that it gives to other businesses, the
better. I expect that Chairman Archer will eventually move to give the
self-employed the ability to deduct 100 percent of their health
insurance costs, and I will do what I can to support him.
Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from
New Jersey [Mr. Menendez].
(Mr. MENENDEZ asked and was given permission to revise and extend his
remarks.)
Mr. MENENDEZ. Mr. Chairman, I rise in strong support of the McDermott
substitute. It represents a balanced compromise that extends the
benefits of tax deductions for health insurance to millions more
Americans, and carefully preserves the best aspects of the tax
provisions related to the sale of broadcast facilities to minority
owners.
Mr. Chairman, the rhetoric of empowerment flows freely from the same
lips that today have condemned section 1071, and the irony is almost
overpowering. Section 1071 is designed expressly to empower minorities
to build businesses that employ people, serve the market, and generate
revenue.
Minority buyers pay market price for the broadcast facilities
purchased under this provision. There are no subsidies. These
provisions have encouraged sales to minorities without distorting the
market, precisely the kind of empowerment that is so pervasive in
Republican rhetoric these days.
Mr. Chairman, there is no special gain or advantage for minority
bidders. Instead, it is the seller who enjoys the tax break. What could
be more Republican? Vote for the McDermott substitute.
Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from New
Jersey [Mr. Zimmer], a valued new member of the committee.
Mr. ZIMMER. Mr. Chairman, I thank the gentleman for yielding time to
me.
Mr. Chairman, the supporters of section 1071 have characterized this
debate as the first battle in an impending war over affirmative action.
As someone who personally believes very strongly that the Federal
Government has a decisive role to play in promoting civil rights and
equal opportunity, I ask the defenders of this tax giveaway, do they
really want to do battle on this battlefield? Even if they believe in
affirmative action, they have to concede that section 1071 is a
particularly goofy program, even by the standards of the tax code, and
it is an incredible waste of taxpayer dollars.
It will continue to be a waste of taxpayer dollars, even if the
Gibbons-McDermott amendment is adopted. The Gibbons-McDermott amendment
would not change the essential character of section 1071. Every cent of
the tax benefit would still go to the sellers of communications
properties; generally speaking, rich white guys.
Not one cent of this taxpayer subsidy would have to go to the
minority purchaser. The minority purchaser still would not have to show
that he or she is economically disadvantaged, or that he or she needs
help economically to make the purchase.
Mr. Chairman, even if the purchaser is a millionaire himself, he
would not have to contribute a single dollar to the purchasing entity.
Is this what we mean by affirmative action? By tying the future of
affirmative action to this misbegotten program, Members are making a
dreadful mistake and doing a real disservice to their cause.
My Democratic colleagues who inveigh against corporate welfare and
trickle-down economics ought to recognize them when they see them, and
not try to perpetuate this giveaway. Evidently, the sponsors of the
Gibbons-McDermott amendment understand that the Viacom deal is
indefensible, because they would block it, too, under their own
proposal.
Although they propose scaling back the maximum size of this loophole,
they have not attempted to change its essential nature.
{time} 2010

It is still basically a subsidy for rich white people.
In the course of this debate, in the committee and on the floor, we
have heard a lot of heated rhetoric. We have heard about Adolf Hitler.
We have heard about David Duke. We have heard about playing the race
card. I urge the champions of civil rights in this Chamber not to
expend your rhetorical heavy artillery on this cause, to save it for a
more worthwhile cause. I urge this House to reject the Gibbons-
McDermott amendment.
Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from
Maryland [Mr. Mfume].
Mr. MFUME. Mr. Chairman, let me say to you and remind myself that
this debate really is not about the deductibility of health insurance
for the self-employed. That might be the intent by some, but the effect
is something altogether different, and at some point in time we ought
to stand up and admit that. Because if we were really serious about
doing away with this second-class citizenship that they now enjoy, we
would have approved the Cardin amendment, which was an 80-percent
deduction, or the Mfume amendment, which has a 100-percent deduction
and paid for with surplus funds. Or we would even now support the
McDermott substitute. But we are not doing that. This is not about
them. This is about a charade, a bigger smoke screen. Because this
makes the 25 percent permanent. It says, ``You're going
[[Page H1942]] to permanently be second-class citizens, those of you
who are self-employed.'' So if we are real and if we are serious, we
ought to give them what everybody else has, and that is an 80- or 100-
percent deduction.
Second point. This is not about what this bill allows. It is about
what it disallows. It disallows an incentive. There are those who would
argue that we should not be giving incentives to businessmen. I do not
ever remember hearing that argument from the other side of the aisle
until today.
If we are going to talk seriously and be frank, let's say what people
are thinking. People are looking at this, ladies and gentlemen, and
seeing this as a race debate. That is how people are seeing it around
the country. Not me. Not the chairman. Not the one who has got the
substitute. The people are seeing it. Because we are playing it that
way. We are. Someone said this is about affirmative action. This is not
the fight about affirmative action. I want to be very clear about this.
This is the flare that goes up before the firefight, that lights the
horizon, that shows the way.
Let me suggest that the real fight is on the horizon. I would hope
and I would remind individuals who are here today who think that
affirmative action will go down quietly that that is not the case.
Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from
California [Mr. Herger], a valued member of the committee.
Mr. HERGER. Mr. Chairman, I rise in strong opposition to the
amendment offered by the gentleman from Washington. Recently I
participated in a Ways and Means subcommittee hearing on this very
program which basically rewards individuals buying communications
properties for at least nominally including minority partners. Over the
last 17 years, this Federal Program which defers taxation of gains in a
sale to a minority purchaser has cost American taxpayers over $2
billion while the number of minority-owned communications businesses
has grown very little.
Further, 71 percent of all radio stations purchased by minority-
controlled groups were resold within an average of 3\1/2\ years. Even
proponents of affirmative action admit that this program does nothing
for the poor or uneducated.
Mr. Chairman, I believe that minority buyers are entitled to every
advantage available to nonminorities. However, I strongly oppose
creating special racial subgroups of Americans in the tax code. Of all
the government-run-amok Federal programs, this has got to be one of the
very worst. It is just not equitable that average citizens should pay
taxes while multibillion-dollar communication firms and a select few
upper class minorities get a free ride on up to $50 million. Clearly,
this law creates a hole in the Internal Revenue Code that tax attorneys
can drive a truck through.
Mr. Chairman, let's treat all citizens equally under the Tax Code.
Vote ``no'' on this amendment.
Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentlewoman from
California [Ms. Woolsey].
(Ms. WOOLSEY asked and was given permission to revise and extend her
remarks.)
Ms. WOOLSEY. Mr. Chairman, I rise in support of the McDermott
substitute to allow both the self-employed and employees, employees who
are not covered, not insured by their employers, to deduct a portion of
the cost of their health insurance.
The McDermott substitute is both sensible and fair. Allowing
uninsured employees who purchase their own coverage to take the same
deduction that we are giving their employer may reduce the number of
Americans who are not insured. The McDermott substitute will encourage
individuals who are currently uninsured to buy health insurance. And
the McDermott substitute does this at no cost to employers. What could
make better sense?
Mr. Chairman, we have a long way to go to reform health care in
America and to achieve universal coverage for all Americans. But the
McDermott substitute is a step in the right direction.
I urge my colleagues to vote for the McDermott substitute.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Texas [Mr. Bonilla].
Mr. BONILLA. Mr. Chairman, H.R. 831 is a tax bill and the race card
has been played and that is very unfortunate.
I happen to be an American of Hispanic descent who grew up in a
family where my father often worked 3 jobs to put food on the table and
my grandmother worked for 30 years as a maid in a hospital to support
herself.
In my family, no one ever expected to be treated differently. All we
ever expected was a fair shot. People who play the race card sadly have
no substance in their arguments. This is a tax break that has not
worked. It was originally designed to increase minority participation
in broadcasting but this has not happened. In fact, the percentage of
minority ownership has actually decreased.
If you want to play the race card, look at it this way. You are
helping hundreds and maybe thousands of minorities in this country who
are self-employed, like Jose Cuevas, small businessman in Midland who
needs this tax break; people like Julius Brooks, an African-American
small businessman in my district.
Let's vote for this bill and against the McDermott substitute because
it helps all Americans.
When I was young, the Bible taught us and we sang in church that red
or yellow, black or white, we are all precious in his sight.
Mr. MFUME. Will the gentleman yield?
Mr. BONILLA. H.R. 831 is color-blind. We should vote for it and
against the McDermott amendment.
Mr. MFUME. Will the color-blind gentleman yield?
Mr. BONILLA. I will not yield.
Mr. MFUME. Will the gentleman yield for a moment?
The CHAIRMAN. The time of the gentleman from Texas [Mr. Bonilla] has
expired.
announcement by the chairman

The CHAIRMAN. The Chair would remind all Members to address their
remarks through the Chair.
Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from
New Mexico [Mr. Richardson].
(Mr. RICHARDSON asked and was given permission to revise and extend
his remarks.)
Mr. RICHARDSON. Mr. Chairman, this is a wedge issue. This is the
opening salvo on the Contract With America's war on minorities. Next it
is affirmative action, and it is going to cover women.
Mr. Chairman, we could have financed this provision through the
compliance provisions in the administration package. The tax
certificate was specifically targeted.
What is wrong with this provision? It has been on the books since
1978. No Republican President has gone after it. What we have here is
diversity in the airwaves, allowing minorities to compete.

{time} 2020

Is there quotas when it is only 3 percent of minorities that own
stations, 323 radio-television stations owned by minorities? What is
wrong with in a ghetto or Indian reservation or Hispanic area for
minorities within those communities to have a chance to own some of
these radio stations? What is wrong if somebody has made money out of
these provisions? Are loopholes only going to go to the nonminorities?
Do we have an opportunity here to undo this legislation?
The McDermott amendment is a good provision. This is a bad amendment,
but it is the first in a salvo of many initiatives that are wrong and
should not happen, and it should be rejected by this House.
H.R. 831 reinstates the 25% health insurance deduction for self-
employed persons. H.R. 831 is in large part paid for by repealing the
Federal Communications Commission (FCC) Sect. 1071, the minority
broadcasting tax certificate, that allows sellers to defer capital
gains on the sale of media properties to minorities.
Broadened in 1978 to include minorities, the FCC minority
broadcasting tax certificate allows sellers to defer capital gains on
the sale of media properties to minorities.
The FCC tax certificate has enabled scores of minorities to own and
control broadcast cable businesses. It has made for a five-fold
[[Page H1943]] increase in minority control of radio and television
stations, and to a lesser extent cable systems.
Before 1978, minorities owned less than one-half of one percent
(0.5%) of the total broadcast licenses issued by the FCC. A 1994 study
reports that there are 323 radio and television stations owned and run
by minorities, nearly 3%.
It is doubtful that repeal will raise promised revenues or result in
savings, since many sales would never take place without the tax
certificate. There are other alternatives--such as stock swaps--that
allow sellers to benefit from tax-free exchanges.
The FCC Sect. 1071 simply gives minority businesses that may not have
stocks or other capital the opportunity to compete. Most sellers would
not take a chance on minority buyers without the FCC Sect. 1071 tax
certificate and would look instead to other tax-free transactions.
The FCC tax certificate is a true ``empowerment'' program for the
Hispanic market. It provides business development in minority
communities, self-sufficiency, and creates jobs.
The FCC tax certificate promotes diversity in the airwaves. For
millions of Latinos, for example, having immediate Spanish language
information could mean the difference between life and death in a
disaster situation.
Impact of McDermott Amendment on FCC Tax Certificate Program

H.R. 831

Section 1071 of the Internal Revenue Code allows the
Federal Communications Commission to issue tax certificates
to companies that sell communications properties as a result
of changes in FCC policy, allowing the seller to defer tax on
the gain if the proceeds are reinvested in qualifying
communications properties.) The FCC policy has been
principally used to accomplish diversity in broadcast
ownership. Since 1978, the FCC has issued tax certificates to
firms that sold properties to qualified minority buyers.
H.R. 831 would abolish the Section 1071 tax certificate
program outright.

The Mc Dermott Amendment

Section 1071 is retained only for ``qualified
transactions'' under the FCC's Minority Ownership Policy.
Tax could only be deferred on gain up to $50 million per
transaction or group of related transactions. (The $50
million cap allows minority buyers to use tax certificates in
major markets, but bars ``mega-deals'' from qualifying for
tax certificates. The restriction on ``related transactions''
ensures that sellers cannot break up sales into $50 million
parcels to evade the cap.)
The FCC must certify that the sale is in furtherance of the
FCC's Minority Ownership Policy.
The sale must be made to an ``eligible'' individual,
corporation, or partnership, i.e.:
an individual qualifying under the FCC's Minority Ownership
Policy (Black, Hispanic, Native American, Alaska Native,
Asian, and Pacific Islander);
a corporation in which eligible individuals--directly or
indirectly--own more than 50% of the voting stock and stock
representing more than 20% of the value of the corporation;
a partnership in which eligible individuals directly or
indirectly--have actual control and own at least 20% of the
value of the partnership.
Permitting indirect ownership recognizes that there may be
intermediate owners (e.g., the corporation may be a
subsidiary of a minority-controlled corporation).
Property must be held by the minority buyer for at least 3
years. Buyout or repurchase agreements by ineligible persons
would be prohibited.

ESTIMATED REVENUE EFFECTS OF POSSIBLE DEMOCRATIC SUBSTITUTIONS TO H.R. 831--FISCAL YEARS 1995-2000
[Millions of dollars]
----------------------------------------------------------------------------------------------------------------
Provision Effective 1995 1996 1997 1998 1999 2000 1995-00
----------------------------------------------------------------------------------------------------------------
1. Limit gain section
1071 transactions to $50
million................. 1/17/95 295 344 82 77 98 121 1,016
2. Modify section 1033\1\ 2/16/95 13 30 40 53 74 106 316
3. Disallow the EITC to
taxpayers with income
over $2,500 from the
following sources;
Interest, tax exempt
interest, dividends, and
gross revenues from
rents and royalties..... tyba 12/31/95 ........ 56 562 608 641 686 2,553
4. Health insurance
deductions:
a. Self-employed
individuals, 25%
deduction........... tyba 12/31/93 -487 -398 -435 -484 -536 -584 -2,925
b. Employees not
eligible for
employer-subsidized
insurance: 15% in
1996, 15% in 1997,
20% in 1998, 20% in
1999, and 25%
thereafter.......... tyba 12/31/95 ........ -208 -644 -774 -997 -1,159 -3,782
5. a. Revise taxation of
income from foreign
trusts.................. 2/6/95 88 182 195 210 226 242 1,142
b. Revise tax
treatment of
renouncers of
citizenship......... 2/6/95 60 181 248 323 405 494 1,711
--------------------------------------------------------------------------------------
Total.............. ............... -31 187 48 13 -89 -94 31
----------------------------------------------------------------------------------------------------------------
\1\This estimate includes adjustment to account for interaction with limiting the gain on section 1071
transactions to $50 million

Note: Details may not add to totals due to rounding.
Joint Committee on
Taxation.

Project for the

Republican Future,

Washington, DC, February 21, 1995.
Memorandum to: Republican leaders.
From: William Kristol.
Subject: Moving Forward on Affirmative Action
``I think the worst thing that could happen is you take an
issue like affirmative action or the whole issue of civil
rights and race relations in this country and make it a
political issue. That's the most dangerous thing that could
happen . . . On affirmative action, we clearly oppose moving
backwards. Where you have discrimination, you need to have a
remedy. That includes affirmative action.''--White House
Chief of Staff Leon Panetta, on ``Meet the Press,'' February
12, 1995.
``Affirmative action was never meant to be permanent, and
now is truly the time to move on to some other approach. You
can try to paint Republican opponents as having been captured
by the far right and the like, but that's not going to make
the Democratic Party the majority party again. In fact,
there's a bad potential for this issue to drive a wedge right
through the Democratic Party, if it doesn't yield some.''--
Democratic strategist Susan Estrich, in The New York Times,
February 16, 1995.
Ironies abound in politics; large issues have a way of
forcing themselves into public debate in unexpected form, on
an unpredictable schedule. We're now halfway through the
Republican Contract's 100-day legislative calendar. The GOP
House and Senate have already achieved some notable
successes. But neither chamber has yet cast, to the best of
our knowledge, a floor vote on any bill that directly undoes
an existing government program. Until now, that is. And the
bill and program in question aren't mentioned in the Contract
at all. In fact, the bill the House is scheduled to vote on
(and will likely pass) today, Ways and Means Committee
Chairman Bill Archer's H.R. 831, would actually kill a large
tax break.
Now as it happens, the tax break involved is preposterous
and Chairman Archer's legislation is self-evidently
necessary. It would pay for a permanent extension of the 25
percent deduction for self-employed health insurance costs.
That's a good cause. But the bill's true subject is
affirmative action. And we'd be for it, and for doing it
now, even if it paid for nothing--because it represents a
strategically intelligent first step in what should be a
major element of the Republican Party's larger, post-
Contract agenda: a rollback of the massive system of
racial preferences and setasides that has come to infect
federal law and American life over the past 25 years.
Chairman Archer's bill repeals section 1071 of the Internal
Revenue Code, which since 1978 has been interpreted by the
Federal Communications Commission to allow companies selling
broadcast properties to ``minority controlled'' enterprises
to defer taxes on any capital gain. Mr. Archer's principal
complaint against this provision is that its World War II-era
provisions have been oozily transformed by the FCC into an
agency-granted tax break--a usurpation of Congressional
prerogative and authority. He's right. But there's also a
much deeper ugliness at work in the FCC program, as recent
news accounts of an attempt by the Viacom Corporation to take
advantage of it make clear.
Viacom, the world's second largest media and entertainment
company, plans to sell off its cable television stations to a
group of investors dominated by InterMedia Partners and Tele-
Communications Inc., the giant cable company. It's a $2.3
billion deal. But because, technically speaking, the investor
of record in this deal is a minority, Viacom would be
permitted to defer hundreds of millions of dollars--maybe
more than a billion--in taxes. And the real purchasers here
won't be inconvenienced at all; the deal's investor of record
is allowed to cash out his $1 million stake at a hefty profit
after just a few years. He is, incidentally, one Frank
Washington, who as a Carter Administration FCC attorney in
1978 designed the whole ``minority ownership program'' in the
first place.
Not to put too fine a point on it, Viacom is engaged in a
particularly vulgar, though perfectly legal, affirmative
action scam. But it's not a new one; again, this particular
FCC initiative has been in place, doling out more than 300
such tax certificates, for 17 years. And the program isn't an
isolated affirmative action grotesquerie, either. There is
the huge 8(a) set-aside program at the Small Business
Administration, for example. And hundreds of other programs
and provisions,
[[Page H1944]] written into the sinews of federal law and
administrative practice, make similar distinctions among American
citizens on the basis of their skin color--with ever-increasingly
questionable effects on their ostensible beneficiaries, and to the
obvious detriment of race relations nationwide.
What's interesting, then, is that all of a sudden it seems
possible that mere scrutiny of these programs will be enough
to demolish them. Many of us long ago came to the conclusion
that affirmative action, at this point in American history,
is virtually indefensible. What's striking about the current
political situation, in the aftermath of November 8, is how
many other people apparently think so, too. Consider this:
Charlie Rangel, second-ranking Democrat on Ways and Means,
could produce only 10 of 15 possible Democratic votes against
Chairman Archer's bill in committee, and was reduced to
invoking Adolf Hitler in his churlish post-vote press
release. Or this: Susan Estrich, no right-winger she, tells
The New York Times (as quoted above) that the statute of
limitations on slavery and segregation has run out, and that
affirmative action should be scrapped. Period.
Of course, it's easy for Ms. Estrich to speak so bluntly
and candidly; she has no current institutional responsibility
to the Democratic Party, whose alignment of constituencies is
such that any debate on affirmative action may blow it
completely apart. Which is why Leon Panetta (also quoted
above) is so eager to deny that affirmative action is a
legitimate political issue at all--what kind of issue does he
think it is, we wonder?--and why he wants us to understand
that any near-term political movement on the question of race
preference will be movement ``backwards.''
Republicans are not obliged to alter or trim their
principles for the convenience of Democratic Party voter
mobilization, of course, which is why we say: move forward--
it's the right thing to do. Men like California state
assembly Speaker Willie Brown will decry any rollback as
``totally and completely racist'' (USA Today, February 16).
Jim McDermott (D-WA) will try to muddy the waters with a
substitute to H.R. 831 that blocks the Viacom tax break while
otherwise preserving the FCC program. And Mr. Panetta will
probably warn, again, that ``discrimination'' needs a
``remedy.'' But the guessing here is that neither Congress
nor ordinary voters will be fooled. Discrimination does have
a remedy; it's illegal. Affirmative action--counting citizens
by race, and allocating benefits accordingly--is something
else, something that increasingly strikes more and more
Americans of all colors as fundamentally unfair and
incompatible with their own best traditions and highest
hopes. Witness the spectacular early success of the
California Civil Rights Initiative (CCRI), whose sponsors
haven't even begun collecting the requisite signatures for
ballot approval in 1996, but is already considered a
virtually sure thing for passage.
Congressional Republicans need not immediately reach for a
CCRI-like magic bullet that would in one fell swoop erase
every offensive jot of race consciousness from federal
practice. Constructing such a law would be a complicated
undertaking, in any case, so thoroughly has affirmative
action buried itself in our laws and regulations. And the
effort need not be rushed. It wouldn't be a bad thing to have
the affirmative action debate again and again, program by
program and law by law, as the next several months go by.
It's only through such revealing debate, after all, that a
full public consensus about the need to close our affirmative
action era can be achieved. Bill Archer has done us the
service of beginning such a responsible and level-headed
debate by readying Congress, for the first time in a quarter
century, to dismantle a race-conscious federal program.
Republicans should continue the service by doggedly pursuing
the subject in the future.
The sudden willingness, even courage, of American
politicians to challenge what was until very recently
unchallengeable--racial preferences--is a clear sign of how
completely November's Congressional election has altered our
national landscape. Almost every American political piety of
the past few decades is now squarely on the table, open for
debate at last. These are debates that the Democratic Party,
defender of the status quo, can only fear. And those
Republicans who might privately worry over what to do once
our first 100 days are complete can take heart: there is a
broader, just as popular, just as principled agenda available
for our future pursuit. Establishing a system of color-blind
law and public policies is a not inconsiderable case in
point.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Florida [Mr. Canady].
Mr. CANADY of Florida. Mr. Chairman, I thank the gentleman for
yielding me this time.
Mr. Chairman, I rise in opposition to the McDermott substitute.
The outright repeal of IRS section 1071 is essential if we are to
start dismantling the failed system of race-based preferences and move
toward the goal of a color blind society.
The inherent flaws in the system which section 1071 perpetuates--a
system which provides benefits to some members of our society and
denies benefits to others based solely on their race or ethnicity--are
undeniable.
Justice Sandra Day O'Connor, writing about the racial preference
system in the case of Richmond versus J.A. Croson Co., said of such
systems:

They endorse race-based reasoning and the conception of a
Nation divided into racial blocs, thus contributing to an
escalation of racial hostility and conflict . . . Such
policies may embody stereotypes that treat individuals as the
product of their race, evaluating their thoughts and
efforts--their very worth as citizens--according to a
criterion barred to the Government by history and the
Constitution.

According to studies at Rutgers and George Washington universities,
FCC minority preference programs, including the application of section
1071, have done little to foster diversity in programming. Moreover, of
the minority-owned radio stations that received FCC tax certificates
between 1979-92, only 29 percent of those stations were still
controlled by the minority purchaser at the end of 1992. Many minority
investors choose to quickly divest their interests and reap significant
profits.
Under section 1071, we have the worst of both worlds: we perpetuate a
system of racial classification--and at the same time provide enormous
benefits to individuals who are far from disadvantaged.
By repealing IRS Code Section 1071, we will save the taxpayers $1.4
billion over 5 years. But just as importantly, we will eliminate a
Federal Program that has not only failed in its intended goal, but
given credence to the idea that we should deal with people on the basis
of the color of their skin.
I encourage my colleagues to oppose the McDermott substitute.
Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from
North Dakota [Mr. Pomeroy].
Mr. POMEROY. Mr. Chairman, I support the bill but the substitute
makes it much better. Speaker after speaker on both sides of the aisle
have spoken about the need to pass legislation in the interest of tax
fairness, giving self-employed a partial deduction, representing
equitable treatment for the total tax deduction allowed businesses and
corporations.
Tax fairness also makes it imperative we allow a deduction not just
for the self-employed, but to all others who purchase their coverage
because they are not covered at their place of employment. No one has
offered one word of defense for treating businesses differently than
self-employed or for treating self-employed different from all other
employees.
Clearly all of us must believe when it comes to health insurance,
corporations and those who are self-employed are no more entitled to
tax breaks than all other men and women who purchase their health
insurance. This substitute improves the bill and should be passed. I
urge the Members of this House not to discriminated between business
and self-employed or self-employed and all other employees. Pass the
substitute.
Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the
gentleman from Minnesota [Mr. Ramstad], a valued member of the
committee.
(Mr. RAMSTAD asked and was given permission to revise and extend his
remarks.)
Mr. RAMSTAD. Mr. Chairman, I rise in strong opposition to the
McDermott amendment and in strong support of H.R. 831.
This measure restores the extremely important 25-percent deduction
for health insurance costs for self-employed.
Mr. Chairman, it is grossly unfair that farmers, small business
owners, and other self-employed Americans can't fully deduct health
care expenses like other businesses.
Hundreds of thousands of self-employed Americans across the country
are already preparing their 1994 tax forms. They need relief now.
This measure also rectifies a problem in the current tax code that
has given a Federal agency unprecedented authority to craft tax policy.
That is why it is important to vote against the McDermott amendment,
which fails to adequately close the section 1071 loophole, which costs
taxpayers hundreds of millions of dollars a year.
Let us move quickly to pass the legislation and restore certainty and
fairness to the lives of America's self-employed
I urge my colleagues to vote in favor of H.R. 831.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from
Washington [Mrs. Smith].
[[Page H1945]] Mrs. SMITH of Washington. Mr. Chairman, I thank the
gentleman for yielding me this time.
Mr. Chairman, I rise today in opposition to the McDermott substitute
amendment. While the McDermott substitute also restores a small health
insurance tax deduction for self-employed, it pays for it in a
desperate and haphazard manner.
Both Republicans and Democrats alike realize the importance of the 25
percent health insurance deduction. This deduction restores an element
of fairness to the system. For too long, self-employed individuals have
faced daunting circumstances when attempting to obtain health insurance
for themselves and their family. Because the 25 percent insurance
deduction expired on December 31, 1993, self-employed individuals are
facing a tax filing on April 15 without any deduction at all.
The very least this Congress can do is reinstate this deduction; more
importantly, make it permanent. Do not play around with it, do not make
it political just make it permanent.
I commend the chairman and the members of the committee for doing
this so quickly because it will actually put money back in the hands of
small businesses to pay for their own families' health insurance, which
is what they need to do with this money instead of giving it to the
Government.
I guess I want to conclude by saying it amazed me that a bill that
seemed so good that came at the request of so many in my State of
Washington would have so much political rhetoric behind it. It seemed
so reasonable to pay for this bill by a tax loophole that has become a
front by using minorities to be able to use them, so white billionaires
could actually take advantage of a tax loophole. It amazed me that my
colleagues, some from Washington, would actually support big business
welfare and using people of minorities as a front.
Let us get back to the bill and the purpose of this bill.
Mr. McDERMOTT. Mr. Chairman, I yield such time as she may consume to
the gentlewoman from Illinois [Mrs. Collins].
Mrs. COLLINS of Illinois. Mr. Chairman, I rise in full support of the
McDermott substitute and against H.R. 831 as currently written.
Mr. Chairman, I rise in opposition to H.R. 831 and in support of the
McDermott substitute.
Mr. Chairman, I strongly question the particular method by which my
Republican friends purport to pay for the costs of the legislation
before us--by retroactively eliminating the Federal Communications
Commission's [FCC] minority tax certificate program to simply target a
straightforward, legal transaction between an African-American
entrepreneur, Frank Washington, and Viacom, Inc.
Ironically, eliminating the tax certificate program will have the
effect of dooming this particular transaction and, therefore, any
expected revenue to the Treasury as a result. In other words, yes
that's right, my GOP colleagues will actually increase the deficit with
this legislation given the fact that the revenue estimates from the
Joint Committee on Taxation rely heavily on the Viacom deal, which is
moot given the repeal of section 1071 of the Tax Code.
This retroactively smacks of political posturing, pure and
purposefully.
The tax certificate program has been a key element in expanding the
number of minority-owned and operated television, radio, and cable
stations across our country and bringing more citizens into the great
public policy debates of our time.
Despite the fact that diversity in these industries has been
constitutionally upheld as a vital goal of U.S. telecommunications
policy, despite the fact that today only 2.9 percent of broadcast firms
are minority-controlled, despite the fact that undercapitalization
continues to be a major impediment to minority representation in all
telecommunications-related fields, the Republican leadership of this
body sees the FCC minority tax certificate program as a needless
initiative.
It was a sad commentary on the Republican party when it chose this
undemocratic action of preventing minorities who wish to own and
operate TV, radio, cable, satellite, et cetera from embarking upon the
information superhighway. This clearly is a despicable undertaking to
sever lines of open communication and to silence those who might
counteract the debatable rhetoric of the rightwing airwave wordsmiths.
All the minority tax certificate program does is seek to create a
fair opportunity for minority entrepreneurs that have, unfortunately,
been historically locked out of the broadcasts and cable markets.
Do my colleagues on the other side of the aisle believe that
diversity of ownership in the telecommunications arena is not a valid
objective? I think not.
I urge my colleagues to vote no on H.R. 831, and reject this blatant
Republican step in an inevitable series of attempts to roll back the
clock on equal opportunity for America's minorities.
Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to
the gentleman from California [Mr. Dixon].
(Mr. DIXON asked and was given permission to revise and extend his
remarks.)
Mr. DIXON. Mr. Chairman, I rise in support of the McDermott
substitute.
Mr. Chairman, I rise in support of the Gibbons-McDermott amendment. I
rise also to express my deep concern about H.R. 831.
I strongly support the efforts of the Committee on Ways and Means to
restore and make permanent the tax deduction for 25 percent of the
health insurance costs for self-employed individuals. I cosponsored
legislation to achieve that goal in the 103d Congress, as well as in
the present Congress.
However, it is extremely unfortunate that the majority has chosen to
pay for the deduction with the elimination of the minority preference
program in broadcasting. If ever there was a situation where the best
interests of one group of Americans is pitted against those of
another--this is it.
From both a symbolic and practical standpoint, this is bad policy.
For 17 years the Federal Government has sought to encourage minority
entrepreneurs to enter the telecommunications market through the
preference program. Now the committee has sent a signal that it is no
longer necessary to work in an affirmative fashion to enhance minority
ownership in the broadcasting industry.
Nothing could be further from the truth.
While there has been a fivefold increase in minority ownership of
broadcasting stations since inception of the preference program,
minority ownership currently stands at only 2.9 percent. Minorities are
still vastly underrepresented in the broadcasting industry. Elimination
of the preference program will serve to sanction that situation.
There was no legitimate rationale for the committee to eliminate the
preference program. The substitute now before us was offered in
committee to address criticisms of the program--but retain its basic
goals. The majority chose instead to completely dismantle the program.
I take strong issue with the majority's contention that the Tax Code
should be colorblind. Enhancing access to capital and encouraging
minority entrepreneurship should be viewed as an essential element in
this Nation's efforts to revitalize minority communities and empower
Americans long denied opportunity. The Tax Code is an appropriate
vehicle to achieve those objectives.
Enough has not been done; the playing field is not level, and
preferences for certain groups of Americans historically denied
opportunity are as relevant and necessary in 1995 as they were in 1978
when this program began.
The Republican majority is clearly committed to using the Tax Code to
encourage a range of economic goals. I regret that expanding access to
capital in the minority community is not one of them.
While I support making permanent the extension of the deduction for
health insurance costs for the self-employed, I cannot support
legislation that accomplishes that goal by denying opportunity to
another group of Americans.
The Gibbons-McDermott substitute not only expands the health care
deduction to employees whose employers do not subsidize their health
care--it does so without elimination of minority preference in
broadcasting.
I urge my colleagues to support the substitute.
Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to
the gentleman from Louisiana [Mr. Fields].
(Mr. FIELDS of Louisiana asked and was given permission to revise and
extend his remarks.)
Mr. FIELDS of Louisiana. Mr. Chairman, I rise in strong opposition to
the bill and in support of the substitute.
Mr. Chairman, while I rise in favor of the permanent extension of the
current 25-percent health insurance deduction for the self-employed, I
strongly object to the means by which the legislation proposes to
replace the $2.9 billion in revenue which will be lost with a deduction
for health care cost.
This bill is a double edged sword in that supporting a tax deduction
for working Americans will injure other hard working Americans.
[[Page H1946]] This legislation brings us to a crossroad, on one hand
the self-employed benefit from deduction, and on the other we take away
a policy the Federal Communications Commission established over 20
years ago. The tax incentives provided to businesses giving minority-
owned firms has given opportunities to over 300 minority-owned firms
increasing minority ownership from 0.5 percent to 2.9 percent.
Repealing this law, today, severely effects the highly innovative and
forward moving communications industry. While there is no proof that
dismantling section 1071 will provide more revenues to make up for the
25-percent self-employed health insurance deduction there are facts to
back up the need for this program. This program provides for program
diversity which must not be abandoned. We can not let the bill stand as
is.
Mr. Speaker, we must work to not allow the vying of one group of
working Americans against another. It is not fair to ask us to support
this and I hope Members will act responsibly and vote down H.R. 831.
Mr. McDERMOTT. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from Michigan [Mr. Levin].
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Chairman, we must pass legislation to assure deduction
of health costs for the self-employed. We also need to make sure that
the present section 1071 is not violated in letter or spirit.
I believe that the Viacom transaction is so large that it goes beyond
an appropriate use of section 1071, and the Gibbons amendment provides
a reasonable middle path. It is appropriate to review programs that aim
to encourage opportunities for minorities as to their specific
purposes, their structure, and their effectiveness or lack of it. But
there has not been a comprehensive review of section 1071. There was no
hearing at all at full committee.
The facts are that since the FCC began to apply the tax certificate
program to minorities, minority ownership has risen from a tiny half
present to 3 percent. The vast majority of transactions have been quite
small and the average holding period by the new owners has been 5
years, and in more than 100 transactions the original owners still hold
the license. The McDermott language limits the use of 1071 to
transactions with these characteristics.
It is said the law should be color-blind. That does not mean it
should be blind to racial or other discrimination.
If the House does not adopt the Gibbons-McDermott amendment it will
be up to the Senate to take a more comprehensive look at section 1071.
It deserves that careful look, just as the deduction for health
insurance deserves action tonight.
I support the Gibbons-McDermott amendment.
Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from
Oklahoma [Mr. Watts], a new and respected Member.
Mr. WATTS of Oklahoma. Mr. Chairman, I have great respect for the men
and women on both sides of this debate on H.R. 831. However, in my
opinion, I think much of the opposition's debate on H.R. 831 and repeal
of 1071 is off point.
Many of my colleagues think that this repeal is pointed toward
minorities. If we do away with this provision, then minorities would
somehow lose out on benefits that could help them prosper.
In fact, the unintended consequence of this well-intentioned policy
is to benefit the business that sells to a minority rather than the
minority.
Moreover, since 1941 minority ownership of broadcast outlets has
increased by less than 2.2 percent. We can encourage minority ownership
by supporting measures other than this warped method of taxation.
{time} 2030

This abuse of the system is the worst example of administrative
interpretation gone awry. I think the intent was good, but clearly this
was not its intended purpose. The purpose was not to allow companies to
avoid millions of dollars in taxes. I ask those who agree and those who
disagree with this bill and really want to make a difference in the
prosperity of the minority community to join me and support free
enterprise with capital formation and relaxing lending regulations. We
need to support enterprise zones and give tax incentives for business
development in areas that do not produce revenues now.
Most of all, we need to renew our culture and encourage basic
education, and I take this opportunity to say, Mr. Chairman, give
Americans a flat tax.
Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from
California [Mr. Miller].
(Mr. MILLER of California asked and was given permission to revise
and extend his remarks.)
Mr. MILLER of California. Mr. Chairman and members of the committee,
I rise in strong support of the Gibbons-McDermott substitute to extend
the 25-percent deduction to employees who are not eligible to
participate in employer-sponsored health plans.
I noted with interest yesterday that the Republicans on the Committee
on Ways and Means are looking for a definition of work. Well, they have
to understand that that is what millions of Americans do every day when
they get up out of bed; they go to work. Millions of Americans go to
work and work every day, but they are not able to provide health
insurance for themselves or for their family.
What the McDermott bill would do is to say that those workers are
every bit as noble as self-employed individuals. This would make sure
that we would have equity and fairness in providing the deduction so
that people who take it upon themselves to go out and try to provide
health insurance for themselves would get the same deductions as the
self-employed individual.
When you find the definition of work, you will find there are
millions of Americans that do it every day, and they ought to be
extended the same dignity that you give to self-employed individuals.
Mr. ARCHER. Mr. Chairman, I yield 5 minutes to the gentlewoman from
Connecticut [Mrs. Johnson], chairman of the Subcommittee on Oversight
and a valued member of our committee.
Mrs. JOHNSON of Connecticut. I thank the chairman for yielding this
time to me.
Mr. Chairman, repeal of section 1071 is not a retreat from our
commitment to equal opportunity for minorities in America. In fact, the
case for repeal is clear and convincing. No one can defend the deals
that have been made under section 1071. Clarence McGee got a 29-percent
stake in a station for the investment of $290 plus $106 million in
borrowed money collateralized by the station's assets and cash flow.
Washington Redskins owner Jack Kent Cooke purportedly has received
tens of millions of dollars of tax breaks from the FCC, using minority
tax certificates four times in recent years.
In 1993, the Times Mirror sold four TV stations for $335 million to a
``minority partnership,'' in which the minority partner invested
$153,000 in borrowed money.
The Times Mirror, on the other hand, reportedly received a tax break
of somewhere between $35 million and $80 million in the transaction.
Now, remember, folks, we had testimony in hearings over and over
again that these deals are done at the market rate. The tax benefit
goes to the seller, to the Times Mirror. That is who got the tax break.
It is not the disadvantaged poor, it is the affluent rich, no matter
what color their skin, that are getting the tax breaks from these
deals.
Mr. RANGEL. Mr. Chairman, will the gentlewoman yield?
Mrs. JOHNSON of Connecticut. I yield to the gentleman from New York
briefly.
Mr. RANGEL. I thank the gentlewoman for yielding. I will be brief.
Let me make it abundantly clear that the only reason that the big,
rich, white folks get the tax benefits is because the minorities are
not a part of understanding when these benefits are there. This is
given to them to search out for minorities so we can get our foot in
the door.
Mrs. JOHNSON of Connecticut. Reclaiming my time, there are many
examples of very rich, affluent minority members who are benefiting
from this program and others who are being made rich because they have
the inside track on how to be part of these big deals. It is not your
ordinary folk out there who on the whole are benefiting from these
deals.
Let me address the issue of restructure and reform.
[[Page H1947]] If the program is benefiting the wrong people, why not
restructure it in form? First of all, there is no evidence that this
approach works.
Over the almost 20 years of this approach, minority ownership has
gone from 0.5 percent to under 3 percent. Over about 20 years, that
growth is far more rationally attributable to the growth in wealth in
the minority community than to this program.
Second, because the substitute continues the practice of a Federal
agency handing out tax breaks, it perpetuates a loophole that will
continue to benefit primarily the affluent doing big deals in America.
We heard over and over again how this program functions. We heard
over and over again that there is very little evidence of any of its
benefits, in part because the Congress would not allow the oversight
work to proceed because it seemed to be demonstrating that the program
was ineffective.
Restructuring cannot help a program that in fact does not work.
Furthermore, restructuring a program that gives a Federal agency the
right to, on its own hook, hand out millions of dollars of subsidies is
bad in principle.
I for one do not believe the day has come when we can eliminate
affirmative action policies. But I also agree with Justice Sandra Day
O'Connor that, ``Because racial classifications themselves are
inherently divisive, they must always be narrowly tailored to remedy
the effects of past racial discrimination.'' As Johnathan Rauch, the
author of an article on FCC programs, which recently appeared in the
New Republic put it best:

The policy, however admirable the intentions, makes a
mockery of Justice Lewis Powell's pronouncement in Bakke:
``Preferring members of any one group for no reason other
than race or ethnic origin is discrimination for its own
sake. This the Constitution forbids.''

I urge a ``no'' vote on the amendment and a ``yes'' vote on the bill.
Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to
the gentleman from Ohio [Mr. Stokes].
(Mr. STOKES asked and was given permission to revise and extend his
remarks.)
Mr. STOKES. I thank the gentleman for yielding this time to me.
I rise in opposition to H.R. 831 and in support of the McDermott
substitute.
Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from
California [Mr. Becerra].
(Mr. BECERRA asked and was given permission to revise and extend his
remarks.)
Mr. BECERRA. I thank the gentleman for yielding.
Mr. Chairman, let me thank the gentleman for yielding some time and
acknowledge to the rest of the Members what I think we all know: Most
of the people that have taken to this well to speak are here to support
the health insurance tax deduction for self-employed, something we all
believe should be extended.
But, unfortunately I do not believe a number of us could support H.R.
831 the way it is. That is why we wish to speak on behalf of the
McDermott amendment.
When you take a look at what we are doing here. We are cutting out
opportunity for some to provide it to others. That is not the way to do
it, to rob from Peter to give to Pauline.
If you take a look at your radio stations and your television
stations, if you turn on that radio and change that dial or change the
channel on that TV, everywhere across the Nation you can count up every
radio station and every TV station, and you can only count up 323
stations that are minority owned. You can virtually count 323 stations
just on your radio dial in Los Angeles alone, but throughout the Nation
we have 323 that are minority owned.

{time} 2040

And that is because we have this tax certification program that has
helped raise that level of ownership five times. And now we are here to
eliminate it without even having held a public hearing to discuss the
merits of the program. Well, there are some in this House who would
support the media magnate by the name of Rupert Murdoch and give him
tax breaks but are not unwilling to support people who have been closed
out from media altogether for far too long.
I would say we take a look at what we are doing here, take a look at
who we are trying to give opportunity to and say yes to the McDermott
amendment and no to H.R. 831.
Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from
New York [Mr. Hinchey].
Mr. HINCHEY. Mr. Chairman, it is obviously a good idea to allow
people who are self-employed to deduct the cost of their health
insurance premiums. And for that measure, this is a good bill.
The problem is, it does not go nearly far enough. Why only 25
percent? Why are we not allowing people who are self-employed to deduct
the full cost of their health insurance premiums? This bill ought to do
that.
There is another deficiency as well. This bill does not relate to the
insurance premiums of employees. The McDermott substitute would correct
that deficiency. People who are out working, working every day,
carrying lunch pails, standing in line, working in supermarkets and
checkout counters and factory situations, many of them do not have
health insurance. We ought to make it possible for them to get health
insurance, too. They ought to be able to deduct the cost of their
health insurance, a minimum of 25 percent. They ought to be able to
deduct the full cost of that health insurance. We really have not done
our job unless we do that.
The McDermott substitute would provide at least the beginnings of
that kind of allowability for deduction of those health insurance
premiums. I very strongly support the McDermott substitute, because it
will allow employees also to deduct the cost of their health insurance
premiums.
Yes, let us do it for people who are self-employed. Let us not stop
at 25 percent. Let us go to the full cost of that health insurance. But
let us take the first step here tonight by passing the McDermott
substitute and providing that people who are employees will also have
the opportunity to get health insurance by deducting the cost of those
health insurance premiums.
Let us pass the McDermott substitute.
Mr. McDERMOTT. Mr. Chairman, do I have the right to close?
The CHAIRMAN. The right to close rests with the gentleman from Texas
[Mr. Archer].
Mr. McDERMOTT. Mr. Chairman, I reserve the balance of my time.
Mr. ARCHER. Mr. Chairman, as the Chair actually stated, we have the
right to close, and I reserve the balance of my time.
Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to
the gentleman from Virginia [Mr. Scott].
(Mr. SCOTT asked and was given permission to revise and extend his
remarks.)
Mr. SCOTT. Mr. Chairman, I rise in support of the McDermott-Gibbons
amendment.
Mr. Chairman, I rise in support of the Gibbons-McDermott substitute
for H.R. 831. Not only does the substitute provide for equitable tax
treatment for the people most adversely affected by the absence of
health care insurance, it also addresses, at least partially, a problem
that Congress has failed to adequately address--the absence of health
care insurance for hard-working Americans.
Why we continue to ``stick our heads in the sand'' and pretend we
don't see or feel the cost of health care to people without insurance
is beyond me. After we allow them to fall into financial ruin and
poorer health due to exhorbitant health care costs, we then pay a lot
more through government health care provisions and higher health
insurance and service costs to those who still can pay for it. We will
pay much more through these methods than we will for a 25-percent
deduction for uninsured or underinsured individuals.
Employees in small businesses who are paying for health insurance are
generally paying a lot more than employees in large group plans. The
substitute will ensure that they can acquire more insurance or at least
continue the limited coverage they already have.
I also believe that the modifications of the nonrecognition of gain
for involuntary conversions under the FCC Tax Certificate Program in
the Gibbons-McDermott substitute are also reasonable ways to address
any perceived short-comings in a program that has proved highly
successful in bringing minorities clearly into the mainstream.
Mr. Chairman, it is time that we face up to the cost of health care
we are already paying
[[Page H1948]] indirectly. We should adopt the Gibbons-McDermott
substitute as a part of directly recognizing and partially addressing a
serious and ever-growing crisis for American families.
Mr. McDermott. Mr. Chairman, I yield such time as she may consume to
the gentlewoman from Hawaii [Mrs. Mink].
(Mrs. MINK of Hawaii asked and was given permission to revise and
extend her remarks.)
Mrs. MINK of Hawaii. Mr. Chairman, I rise in support of the Gibbons-
McDermott substitute.
Mr. Chairman, I rise in strong support of the Gibbons-McDermott
substitute to H.R. 831.
Throughout the past Congress it was made unmistakably clear that our
health care system and the way in which it is financed must be
significantly reformed. Health care costs are escalating, placing a
considerable burden upon the Federal and state governments, as well as
the private sector. Additionally, the number of working Americans who
lack any form of health insurance continues to increase. At last count,
there were 37 million working Americans without health insurance--
surely there are many more now. People without insurance do not cease
to get sick, however, and someone--usually the doctor or hospital--must
pay the bills. This causes prices to go up for all of us, making health
insurance even less affordable than it is now. The Gibbons-McDermott
substitute, however, takes steps to remedy this problem.
The Gibbons-McDermott substitute would expand the number of insured
Americans in two ways. First, like H.R. 831, it would restore and
extend the 25-percent deduction for self-employed individuals, which
expired in 1993. Secondly, and most importantly, it would allow a 25-
percent deduction for health insurance purchased by individuals whose
employers do not provide health insurance. In this way, many of the
more than 37 million uninsured Americans would have a new incentive to
purchase health insurance. Again, only by increasing the number of
insured people, can health care costs be reduced and health insurance
be made affordable to all.
H.R. 831, however, unlike the Gibbons-McDermott substitute, would not
add any additional incentives which were not already in place in 1993.
H.R. 831 only reinstates and extends the then existing 25-percent
deduction for health care insurance purchased by a self-employed
individual. H.R. 831 does nothing to expand the number of individuals
who have health insurance. The Gibbons-McDermott substitute, on the
other hand, addresses the root cause of our health care crises--the
fact that many working Americans cannot afford health insurance. By
allowing those whose employer do not provide health insurance to
receive the same deduction as the self-employed, all workers are put on
a level playing field and have an equal incentive to purchase health
insurance.
In addition to taking real steps to solve our health care crisis, the
Gibbons-McDermott substitute significantly reforms, but does not
eliminate the tax preferences which have been used to encourage
increased minority ownership of broadcasting companies.
The Gibbons-McDermott bill would place stringent limits upon
individuals who seek to benefit from tax laws encouraging the sale of
broadcasting companies to minority-owned firms. The Gibbons-McDermott
bill would: limit the seller's deferrable gain on sale to $50 million;
require minority purchasers to prove equity ownership; require minority
purchasers to show voting control and management control; demand that
minority purchasers hold their property for three years following its
sale; and, prohibit ineligible parties from having the right to buy out
minority investors. These provisions will not only allow minorities to
participate in the largely white-controlled communications industry,
but they will also provide safeguards against fraud and abuse by both
the seller and the minority buyer.
H.R. 831, however, would completely gut this program. Its proponents
argue that this program is costly and widely abused. The Gibbons-
McDermott substitute, however, solves these problems. It limits costs
by reducing the allowed deferrable gain to $50 million, and it adds
significant protections against fraud by purchasers and sellers.
Most importantly, now is not the time to eliminate laws which
encourage minority ownership of broadcasting companies. Because of this
law, minority ownership has risen since 1978 from 0.5 percent to 2.7
percent of all broadcast stations. This more than 500 percent increase
represents success by small, minority-owned businesses, which provide
economic opportunities in their communities, add greater diversity in
local broadcasting. Removing this protection would destroy all of the
progress which has been achieved thus far, and would make it virtually
impossible to achieve the goal of fairly integrating the ownership and
operation of the broadcast media.
For the above stated reasons, I strongly urge that we vote to pass
the Gibbons-McDermott substitute.
Mr. McDERMOTT. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, we are here today on a fundamental decision that nobody
disagrees with. Everybody here believes that we ought to extend the 25-
percent deduction for self-employed people for buying health insurance.
But that is not the issue. The real issue here is how are we going to
pay for it.
And when we brought this bill to committee, I offered a whole series
of tax exemptions that we could have used to pay for it, but we chose
the one that we are here dealing with today, which is section 1071 of
the Tax Code.
Members may ask why we chose that one, and I will quote here from a
memo from the Project for a Republican Future to the Republican leaders
by William Kristol, dated February 21, in which he says, ``the bill's
true subject is affirmative action.''
Now, this is like that story about the small boy standing next to the
road when the King went by who said, the Emperor has no clothes. Mr.
Kristol took the clothes off because he says:

It represents a strategic, intelligent first step in what
should be a major element of the Republican party's larger
post-contract agenda, a roll back of the massive system of
racial prejudices and set-asides that have come to infect
federal law and American life over the last 25 years.

That is what this issue is about. That is why this was chosen as the
way to fund this. There is no question. The consultants told them to do
it, and that is what they did.
Now, I wish more than anything standing here, I wish this was a
color-blind society. I wish that the gentleman from Texas [Mr. Archer]
was absolutely correct. I wish we were not having this debate. But we
all know this is not a color-blind society. The reason why we have
these preferential tax credits and why they are there, everybody
figured out, well, if we want minorities to know when a radio station
or television station is up for sale, we got to have somebody who owns
one go looking for them. Otherwise the decisions will all be made in
the board rooms or at the local club or the golf course. And they will
never ever know it was for sale in the first place. So when we put in
this tax deduction, it is true, the minorities do not get it. They do
not get it at all. But it gives them access, like we wanted to give
last year, access in health care.
I accept a certain amount of, well, I do not know what, from Members
about this being a rather modest health care reform proposal. I could
make a much larger one here tonight. I would be glad to put it out
here. But the fact is this is a modest proposal to give people access
to buy radio, television, cable networks, personal communication. And
the reason why this program is here is because of some words that
Justice Blackmun said in a dissenting opinion. He said that
``arrangements of successful affirmative action programs by race-
neutral means is impossible.'' This means you cannot have a successful
effort to bring women and minorities into the telecommunications
industry without taking into consideration race and gender.
Now, nobody says this has been a roaring success. But it is a way
that has worked. In my city there are two black-owned radio stations.
There is one native American-owned radio station. And they came through
this program. And there are 300 of them across the country that would
not have been there had it not been for this program.
I am saying that I gave people a choice. Do we
want to destroy this program, or would we like to tighten it up? All
of us agree on this side that that was an egregious deal. Nobody is
standing up here defending the Viacom deal, get that straight. But we
do think that there is room for this program. It has a purpose and a
place in our trying to deal in this society with the problems that we
have had in the past.

For that reason, I urge the adoption of this substitute amendment.
Mr. ARCHER. Mr. Chairman, I yield the balance of our time to the
gentleman from Texas [Mr. Armey], the respected majority leader of the
House.
Mr. ARMEY. Mr. Chairman, I thank the gentleman for yielding time to
me.
Mr. Chairman, let me just reiterate several points that the gentleman
from Texas [Mr. Archer] has made earlier in this debate, because I
think they are
[[Page H1949]] very important to our decision on the McDermott
substitute.
First, the legislative history of section 1071 clearly shows that
Congress originally intended the statute to apply only to involuntary
sales of radio stations. The FCC itself has admitted that this
rationale no longer applies.
Second, there is no requirement that one must be actually
disadvantaged to qualify for the FCC minority tax certificate. Scarce
Federal resources should be used to help those who are truly in need,
not multibillion dollar telecommunications companies.
Third, there is no substance to the FCC's policy rationale of
promoting programming diversity.
{time} 2050

Our Nation's air waves carry abundant programming, directed at people
of different races and ethnic backgrounds. In addition, public access
channels have been set aside on the cable systems of every community to
ensure that everyone in America has access to the Nation's air waves.
More important, studies show that minority broadcasters are driven by
the same motives as any other broadcasters, to make money by maximizing
ratings. Under our free market system, broadcasters have two basic
choices. They can either design programming that will appeal to their
audiences, or they can go out of business.
Mr. Chairman, the fact is that the diversity of programming premise
is a red herring. The FCC uses tax certificates in its Personal
Communications Services licensing program, and this has nothing to do
with the originating or programming for the air waves.
Mr. Chairman, after we strip off all the veneer, what we are left
with is this: the FCC is using the tax code to promote racial and
ethnic diversity in the ownership of broadcast facilities, period.
Although the FCC has not yet fixed a number on what it believes to be
the ideal racial and ethnic mix, its policies come dangerously close to
sounding like a quota system for minority ownership of communications
companies.
Mr. Chairman, what is truly amazing is that in the mid eighties the
FCC itself tried to examine whether its programs were constitutionally
permissible. However, in 1987, the Democrat-controlled Congress stepped
in and actually prohibited the agency from conducting such an
examination, or addressing even the abuse in the tax certification
program.
Section 1071 has already cost the Nation's taxpayers a bundle, and
will cost them another $1.4 billion over the next 5 years.
Mr. Chairman, if someone came before the Congress today to propose
giving a Federal agency the power to hand out tax breaks to carry out
whatever policies that agency decided to adopt, they would be laughed
out of the building. Imagine the uproar that would be heard across this
land if the Pentagon asked for such authority.
Moving the authority to issue the tax certificate to the Internal
Revenue Service does not cover up that basic flaw. All that the
substitute will do is eliminate the type of abusive transactions which
prior congresses essentially forced the FCC to approve. It still keeps
the FCC's basic policy in place, and that policy is offensive to the
principle that our tax code should be color blind.
The time has come to repeal section 1071. I urge my colleagues to
defeat the McDermott substitute, pass the committee bill, and
demonstrate that the time has come in America where we dare to respect
the best dreams of the true civil rights leaders in this Nation's
history.
Ms. PELOSI. Mr. Chairman, I rise today to support the Gibbons/
McDermott substitute to H.R. 831.
Mr. Chairman, this substitute would establish a 25-percent deduction
for health insurance costs to employees not eligible to participate in
an employer-sponsored health plan. For those employees whose health
insurance is not employer-sponsored, this 25-percent deduction is an
issue of fundamental fairness which deserves our support.
Denying employees who must buy their own health insurance the same
deduction we give their employers ignores real need.
Had the Republicans on the Rules Committee allowed the rule for H.R.
831 to be open, rather than completely closed, we could be considering
other meritorious amendments to this legislation, such as the proposal
to extend the current deduction to 80 percent. Unfortunately this rule,
like so many others we have seen was closed.
In addition, Mr. Chairman, the McDermott substitute would narrow the
tax preference for sales of radio, T.V. and cable companies to
minority-owned firms, rather than repealing it as under the bill.
Before section 1071 was enacted minorities owned virtually to TV or
radio stations in this country. Thanks to this provision of the
Internal Revenue Code, the numbers of minority owned media properties,
while still very small, are growing.
Repeal of this section will completely undo the progress this Nation
has made to provide opportunities for African-Americans, Asian-
Americans, Hispanic-Americans, and others to fully participate in the
economic and social fabric of our Nation.
I urge my colleagues to vote for the Gibbons/McDermott substitute.
Mr. BISHOP. Mr. Chairman, I rise in support of the Gibbons-McDermott
substitute for H.R. 831. Unlike the committee bill, the substitute
provides for both a permanent 25-percent health insurance deduction for
the self-employed and a tax preference for persons who sell broadcast
facilities to minorities.
Congress has provided for a health insurance tax deduction for the
self-employed since 1986. As a freshman Member in 1993, I supported
this deduction because it is good for business. It is good for farmers
and for all who are self-employed. A self-employed individual should be
permitted the same health insurance deduction that is provided to the
Fortune 500 businesses. But at the least 25 percent.
Mr. Chairman, I feel strongly, however, that a vote in support of the
health insurance deduction should not mean a vote against the tax
preference for sales of broadcast companies to minority-owned firms.
These two worthwhile policies should not be mutually exclusive. In
1978, Congress recognized the need for a tax preference for persons who
sold broadcast facilities to minorities. The tax preference was
developed in order to increase minority ownership of radio and
television stations. Since that time, Congress has repeatedly
reaffirmed this policy through annual appropriations legislation and
the Reagan administration extended the policy to cable systems.
Today, nearly 20 years later, the need for incentives to increase
broadcast diversity is even greater. Opponents of the tax preference
program point to one apparently legal transaction and allege the
absence of real minority ownership in that transaction. If the program
is subject to this type of abuse, then let us engage in corrective
measures rather than act as extremists and repeal the entire program.
Don't throw out the baby with the bathwater. The Gibbons-McDermott
substitute provides for such corrective measures. In addition to
requiring that minorities demonstrate real equity ownership, it also
requires minorities to prove voting and management control.
Mr. Chairman, I urge my colleagues to support the substitute bill
which allows two beneficial policies to coexist.
Mr. BENTSEN. Mr. Chairman, I rise in support of the McDermott
substitute to the bill. This amendment will restore and make permanent
the 25 percent health insurance tax deduction for the self-employed and
extend it to hardworking employees. This benefit will help small
business owners, farmers and other self-employed individuals contend
with rising health care costs. It will also help those working
individuals who do not have health benefits without burdening
businesses.
We must act now to help small business owners and employees who face
real hardship when it comes to health insurance costs. As a member of
the small business committee, I have seen and heard firsthand how much
this deduction means to people who have to make ends meet solely for
themselves.
Under the McDermott substitute, we have an opportunity to extend this
deduction to individuals whose employers do not subsidize their health
insurance. While I have publicly stated that we should treat the small
business as we treat large corporations, the same should be true for
employees who do not currently receive health insurance through their
workplace.
We must ease the financial burden of employees without asking
employers to pay. The McDermott substitute does that. This deduction,
if enacted before the April 15 deadline, will provide substantial
relief to over 9 million self-employed business owners, many millions
more of employees, and hundreds of thousands of Texans who face their
1994 tax returns with real concern.
Ms. VELAZQUEZ. Mr. Chairman, I rise in strong support of the Gibbons-
McDermott substitute to H.R. 831. Not only does the substitute
amendment restore the 25 percent health insurance tax deduction, but it
also expands the benefit to employees who are currently ineligible to
participate in employer-sponsored health plans.
[[Page H1950]] Just as importantly, this substitute would expand the
health insurance deduction without sacrificing the FCC's section 1071
program. In an increasingly diverse society, it is alarming that women
and persons of color play such a small role in the broadcasting
industry. We can never be guided by the truth if we turn a deaf ear to
this Nation's many voices.
The section 1071 program's tax provisions have proven effective for
enhancing the voices of women and minority individuals. Women and
minorities held less than 1 percent of the total broadcasting licenses
16 years ago, before section 1071 was enacted. Although women and
minority broadcasters still struggle, they now control 3 percent of all
broadcast licenses.
Like any other program, section 1071 is subject to abuse. The
Gibbons-McDermott substitute deals with these concerns as well. It
would minimize minority ownership scams by requiring women and minority
owners to both demonstrate equity ownership and substantiate voting and
management control over their broadcast company. The substitute would
also require minority owners to retain their FCC license for a minimum
of 3 years.
Mr. Chairman, only the Gibbons-McDermott substitute offers both
health and fairness. It will expand health insurance coverage, without
sacrificing diversity on the airwaves. I urge support for the Gibbons-
McDermott substitute.
Ms. BROWN of Florida. Mr. Chairman, I rise in strong support of the
Gibbons-McDermott substitute to H.R. 831, the Health Premium Deduction
for the Self-Employed. We all agree with the purpose of this bill which
is to permanently extend the tax deduction for 25 percent of health
insurance costs of self-employed individuals. This is an issue that was
supposed to be addressed in comprehensive health care legislation in
the last Congress. So while I support this tax deduction, I would ask
that we not forget about the need in this country for health care
reform.
This is a bill that should not have been controversial. I believe
that it would have been passed without any opposition. Unfortunately,
Members of the majority are using this bill to begin their assault on
affirmative action programs. This is clearly just the beginning of a
larger effort to dismantle efforts to assure that minorities can truly
have an equal opportunity in the American society.
I stand before you tonight outraged and offended by the Republicans'
decision to pay for this program by repealing the FCC's minority
preference program. We all know that the tax code is filled with tax
breaks for wealthy white men, and yet the Republicans have picked the
only tax provision affecting minorities to repeal.
Nearly 20 years ago, the FCC established a policy of providing tax
preferences for sales of radio, television, and cable companies to
minority-owned firms. This policy has been supported by the past four
administrations, both Democrat and Republican. The aim of the program
is to increase minority ownership of radio and television stations and
thus promote the diversity of broadcast views.
Since this program went into effect, there have been over 300 sales
to minority-owned firms, and minority ownership has increased from 0.5
percent to 2.9 percent. However, it is clear that more must be done.
Minorities are still vastly underrepresented in the broadcast business
with more than 97 percent of all broadcast licenses being held by white
men. Without this program, the number of licenses issued to minority-
controlled businesses would be far less as would the diversity of
broadcast views.
That's why I would urge my colleagues to carefully consider the
Gibbons-McDermott substitute. It's a good bill. The substitute finances
the health care tax deduction by levying a punitive tax on wealthy
people who give up their U.S. citizenship in an effort to avoid taxes
and revises the rules governing foreign trusts. In addition, the
substitute addresses legitimate concerns about the FCC's minority
preference program. It requires minorities to demonstrate real equity
ownership in the company; to prove voting control and management
control of the purchasing company; and to hold the property for 3 years
after the sale.
My colleagues, I look forward to the day when we don't have to have
these laws, but it is clear and evident from the data and statistics
that affirmative action is still needed to reverse past racial and sex-
based discrimination.
I urge you to support the Gibbons-McDermott substitute.
The CHAIRMAN. All time for debate has expired.
The question is on the amendment in the nature of a substitute
offered by the gentleman from Washington [Mr. McDermott].
The question was taken; and the Chairman announced that the noes
appeared to have it.

recorded vote

Mr. GIBBONS. Mr. Chairman, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 191,
noes 234, not voting 10, as follows:
[Roll No. 148]

AYES--191

Abercrombie
Ackerman ____
Andrews
Baesler
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Brewster
Browder
Brown (CA)
Brown (FL)
Brown (OH)
Bryant (TX)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Coleman
Collins (IL)
Collins (MI)
Condit
Conyers
Costello
Coyne
Cramer
Danner
Deal
DeFazio
DeLauro
Dellums
Deutsch
Diaz-Balart
Dicks
Dingell
Dixon
Doggett
Dooley
Doyle
Durbin
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Flake
Foglietta
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Gibbons
Gordon
Green
Gutierrez
Hall (OH)
Hamilton
Hastings (FL)
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson-Lee
Jacobs
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
LaFalce
Lantos
Laughlin
Levin
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
McNulty
Meehan
Menendez
Mfume
Miller (CA)
Mineta
Minge
Mink
Moakley
Mollohan
Montgomery
Moran
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Orton
Owens
Pallone
Pastor
Payne (NJ)
Payne (VA)
Pelosi
Peterson (FL)
Pickett
Pomeroy
Poshard
Rahall
Reed
Reynolds
Richardson
Rivers
Ros-Lehtinen
Rose
Roybal-Allard
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Sisisky
Skaggs
Skelton
Slaughter
Spratt
Stark
Stenholm
Stokes
Studds
Stupak
Tanner
Taylor (MS)
Tejeda
Thompson
Thornton
Thurman
Torres
Torricelli
Towns
Traficant
Tucker
Velazquez
Vento
Visclosky
Volkmer
Ward
Waters
Watt (NC)
Waxman
Williams
Wilson
Wise
Woolsey
Wyden
Wynn
Yates

NOES--234

Allard
Archer
Armey
Bachus
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Boucher
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Cooley
Cox
Crane
Cremeans
Cubin
Cunningham
Davis
DeLay
Dickey
Doolittle
Dornan
Dreier
Duncan
Dunn
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Gingrich
Goodlatte
Goodling
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hall (TX)
Hancock
Hansen
Harman
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Meyers
Mica
Miller (FL)
Molinari
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Oxley
Packard
Parker
Paxon
Peterson (MN)
Petri
Pombo
Porter
Portman
Pryce
Quillen
Quinn
Radanovich
Ramstad
Rangel
Regula
Riggs
Roberts
Roemer
Rogers
Rohrabacher
Roth
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tate
Tauzin
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Upton
Vucanovich
Waldholtz
[[Page H1951]] Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer

NOT VOTING--10

Borski
Crapo
de la Garza
Ehlers
Gallegly
Gonzalez
Lewis (GA)
Meek
Metcalf
Rush

{time} 2111

Mrs. MORELLA changed her vote from ``aye'' to ``no.''
Mr. TAYLOR of Mississippi changed his vote from ``no'' to ``aye.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
{time} 2113

The CHAIRMAN. Under the rule, the Committee rises.
Accordingly, the Committee rose, and the Speaker pro tempore [Mr.
Walker] having assumed the chair, Mr. McInnis, Chairman of the
Committee of the Whole House on the State of the Union reported that
that Committee, having had under consideration the bill (H.R. 831) to
amend the Internal Revenue Code of 1986 to permanently extend the
deduction for the health insurance costs of self-employed individuals,
to repeal the provision permitting nonrecognition of gain on sales and
exchanges effectuating policies of the Federal Communications
Commission, and for other purposes, pursuant to House Resolution 88, he
reported the bill back to the House with an amendment adopted by the
Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered and the amendment is adopted.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time and was
read the third time.

motion to recommit offered by mr. stark

Mr. STARK. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. STARK. I am opposed to the bill in its present form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:

Mr. Stark moves to recommit the bill H.R. 831 to the
Committee on Ways and Means with instructions to report the
same back to the House forthwith with the following
amendment:
At the end of the bill insert the following:

SEC. 5. REPEAL OF MAXIMUM PERIOD OF MANDATORY CONTINUATION
COVERAGE UNDER GROUP HEALTH PLANS.

(a) In General.--Section 162 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (o) as
subsection (p) and by inserting after subsection (n) the
following new subsection:
``(o) Group Health Plans Not Providing Extended
Continuation Health Coverage.--
``(1) In general.--No deduction shall be allowed under this
chapter for any amount paid or incurred by an employer for
any group health plan to which section 4980B applies if such
plan fails to provide extended continuation coverage with
respect to any qualified beneficiary (as defined in section
4980B(g)).
``(2) Extended continuation coverage.--For purposes of
paragraph (1), the term `extended continuation coverage'
means coverage which would be required to be provided under
section 4980B but for subsection (f)(2)(B)(i) thereof.''
(b) Effective Date.--The amendment made by this section
shall apply with respect to qualifying events (as defined in
section 4980B of the Internal Revenue Code of 1986) occurring
before, on, or after the date of the enactment of this Act,
but shall not apply if the period of continuation coverage
required under section 4980B of the Internal Revenue Code of
1986 with respect to the qualifying event has expired before
such date.

Mr. STARK (during the reading). Mr. Speaker, I ask unanimous consent
that the motion to recommit be considered as read and printed in the
Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. STARK. Mr. Speaker, as I indicated, I am opposed to H.R. 831 in
its present form. We can do better and we can go home tonight, and
without any cost to the Federal Government and without any cost to
American employers we can lift the fear from 3\1/2\ or 4 million
American families, the fear that they may lose their extended coverage
which they received under a bill that we passed unanimously.
This is a bill we passed unanimously in the Ways and Means Committee
in 1985, under which over 36 million Americans have had continuation of
group health insurance after they lost their employer- or would have
lost their employer-based health insurance because of a change in
family status, because of disability, because of a transfer, because a
branch factory or factory closed.
This is a bipartisan amendment which adds to every word in the
Republican bill. And all it does is extend permanently these extensions
that are known as COBRA to nearly 4 million Americans so that the time
clock will stop ticking and they will stop worrying about losing this
protection.
Let me quickly address two concerns and they have only been raised
modestly. One concern is it will take a little extra time. It will take
5 minutes of your time tonight, ladies and gentlemen, for a quick vote
to add this amendment and to bring to thousands of people in your
districts the peace of mind that their insurance will not end if they
are currently under a group insurance plan with extended coverages.
Second, it has been claimed that employers might be saddled with
additional costs under a complicated thing known as adverse selection.
That is not true. The reverse is true.
Four million people becoming uninsured will add more costs through
cost shifting to the total cost of all of our paying for health care
coverage than a few people who might try and game the system. There
will be no change in rate to employers. They will continue their same
payment. The employee will pay 102 percent of the coverage instead of
perhaps the 20 or 30 percent that he or she is paying now. It is as if
I am paying $101 a month for Blue Cross under my Federal plan, just
like many of you. If I were disabled and had to leave and did not have
the generous continuation, I would then have to pay 400-some dollars
plus $8 a month to the Clerk to bill me and I could continue my Blue
Cross low option.
I want to extend that peace of mind to every American. And as I say,
this does not have a partisan difference in it.
I ask Members' support for this so we can walk out of here tonight.
This is a bipartisan bill. I subject this is a bipartisan motion to
recommit, and I would ask Members to think about the people that will
receive the good news that they will have a small tax deduction, those
who are self-employed. Let us expand that. Both sides of the aisle have
talked about the desirability of portability. This is not quite
portability, but it is a step, it is a modest step toward getting the
kind of health reform that we agreed last year was needed.
This is a modest proposal that was agreed to in some of the bills
last year on both sides of the aisle.

{time} 2120

So for a few minutes of inconvenience tonight, for one extra vote
tonight, you can go home and say this, that for the 3,600,000 to 4
million people in America who sometime in the next 18 to 20 months will
lose their health insurance--they are paying for it out of their own
pockets, at no cost to the Federal budget, at no cost to their
employer--we can extend that privilege.
If there ever was a time for us to come together to help those
people, it is tonight.
Ladies and gentlemen, I implore you, we have our own Members who have
children who are not covered because they are over 22 and they have to
go off health insurance, buy COBRA insurance.
We have many cases throughout the land where this insurance will help
families. I urge you to think tonight that we have no partisan
difference, we have no cost to the budget, we can only help a few
Americans who will be desperate to find health insurance if we do not.
Mr. Speaker, as stated, I am opposed to H.R. 831 in its present form.
We can do better. We can do better for American workers--without cost
to the Federal Government, without cost to employers, and without
delay.
Both the reason for moving this motion, and the remedy it contains,
are very simple.
The purpose of this motion is simply to help Americans keep the
health insurance coverage they have when they lose their job or
[[Page H1952]] have a change in their family status--in insurance lingo
this is referred to as ``portability.''
This motion would improve health insurance portability through a very
simple means--by eliminating the time restrictions contained in the
current Federal health insurance continuation protections. These
protections are often referred to as ``COBRA'' protections after the
1985 authorizing legislation.
Today, nearly 4 million Americans have coverage because of these
Federal protections. But under current law, the protections are
limited, to a maximum of 18 to 36 months depending upon the qualifying
event. For these Americans, the clock is ticking. Their protections may
soon lapse. Supporting this motion would stop the clock, and lock these
protections in place.
Let me quickly address two concerns I have heard regarding this
motion. Neither hold merit, and neither should delay us in protecting
American workers and their families.
First, supporting the motion to recommit would in no way delay or
jeopardize the underlying bill. If my motion is agreed to, it will
require one vote on the motion and one vote on final passage. But if we
exclude these protections, there will still be one vote on my motion
and one on final passage. The assistance to be provided the self-
employed will not be delayed one minute by the inclusion of these
protections for workers.
It makes no sense to leave behind one group of Americans--America's
workers--when we have a chance to simply and quickly pass legislation
to give them all greater peace of mind.
Second, some claim that employers will be saddled with additional
costs if this amendment passes. Just the opposite will actually result.
This motion will reduce the cost-shift from uninsured Americans on to
employers.
The individual or family member that chooses to continue coverage
would pay 100 percent of the premium--150 percent in the case of
disabled persons--plus a 2 percent administrative fee. The key for the
former employee or their family member is having continued access to
health insurance coverage at group rates. If this protection is allowed
to lapse, these individuals and families are forced into the individual
insurance market where rates easily become unaffordable as they can
jump by 100 to 500 percent.
We can all agree that the cost of health care for those without
health insurance often ends-up in the premiums of employers and other
who purchase health insurance. My motion would reverse this cost-shift
trend. Rather than become a drain on business or on government
insurance programs, those allowed to continue purchasing health
insurance at the more affordable group rate will continue to pay for
their coverage. By keeping more Americans under the umbrella of health
insurance, businesses would see a drop, not an increase, in the burden
of uncompensated care.
We have been told of the need to take immediate action on H.R. 831
because the Federal income tax filing deadline is approaching. For the
nearly 4 million Americans that have insurance as a result of the
current time-limited insurance continuation protections, their
deadlines are passing every day, and they are losing coverage. We need
to act quickly on both of these measures.
I ask your support for this motion. A vote in favor of this motion is
a vote to strengthen the health insurance protections of all Americans,
not just the self-employed. For literally millions of Americans, time
is running out.
The SPEAKER pro tempore (Mr. Walker). The gentleman from Texas [Mr.
Archer] is recognized for 5 minutes in opposition to the motion to
recommit.
Mr. ARCHER. Mr. Speaker, I rise to oppose Mr. Stark's motion to
recommit H.R. 831. His proposal was fully debated in the Ways and Means
Committee markup on this bill and was defeated on a vote of 22 to 13.
Mr. Stark's proposal may appear to be a minor expansion of current
law. However, the Stark instructions ignore the purpose of COBRA
continuity coverage, place an unfair burden on business, and will
almost certainly result in higher insurance premiums for both employers
and their employees.
The intent of the COBRA continuity provisions in the Tax Code is to
offer a transitional benefit for employees and their dependents when
they lose health coverage as a result of a qualifying event. This
transitional coverage is intended to extend only for a reasonable
period of time, with the expectation that individuals would shortly
become eligible for coverage under another health plan. Under current
law, this coverage can extend for up to 18 months for former employees
and 36 months for their families. Removing the limitation on an
employers obligation is essentially a mandate to provide coverage
forever. So, plain and simple, the Stark proposal is nothing more than
a back door employer mandate.
This mandate on employers to cover people who are no longer connected
to that employer in any way, for an unlimited period of time, is
unreasonable and unfair. Furthermore, Mr. Stark's unlimited mandate
would even require employers to permanently track individuals, who have
never had a direct relationship with the employer.
It is also the case, that COBRA continuity coverage is generally used
by people who expect to have major medical expenses.
Studies have shown that these former employees and dependents do not
pay the true costs of their coverage. Instead, employers subsidize the
cost of health care for former employees and dependents. This increases
health insurance costs for employers as well as those employees who are
contributing to their own premiums.
Extending COBRA continuity beyond its intended purpose would not only
increase health care costs for employers and employees, but may even
make coverage unaffordable for some employers now offering coverage.
That is why the NFIB and other small business groups so strongly
oppose the Stark motion to recommit.
Mr. Speaker, there has been sufficient time for debate on this bill.
The House Ways and Means Committee and the full House have expressed
their will. We need to complete our work now to provide for those self-
employed Americans who expect, and deserve to take this health
deduction in April and not have to file amended returns.
Mr. Stark wants to reignite the debate over health reform at this
most untimely point, and raise the issue of employer mandates. We will
turn to health care reform as the schedule permits, but at this moment
we should move with dispatch to reinstate the expired tax provisions.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken, and the Speaker pro tempore announced that
the ayes appeared to have it.

recorded vote

Mr. STARK. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 180,
noes 245, not voting 9, as follows:
[Roll No. 149]

AYES--180

Abercrombie
Ackerman
Bachus
Baldacci
Barcia
Barrett (WI)
Becerra
Beilenson
Bentsen
Berman
Bevill
Bishop
Bonior
Boucher
Browder
Brown (CA)
Brown (FL)
Brown (OH)
Bryant (TX)
Cardin
Chapman
Clay
Clayton
Clement
Clyburn
Coleman
Collins (IL)
Collins (MI)
Conyers
Costello
Coyne
Cramer
Danner
DeFazio
DeLauro
Dellums
Deutsch
Diaz-Balart
Dicks
Dingell
Dixon
Doggett
Doyle
Durbin
Engel
Eshoo
Evans
Farr
Fattah
Fazio
Fields (LA)
Filner
Flake
Foglietta
Forbes
Ford
Frank (MA)
Frost
Furse
Gejdenson
Gephardt
Gibbons
Gordon
Green
Gutierrez
Hall (OH)
Hall (TX)
Hamilton
Hastings (FL)
Hayes
Hefner
Hilliard
Hinchey
Holden
Hoyer
Jackson-Lee
Jacobs
Jefferson
Johnson (SD)
Johnson, E. B.
Johnston
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kleczka
Klink
Lantos
Levin
Lincoln
Lipinski
Lofgren
Lowey
Luther
Maloney
Manton
Markey
Martinez
Mascara
Matsui
McCarthy
McDermott
McHale
McKinney
McNulty
Meehan
Menendez
Mfume
Miller (CA)
Mineta
Minge
Mink
Moakley
Mollohan
Montgomery
Moran
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pastor
Payne (NJ)
Pelosi
Peterson (FL)
Rahall
Rangel
Reed
Reynolds
Richardson
Rivers
Ros-Lehtinen
Rose
Roybal-Allard
Sabo
Sanders
Sawyer
Schroeder
Schumer
Scott
Serrano
Skaggs
Slaughter
Spratt
Stark
Stenholm
Stokes
Studds
Stupak
Tanner
Tauzin
Taylor (MS)
Tejeda
Thompson
Thornton
Thurman
Torres
Torricelli
Towns
Traficant
Tucker
Velazquez
Vento
Volkmer
Ward
Waters
Watt (NC)
Waxman
Williams
Wise
Woolsey
Wyden
Wynn
Yates
[[Page H1953]] NOES--245

Allard
Andrews
Archer
Armey
Baesler
Baker (CA)
Baker (LA)
Ballenger
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bereuter
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bono
Brewster
Brownback
Bryant (TN)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Castle
Chabot
Chambliss
Chenoweth
Christensen
Chrysler
Clinger
Coble
Coburn
Collins (GA)
Combest
Condit
Cooley
Cox
Crane
Cremeans
Cubin
Cunningham
Davis
Deal
DeLay
Dickey
Dooley
Doolittle
Dornan
Dreier
Duncan
Dunn
Edwards
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fields (TX)
Flanagan
Foley
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Funderburk
Ganske
Gekas
Geren
Gilchrest
Gillmor
Gilman
Goodlatte
Goodling
Goss
Graham
Greenwood
Gunderson
Gutknecht
Hancock
Hansen
Harman
Hastert
Hastings (WA)
Hayworth
Hefley
Heineman
Herger
Hilleary
Hobson
Hoekstra
Hoke
Horn
Hostettler
Houghton
Hunter
Hutchinson
Hyde
Inglis
Istook
Johnson (CT)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King
Kingston
Klug
Knollenberg
Kolbe
LaFalce
LaHood
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Lewis (CA)
Lewis (KY)
Lightfoot
Linder
Livingston
LoBiondo
Longley
Lucas
Manzullo
Martini
McCollum
McCrery
McDade
McHugh
McInnis
McIntosh
McKeon
Metcalf
Meyers
Mica
Miller (FL)
Molinari
Moorhead
Morella
Myers
Myrick
Nethercutt
Neumann
Ney
Norwood
Nussle
Orton
Oxley
Packard
Parker
Paxon
Payne (VA)
Peterson (MN)
Petri
Pickett
Pombo
Pomeroy
Porter
Portman
Poshard
Pryce
Quillen
Quinn
Radanovich
Ramstad
Regula
Riggs
Roberts
Roemer
Rogers
Rohrabacher
Roth
Roukema
Royce
Salmon
Sanford
Saxton
Scarborough
Schaefer
Schiff
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Stearns
Stockman
Stump
Talent
Tate
Taylor (NC)
Thomas
Thornberry
Tiahrt
Torkildsen
Upton
Visclosky
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)
Zeliff
Zimmer

NOT VOTING--9

Borski
Crapo
de la Garza
Ehlers
Gallegly
Gonzalez
Lewis (GA)
Meek
Rush

{time} 2142

Messrs. CRAMER, HALL of Texas, STENHOLM, and BARCIA changed their
vote from ``no'' to ``aye.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Walker). The question is on passage of
the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.

recorded vote

Mr. ARCHER. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This is a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 381,
noes 44, not voting 9, as follows:
[Roll No. 150]

AYES--381

Ackerman
Allard
Andrews
Archer
Armey
Bachus
Baesler
Baker (CA)
Baker (LA)
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Beilenson
Bentsen
Bereuter
Berman
Bevill
Bilbray
Bilirakis
Bliley
Blute
Boehlert
Boehner
Bonilla
Bonior
Bono
Boucher
Brewster
Browder
Brown (CA)
Brown (OH)
Brownback
Bryant (TN)
Bryant (TX)
Bunn
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Canady
Cardin
Castle
Chabot
Chambliss
Chapman
Chenoweth
Christensen
Chrysler
Clement
Clinger
Coble
Coburn
Coleman
Collins (GA)
Combest
Condit
Cooley
Costello
Cox
Cramer
Crane
Cremeans
Cubin
Cunningham
Danner
Davis
Deal
DeFazio
DeLauro
DeLay
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Doggett
Dooley
Doolittle
Dornan
Doyle
Dreier
Duncan
Dunn
Durbin
Edwards
Ehrlich
Emerson
English
Ensign
Eshoo
Everett
Ewing
Farr
Fawell
Fazio
Fields (TX)
Filner
Flanagan
Foley
Forbes
Fowler
Fox
Franks (CT)
Franks (NJ)
Frelinghuysen
Frisa
Frost
Funderburk
Furse
Ganske
Gejdenson
Gekas
Gephardt
Geren
Gibbons
Gilchrest
Gillmor
Gilman
Goodlatte
Goodling
Gordon
Goss
Graham
Green
Greenwood
Gunderson
Gutierrez
Gutknecht
Hall (OH)
Hall (TX)
Hamilton
Hancock
Hansen
Harman
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hefner
Heineman
Herger
Hilleary
Hinchey
Hobson
Hoekstra
Hoke
Holden
Horn
Hostettler
Houghton
Hoyer
Hunter
Hutchinson
Hyde
Inglis
Istook
Jacobs
Johnson (CT)
Johnson (SD)
Johnson, Sam
Johnston
Jones
Kanjorski
Kaptur
Kasich
Kelly
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kim
King
Kingston
Kleczka
Klink
Klug
Knollenberg
Kolbe
LaFalce
LaHood
Lantos
Largent
Latham
LaTourette
Laughlin
Lazio
Leach
Levin
Lewis (CA)
Lewis (KY)
Lightfoot
Lincoln
Linder
Lipinski
Livingston
LoBiondo
Lofgren
Longley
Lowey
Lucas
Luther
Maloney
Manton
Manzullo
Markey
Martinez
Martini
Mascara
Matsui
McCarthy
McCollum
McCrery
McDade
McDermott
McHale
McHugh
McInnis
McIntosh
McKeon
McNulty
Meehan
Menendez
Metcalf
Meyers
Mica
Miller (CA)
Miller (FL)
Mineta
Minge
Moakley
Molinari
Mollohan
Montgomery
Moorhead
Moran
Morella
Murtha
Myers
Myrick
Nadler
Neal
Nethercutt
Neumann
Ney
Norwood
Nussle
Oberstar
Obey
Olver
Ortiz
Orton
Oxley
Packard
Pallone
Parker
Pastor
Paxon
Payne (VA)
Pelosi
Peterson (FL)
Peterson (MN)
Petri
Pickett
Pombo
Pomeroy
Porter
Portman
Poshard
Pryce
Quillen
Quinn
Radanovich
Rahall
Ramstad
Reed
Regula
Richardson
Riggs
Rivers
Roberts
Roemer
Rogers
Rohrabacher
Ros-Lehtinen
Rose
Roth
Roukema
Royce
Sabo
Salmon
Sanders
Sanford
Sawyer
Saxton
Scarborough
Schaefer
Schiff
Schroeder
Schumer
Seastrand
Sensenbrenner
Shadegg
Shaw
Shays
Shuster
Sisisky
Skaggs
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Solomon
Souder
Spence
Spratt
Stark
Stearns
Stenholm
Stockman
Studds
Stump
Stupak
Talent
Tanner
Tate
Tauzin
Taylor (MS)
Taylor (NC)
Tejeda
Thomas
Thornberry
Thornton
Thurman
Tiahrt
Torkildsen
Torres
Torricelli
Traficant
Upton
Vento
Visclosky
Volkmer
Vucanovich
Waldholtz
Walker
Walsh
Wamp
Ward
Watts (OK)
Waxman
Weldon (FL)
Weldon (PA)
Weller
White
Whitfield
Wicker
Williams
Wilson
Wise
Wolf
Woolsey
Wyden
Yates
Young (AK)
Young (FL)
Zeliff
Zimmer

NOES--44

Abercrombie
Becerra
Bishop
Brown (FL)
Clay
Clayton
Clyburn
Collins (IL)
Collins (MI)
Conyers
Coyne
Dellums
Dixon
Engel
Evans
Fattah
Fields (LA)
Flake
Foglietta
Ford
Frank (MA)
Hastings (FL)
Hilliard
Jackson-Lee
Jefferson
Johnson, E. B.
McKinney
Mfume
Mink
Owens
Payne (NJ)
Rangel
Reynolds
Roybal-Allard
Scott
Serrano
Stokes
Thompson
Towns
Tucker
Velazquez
Waters
Watt (NC)
Wynn

NOT VOTING--9

Borski
Crapo
de la Garza
Ehlers
Gallegly
Gonzalez
Lewis (GA)
Meek
Rush

{time} 2150

So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________