Max Baucus

Mr. BAUCUS

Mr. BAUCUS. The Senator is correct. Given the posture we are in, I assume procedurally that is available at this time. But that is an assumption. I am not positive. That is an assumption. If procedurally that is available, the Senator is correct.

Mr. BAUCUS. In answer to the Senator, the Finance Committee tax incentives are now part of the energy bill. The Senate has adopted them. They are in the bill now. I am not at this point attempting to seek a UC request.

Mr. BAUCUS. I understand. I have been working with the Senator and with the distinguished chairman of the committee to try to figure out what appropriately could be put in that package.

Mr. BAUCUS. I say to my good friend, the Senate has already adopted the measure that passed the Finance Committee. That is now an adopted amendment and now part of the energy bill.

Mr. BAUCUS. That is correct.

Mr. BAUCUS. The two versions at the desk were identical.

Mr. BAUCUS. Madam President, this amendment consists of the energy tax incentives reported by the Finance Committee. Let me explain why this amendment is necessary. The short term energy crisis has ended. But the long term problem has not. Earlier this year, at a House hearing, Energy Secretary Abraham summed up the energy situation. He said that ``Over the last 12 months we have seen energy supply shortages, natural gas and gasoline price spikes in the Midwest and California, and terrorist attacks within our borders.'' He was right on target. His words emphasize that energy independence matters. It matters to our economy, to our national security, and to the well-being of average American families. Take one example. Gas prices. Remember last summer. The price was $1.70 per gallon. A record high. Just 6 weeks ago, the national average retail price for gasoline was $1.14 per gallon. Since then, gas prices have climbed again. Today, the national average price is back up to $1.42 per gallon. Over the past several years, prices have been extremely volatile. This volatility has had a sharp economic effect, disrupting businesses and lives. Here is why. The difference between $1.14 per gallon and $1.70 per gallon is 56 cents per gallon. The average household uses about 1,100 gallons of automobile gasoline a year. All else being equal, that amounts to a swing in household fuel expenditures of more than $600, just for transportation. That is like a $600 tax increase, on every American family. For a small business, the economic impact of these price swings can be even worse. And the situation is not likely to improve anytime soon. Between now and 2020, worldwide demand for oil is projected to increase from 76 million barrels a day to nearly 120 million barrels per day. That's an increase of almost 60 percent. Clearly, the more we depend on only one source of energy, the more we are subject to price fluctuations. With that background, let's turn to the legislation. The chairman of the Energy Committee, Senator Bingaman, has designed the underlying energy legislation that is the basis for our energy policy. Now why should tax incentives be part of the bill? The use of tax incentives to promote energy development is not some radical new idea. From the time of the enactment of the income tax in 1916, we have had tax incentives for the production of oil and gas. In 1978, we went further. We created the first tax incentives for renewable fuels and for conservation. These incentives were effective. Last July, at a Finance Committee hearing, economist Kevin Hassett told the committee that the tax credits ``were fairly successful at stimulating conservation activity.'' More specifically, he found that ``a 10 percentage point credit would likely increase the probability of investing [in conservation] by about 24 percent.'' The Finance Committee amendment takes this experience to heart. We use targeted tax incentives to promote investments that are critical to energy independence. We do this in three important ways. First, we create incentives for new production, especially production from important renewable sources. Second, we create incentives for the development of new technology. Third, we create incentives for energy conservation. Let me explain each in turn. First, new production. Regardless of the source, total U.S. energy production directly affects our dependence on foreign sources of energy. If U.S. production rises, while consumption remains constant or falls, we become less reliant on foreign energy. Unfortunately, the opposite is expected to occur. Through 2020, energy consumption is projected to increase more rapidly than domestic production. If that happens, our reliance on foreign energy--shown on the chart as ``net imports'' of energy--will increase accordingly. Here is how we address the problem. We extend the wind and biomass credit for an additional 5 years. We also qualify many more sources as renewable fuel sources, including geothermal, solar, plant life, and other sources. We create incentives for clean coal. If you retrofit to use currently available clean coal technology, you are eligible for a production tax credit. If you use advanced technology, you're eligible for both an investment credit and a production credit. We create a new credit for oil and gas production from marginal wells, and a limited tax break for geological and geophysical expenditures. Each of these tax incentives will encourage more energy production, from a variety of renewable and traditional sources. Let me turn to the second key element of the bill. New technology. Think big. Thing new. Think way into the future. New technology can bring both energy independence and a cleaner environment. Before long, our cars and trucks will run on electricity, new and alternative fuels, and fuel cells. And maybe someday, when we get home from work, we'll plug our fuel cell automobiles in to generate the electricity for our homes. But we need to make investments in these technologies today. History tells us it can take a very long time to deploy new technology. The first commercial telephone service was offered in 1876, but it took more than 90 years to make the service available to 90 percent of residences in the United States. It would be a shame if it takes half that time to bring these promising new technology vehicles to market. So here is what we do. We create tax credits for the purchase of new technology vehicles. These vehicles of the future. They'll be powered by alternative fuels, by fuel cells, and by electricity. In the near term, we provide tax credits for the purchase of hybrid vehicles, which run partly on electricity and partly on gasoline. What is so great about these vehicles? For starters, fuel cell and electric vehicles are zero-emissions vehicles. In the meantime, hybrid and alternative fuel vehicles can speed us toward the development of these zero emissions vehicles. On top of that, when it comes to emissions and fuel economy, these vehicles have significant advantages compared to traditional fuel vehicles. To make sure of this, we provide tax credits only to vehicles that meet very stringent emissions standards. There's a related point. New vehicles require new fuels. And it takes new infrastructure to deliver these fuels. Therefore, we provide tax incentives for the installation of new refueling station technology and for the purchase of alternative fuels. All told, these investments in new technology will transform automotive transportation in the United States, so that it is cleaner, more fuel efficient, and less reliant on imported oil. The third key element of the bill is conservation. Conservation is the only way to solve the problem of excessive dependence on foreign imports. When we increase conservation, it has the same effect as if we reduce consumption. We see that this will lessen our reliance on foreign sources of energy. Conservation also will have positive environmental effects. Namely, cleaner aid. Perhaps most important, tax investments in energy conservation will reduce monthly energy bills. How do we accomplish this? We create incentives for people to get more complete energy consumption information with devices like the smart meter, which allows people to track energy use in their homes. We create incentives for people to buy energy efficient refrigerators, air conditioners, and other appliances. And we encourage energy efficient construction, to make homes and commercial buildings more energy efficient. Those are the three key elements of the bill. New production, new technology, and conservation. We also address several other issues. Perhaps the most important is electric utility restructuring. This is important for investor owned utilities, municipal utilities, and cooperatives. And, of course, for consumers. But there is a lot of uncertainty. We all remember the rolling blackouts in California. Many other states also have been affected. In Montana, the legislature has had to delay the implementation of a law calling for retail choice, because the state does not yet have a competitive market in place. There is similar uncertainty in other states and nationwide. To my mind, we don't yet know what a restructured electric industry will look like. In light of this, the amendment tells the Treasury Department to report back to us by the end of the year on restructuring and the tax issues it raises. The study will help us make the right decisions to address future issues raised by restructuring. Senators Bingaman and Murkowski may wish to go further, as part of this bill, and Senator Grassley and I are discussing options with them now. At the same time, there are some current problems, that we do know how to address. The amendment does so with respect to nuclear decommissioning funds and the treatment of cooperatives. Before closing, I'd like to acknowledge all of those who helped write the Finance Committee bill. The President's budget called for tax incentives for renewable resources, residential solar systems, alternative fuel vehicles, and combined head and power systems. Those are included. Our committee members have also made very important contributions. Our ranking member, Senator Grassley, has worked hard to make this a balanced, bipartisan bill. Senator Hatch and others were the principal authors of the alternative fuels provisions. Senator Rockefeller was the principal author of the clean coal provisions. Other Members were responsible for other important provisions. I also appreciate the help of the leaders of the Energy Committee, Senators Bingaman and Murkowski. We are lucky that they also are members of the Finance Committee, and we benefited from their expertise and dedication. In other words, this has been a cooperative effort, all around. Pulling this together, we have a package of tax incentives that are important in their own right and that will complement the broader energy bill. In short, this amendment is good environmental policy and good energy policy. Don't get me wrong. This bill is not a panacea. It is a work in progress. It is just a step. But it is a good step. A step in the right direction. I thank members and urge adoption of the amendment.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, ensuring necessary and affordable energy supplies, including ethanol-blended motor fuels and other initiatives, is important to the quality of life and economic prosperity of all Americans. Policies to achieve these objectives, however, should not come at the expense of transportation infrastructure improvements. By directing 2.5 cents from the sale of gasohol to the highway trust fund, we can begin to alleviate a growing problem for many States-- lower highway trust fund contributions and therefore lower highway apportionments. Furthermore, a major goal of TEA-21 was to restore the integrity of the highway trust fund by depositing all motor fuel taxes in the trust fund and then spending that money on highway, and some transit, programs. Gasohol's 2.5 cents is the only user tax on vehicle fuel that does not flow into the highway trust fund . I am proud to have it as part of the energy tax package. I would especially like to thank Senators Harkin, Warner, and the ranking member of the Finance Committee, Senator Grassley for their help in getting the 2.5 cent provision in the energy tax package. But the 2.5 cents is just the beginning. I had planned to introduce an amendment, along with Senators Harkin and Warner, that would truly make the highway trust fund ``whole.'' This amendment would keep the ethanol subsidy, but make sure that it is the Treasury's General Fund that subsidizes ethanol--not the highway trust fund. The ethanol subsidy is good energy policy, good agriculture policy and good tax policy. Yet, ironically, it is the highway trust fund that bears the burden of the subsidy. Since it is good general policy, I believe that the general fund should bear the burden of the subsidy. I have been asked by several Senators not to offer an amendment at this time. I have complied with the requests of my colleagues. However, I am fully committed to recouping the 5.3 cents for the highway trust fund at the next possible opportunity. I would like to thank Senators Warner and Harkin for working so closely with me on this matter. I look forward to continuing that work as soon as possible. I am pleased to see progress being made to include the highway trust fund in our collective thoughts as we discuss energy policy.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I appreciate the recognition. If no further statements are to be made at this time, I yield the floor.

Mr. BAUCUS. Madam President, I ask unanimous consent that the Senate go into legislative session and that the energy bill be the pending business.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS

Mr. BAUCUS. At this point.

Mr. BAUCUS. Mr. President, I will suspend my statement at this time if someone else wishes to speak.

Mr. BAUCUS

Mr. BAUCUS. Madam President, today I introduce legislation, along with Senator Grassley, to clarify the tax treatment of the clergy housing allowance. It is a very simple bill that confirms established Internal Revenue Service policy that has lacked the force of law. Without this clarification, we risk losing a long-standing benefit that is terribly important to hundreds of thousands of ministers, priests, rabbis and other clergy all across America. Since 1921, the Tax Code has allowed clergy to exclude from their taxable income the value of housing provided to them, and since the 1950's they have also been able to exclude a housing allowance provided for the same purpose. This section of the Code is similar to one for employer-provided housing for other taxpayers. The one for clergy is much simpler, in order to minimize the involvement of the Government in the affairs of churches, that is, to keep the separation between Church and State. The IRS has always interpreted this exclusion to be limited to the fair market rental value of the housing. They clearly stated that position in 1971, but their statement lacked the force of law. Their position has been challenged in Court, and the Court has said that it was not clear that Congress meant to impose this limit. That is why we must act. The vast majority of clergy across America work very hard for very modest pay. Especially in rural areas like we have in Montana, many congregations are small, pay is low, and ministers are very dependent upon their churches providing or paying for their housing. A dispute over this issue has led to a controversial attempt by a panel of court of appeals judges to call into question the constitutionality of the exclusion. If the exclusion is lost, it will cost America's clergy $500 million each year. That may seem like a small amount of money compared to many of our tax bills that add up to billions, but it is a lot of money to those who are directly affected, and to the millions of Americans in the congregations that they serve. The House has passed similar legislation by a vote of 408 to 0. Senator Grassley and I will try to expedite passage of the legislation here in the Senate. It is good tax policy to keep a reasonable limit on the amount of this deduction, as the IRS has done for decades. And it is good policy to make our intent crystal clear so that government involvement with religious affairs is kept to a minimum. This bill will do both.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I ask unanimous consent that there be a time limitation of 1 hour equally divided between myself and Senator Grassley for debate on the Finance Committee energy tax amendment; that no amendments be in order to my amendment except a second-degree amendment by Senator Grassley; that at the conclusion or yielding back of the time, the Senate vote in relation to Senator Grassley's second- degree amendment and to my Finance Committee amendment.

Mr. BAUCUS. Madam President, I hear the distinguished Senator from Mississippi. I very much understand the reasons for his objection. I deeply appreciate his statement in support of the Finance Committee title that we hope to offer to this bill. The provisions in the Finance Committee title total roughly $15 to $16 billion over 10 years. The Senate hopefully will pass the Senate- passed version of tax incentives. It will be incentives for production, conventional production, renewables, unconventional production, for conservation. The House passed a tax title to their energy bill which totals about $30 billion. I fully agree with the distinguished Senator that the Finance Committee provisions, which will help wean us away from OPEC by providing incentives on matters that I suggested, are vitally important. And I hope--in fact, I expect--that the Senate, before it passes an energy bill, will also include these provisions because they are such an integral and vital part of the bill. I thank all concerned, particularly my good friend from Mississippi. I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS. What is the business of the Senate?

Mr. BAUCUS

Mr. BAUCUS. Madam President, today I introduce legislation, along with Senator Grassley, to clarify the tax treatment of the clergy housing allowance. It is a very simple bill that confirms established Internal Revenue Service policy that has lacked the force of law. Without this clarification, we risk losing a long-standing benefit that is terribly important to hundreds of thousands of ministers, priests, rabbis and other clergy all across America. Since 1921, the Tax Code has allowed clergy to exclude from their taxable income the value of housing provided to them, and since the 1950's they have also been able to exclude a housing allowance provided for the same purpose. This section of the Code is similar to one for employer-provided housing for other taxpayers. The one for clergy is much simpler, in order to minimize the involvement of the Government in the affairs of churches, that is, to keep the separation between Church and State. The IRS has always interpreted this exclusion to be limited to the fair market rental value of the housing. They clearly stated that position in 1971, but their statement lacked the force of law. Their position has been challenged in Court, and the Court has said that it was not clear that Congress meant to impose this limit. That is why we must act. The vast majority of clergy across America work very hard for very modest pay. Especially in rural areas like we have in Montana, many congregations are small, pay is low, and ministers are very dependent upon their churches providing or paying for their housing. A dispute over this issue has led to a controversial attempt by a panel of court of appeals judges to call into question the constitutionality of the exclusion. If the exclusion is lost, it will cost America's clergy $500 million each year. That may seem like a small amount of money compared to many of our tax bills that add up to billions, but it is a lot of money to those who are directly affected, and to the millions of Americans in the congregations that they serve. The House has passed similar legislation by a vote of 408 to 0. Senator Grassley and I will try to expedite passage of the legislation here in the Senate. It is good tax policy to keep a reasonable limit on the amount of this deduction, as the IRS has done for decades. And it is good policy to make our intent crystal clear so that government involvement with religious affairs is kept to a minimum. This bill will do both.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce the Rural Hospital Access and Improvement Act of 2002. I am pleased to be joined by Senators Grassley, Daschle, Thomas, Conrad, Jeffords, Rockefeller, Bingaman, Harkin, Johnson, and Roberts in sponsoring this important legislation. Simply put, this bill is about keeping small hospitals open in rural areas. It's about preserving access to quality health care for farmers and ranchers and their families. It's about protecting the health of folks who live in small towns and hamlets across our Nation. I think these are goals that every one of us can agree on. But the fight to preserve access to health care in rural America has never been an easy one. Hospitals in rural areas constantly struggle with the difficulties of operating in a low-volume environment. Their emergency rooms might see two or three patients a day. Or some days, none at all. They lack the economies of scale that urban and suburban facilities enjoy. They have a hard time hiring health professionals. And with every passing year, they face a growing regulatory burden that takes time and energy away from patients. In the face of all these obstacles, many small, rural communities have confronted the unthinkable: losing their hospital altogether. I have no doubt that I speak for the vast majority of Senators when I say we should never let this happen. We should never allow a community to go without the health care services it needs to stay healthy. To borrow from the flight director of Apollo 13, I suggest that failure is not an option. This was the message that Congress sent fives years ago, when it took two giant strides towards helping rural communities keep their hospitals. First, it passed legislation allowing small hospitals in rural and frontier areas to become Critical Access Hospitals, or CAHs. CAHs are reimbursed by Medicare based on their actual costs, not fixed or limited payments. They can organize their staff and facilities based on their patients' needs, not on rules made for large, urban facilities. In short, they are given flexibility to adapt to the unique challenges of providing health care in rural areas. This concept was a perfect fit for rural America. In the past five years, over 500 facilities have converted to CAH status. By taking advantage of the CAH option, these hospitals have remained open and continue to serve patients. This success is not surprising. After all, the Critical Access Hospital concept was modeled on a demonstration project that had already been working for years in hospitals across Montana. The second step Congress took in 1997 was to authorize $25 million a year for the Rural Hospital Flexibility Grant Program, or, as I like to call it, the Flex grant. This program awards grants to States to help hospitals convert to CAH status. Already, over 1,000 health care facilities have been assisted by these funds. In my State nearly half of our hospitals, about two dozen facilities, have converted to CAH status. About a dozen more are on the way. Now the Senate has an opportunity to renew its commitment to rural health care. The legislation I have introduced today would reauthorize the Flex grant at a level of $40 million a year. This would continue the work that we have already begun, by helping hundreds more rural hospitals covert to CAH status. In the latest count, nearly 600 hospitals across the Nation were eligible to become CAHs, but have not yet converted. By increasing the size of the Flex grant program, Congress can reach out to these facilities. At the same time, Congress will continue its support for existing CAHs by providing technical assistance and helping them access capital for their physical plants. These funds will also advance the important process of coordinating between emergency medical services providers and other health care providers in rural areas. In the wake of September 11 and the bioterrorist attacks of last fall, this work must move forward without delay. I want to thank my colleagues for their support of the Critical Access Hospital program and the Flex grant over the past five years. Through their efforts, over 500 rural communities have kept their hospitals up and running. Now, I hope they will continue this work by supporting the Rural Hospital Access and Improvement Act of 2002 an reauthorizing the Flex grant at a level of $40 million a year.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce the Rural Hospital Access and Improvement Act of 2002. I am pleased to be joined by Senators Grassley, Daschle, Thomas, Conrad, Jeffords, Rockefeller, Bingaman, Harkin, Johnson, and Roberts in sponsoring this important legislation. Simply put, this bill is about keeping small hospitals open in rural areas. It's about preserving access to quality health care for farmers and ranchers and their families. It's about protecting the health of folks who live in small towns and hamlets across our Nation. I think these are goals that every one of us can agree on. But the fight to preserve access to health care in rural America has never been an easy one. Hospitals in rural areas constantly struggle with the difficulties of operating in a low-volume environment. Their emergency rooms might see two or three patients a day. Or some days, none at all. They lack the economies of scale that urban and suburban facilities enjoy. They have a hard time hiring health professionals. And with every passing year, they face a growing regulatory burden that takes time and energy away from patients. In the face of all these obstacles, many small, rural communities have confronted the unthinkable: losing their hospital altogether. I have no doubt that I speak for the vast majority of Senators when I say we should never let this happen. We should never allow a community to go without the health care services it needs to stay healthy. To borrow from the flight director of Apollo 13, I suggest that failure is not an option. This was the message that Congress sent fives years ago, when it took two giant strides towards helping rural communities keep their hospitals. First, it passed legislation allowing small hospitals in rural and frontier areas to become Critical Access Hospitals, or CAHs. CAHs are reimbursed by Medicare based on their actual costs, not fixed or limited payments. They can organize their staff and facilities based on their patients' needs, not on rules made for large, urban facilities. In short, they are given flexibility to adapt to the unique challenges of providing health care in rural areas. This concept was a perfect fit for rural America. In the past five years, over 500 facilities have converted to CAH status. By taking advantage of the CAH option, these hospitals have remained open and continue to serve patients. This success is not surprising. After all, the Critical Access Hospital concept was modeled on a demonstration project that had already been working for years in hospitals across Montana. The second step Congress took in 1997 was to authorize $25 million a year for the Rural Hospital Flexibility Grant Program, or, as I like to call it, the Flex grant. This program awards grants to States to help hospitals convert to CAH status. Already, over 1,000 health care facilities have been assisted by these funds. In my State nearly half of our hospitals, about two dozen facilities, have converted to CAH status. About a dozen more are on the way. Now the Senate has an opportunity to renew its commitment to rural health care. The legislation I have introduced today would reauthorize the Flex grant at a level of $40 million a year. This would continue the work that we have already begun, by helping hundreds more rural hospitals covert to CAH status. In the latest count, nearly 600 hospitals across the Nation were eligible to become CAHs, but have not yet converted. By increasing the size of the Flex grant program, Congress can reach out to these facilities. At the same time, Congress will continue its support for existing CAHs by providing technical assistance and helping them access capital for their physical plants. These funds will also advance the important process of coordinating between emergency medical services providers and other health care providers in rural areas. In the wake of September 11 and the bioterrorist attacks of last fall, this work must move forward without delay. I want to thank my colleagues for their support of the Critical Access Hospital program and the Flex grant over the past five years. Through their efforts, over 500 rural communities have kept their hospitals up and running. Now, I hope they will continue this work by supporting the Rural Hospital Access and Improvement Act of 2002 an reauthorizing the Flex grant at a level of $40 million a year.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I submit this statement to explain my absence on Wednesday, April 10 on the rollcall votes regarding the amendments offered by the distinguished Senator from California. Senator Feinstein, and the distinguished Senator from Idaho, Senator Craig. Unfortunately, I was absent for medical reasons and was unable to vote. I wanted to express my support for Senator Feinstein's amendment and had I been here, my intention was to vote ``yes'' on the motion to invoke cloture on her energy derivatives amendment. I understand that this body specifically exempted over-the-counter trading in energy derivatives from anti-fraud, anti-manipulation and other oversight regulation by the Commodities Futures Trading Commission back in 2000. However, I believe the Enron collapse, and the dramatic energy price spikes we saw last year in California and the Northwest, including in my State of Montana, tell us that we should take a closer look at energy markets and make sure we are catching market manipulators. I was disappointed that cloture was not invoked on this amendment. I also wanted to express my support for Senator Craig's amendment, and had I been here, my intention was to vote for the Craig amendment to strike title II of S. 517. With so much uncertainty in today's energy markets. I was not convinced that the modified electricity restructuring provisions in S. 517 did enough to protect the best interests of consumers. This is a complicated area of Federal law, and I think the Senate needs more time to get it right. For that reason, I would have supported Senator Craig's amendment.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I am pleased to be a co-sponsor, with Senator Grassley, of this important piece of legislation. Our legislation, Reversing the Expatriation of Profits Offshore, (REPO), Act, is designed to put the brakes on the potential rush to move U.S. corporate headquarters to tax havens, through increasingly popular transactions known as corporate inversions. Prominent U.S. companies are literally re-incorporating in off-shore tax havens in order to avoid U.S. taxes. They are, in effect, renouncing their U.S. citizenship to cut their tax bill. Tax avoidance costs honest taxpayers tens of billions of dollars each year. When one taxpayer, whether a corporation or an individual, doesn't pay their fair share of taxes, we all pay. The REPO Act cracks down on corporations that avoid taxes at the expense of honest, hardworking American taxpayers. The local hardware store in Butte, MT, isn't re-incorporating in Bermuda or one of these tax haven countries. He is keeping his company an American company. The companies reincorporating in tax haven countries, and their executives, are still physically located in the United States. Their executives and employees enjoy all the privileges afforded to honest U.S. taxpayers. I understand that the corporate inversion issue is complex. I also understand that, over the long term, we may need to consider whether the structure of the U.S. international tax rules creates an incentive for U.S. corporations to shift their operations abroad in order to remain competitive. For now, we are putting a stop to the erosion of the U.S. tax base through these tax avoidance schemes. Our legislation distinguishes between two types of inversions, pure inversions and limited inversions. A pure inversion is when a U.S. company becomes a subsidiary of a foreign company or shifts substantially all of its properties to a foreign corporation and 80 percent of more of the shareholders in the original U.S. company are now shareholders in the new foreign company. The foreign company has no substantial business activity in the foreign tax haven country. Companies that hold board meetings in the tax haven country or send a few employees or executives to work in the tax haven country will not meet the substantial business activity standard. Under our legislation, the parent company will be treated as a U.S. company. A limited inversion transaction is when more than 50 percent and fewer than 80 percent of the shareholders are the same. The new foreign company is recognized as a foreign company for tax purposes but there is a tax cost. The company won't be able to use tax attributes, such as net operating losses and foreign tax credits, to offset the gain incurred upon inverting. Finally, the company won't be able to strip earnings out of the U.S. to avoid U.S. taxes. This week is the last week leading up to the April 15 tax filing deadline. Families in Montana and across the nation are sitting down at their kitchen tables, or at their home computers, and figuring out their taxes. The calculations may be complex, the tax bite may seem high, but by and large, with quiet patriotism, average Americans will step up and pay the tax they owe. They're counting on us to make sure that sophisticated corporations pay their fair share, as well.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I am pleased to be a co-sponsor, with Senator Grassley, of this important piece of legislation. Our legislation, Reversing the Expatriation of Profits Offshore, (REPO), Act, is designed to put the brakes on the potential rush to move U.S. corporate headquarters to tax havens, through increasingly popular transactions known as corporate inversions. Prominent U.S. companies are literally re-incorporating in off-shore tax havens in order to avoid U.S. taxes. They are, in effect, renouncing their U.S. citizenship to cut their tax bill. Tax avoidance costs honest taxpayers tens of billions of dollars each year. When one taxpayer, whether a corporation or an individual, doesn't pay their fair share of taxes, we all pay. The REPO Act cracks down on corporations that avoid taxes at the expense of honest, hardworking American taxpayers. The local hardware store in Butte, MT, isn't re-incorporating in Bermuda or one of these tax haven countries. He is keeping his company an American company. The companies reincorporating in tax haven countries, and their executives, are still physically located in the United States. Their executives and employees enjoy all the privileges afforded to honest U.S. taxpayers. I understand that the corporate inversion issue is complex. I also understand that, over the long term, we may need to consider whether the structure of the U.S. international tax rules creates an incentive for U.S. corporations to shift their operations abroad in order to remain competitive. For now, we are putting a stop to the erosion of the U.S. tax base through these tax avoidance schemes. Our legislation distinguishes between two types of inversions, pure inversions and limited inversions. A pure inversion is when a U.S. company becomes a subsidiary of a foreign company or shifts substantially all of its properties to a foreign corporation and 80 percent of more of the shareholders in the original U.S. company are now shareholders in the new foreign company. The foreign company has no substantial business activity in the foreign tax haven country. Companies that hold board meetings in the tax haven country or send a few employees or executives to work in the tax haven country will not meet the substantial business activity standard. Under our legislation, the parent company will be treated as a U.S. company. A limited inversion transaction is when more than 50 percent and fewer than 80 percent of the shareholders are the same. The new foreign company is recognized as a foreign company for tax purposes but there is a tax cost. The company won't be able to use tax attributes, such as net operating losses and foreign tax credits, to offset the gain incurred upon inverting. Finally, the company won't be able to strip earnings out of the U.S. to avoid U.S. taxes. This week is the last week leading up to the April 15 tax filing deadline. Families in Montana and across the nation are sitting down at their kitchen tables, or at their home computers, and figuring out their taxes. The calculations may be complex, the tax bite may seem high, but by and large, with quiet patriotism, average Americans will step up and pay the tax they owe. They're counting on us to make sure that sophisticated corporations pay their fair share, as well.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I submit this statement to explain my absence today on the rollcall vote regarding the amendment offered by my good friend from Nevada, Senator Reid. Unfortunately, I am absent for medical reasons and was unable to vote today. However, I wanted to express my support for Senator Reid's amendment and had I been here, my intention to vote not to table the amendment. Senator Reid's amendment just made sense. This is a debate over energy legislation and it is logical to limit Senator Feinstein's amendment to energy derivatives. If this body feels there is a need to extend the provisions in Senator Feinstein's amendment to metals, which I am not convinced that we need to do, then we should take that issue up at the appropriate time and in the appropriate vehicle. For that reason, I would have voted not to table Senator Reid's amendment.

Mr. BAUCUS

Mr. BAUCUS. Madam President, on March 1, 2002, I filed Report 107-140 to accompany S. 1979, the Energy Tax Incentives Act of 2002. Since that time, the Congressional Budget Office has revised its estimate to reflect changes resulting from enactment of Public Law 107-147, the Job Creation and Worker Assistance Act of 2002, plus direct spending effects that were not in the previous estimate. I ask unanimous consent that the revised CBO estimate, dated April 1, 2002, be printed in the Record.