Phil Crane

Mr. CRANE

Mr. CRANE. Mr. Speaker, I thank the gentleman for yielding me this time. We now have an excellent opportunity to advance sound tax policy and sound fiscal policy and sound social policy by returning to our Nation's historical emphasis on private activities and personal involvement in the well-being of our communities. Because the legislation we are considering contains a number of worthwhile provisions that I believe will help encourage people to give to charity, I rise today to express my support. Mr. Speaker, I have long been an advocate in making changes in the Tax Code to encourage charitable giving. For many years, I have championed and sponsored some of the proposals contained in the legislation we have before us today, including the charitable IRA rollover and the deduction for nonitemizers. In fact, I do not believe there is a Member in Congress who has fought longer and harder for restoring a charitable deduction for nonitemizers than me. I have introduced the nonitemizer deduction legislation in every Congress since the 99th, and it is gratifying to finally see its inclusion in this legislation. I would like to thank the gentleman from Oklahoma (Mr. Watts) for including my provisions in H.R. 7, and the chairman, the gentleman from California (Mr. Thomas), for including it in the mark. While I am pleased that the nonitemizer deduction was included in H.R. 7, I am disappointed that the limitations on the amount of the deduction were set so low. I hope to be able to work with the chairman in the future to raise the limit up to the standard deduction.

Mr. CRANE. Mr. Speaker, I have long advocated making changes to the tax code designed to encourage charitable giving. Indeed, I have promoted some of the proposals contained in the legislation we have before us today, including the charitable IRA rollover and the deduction for non-itemizers, for many years. Because the legislation we are considering, the Community Solutions Act, contains a number of worthwhile provisions that I believe will help encourage people to give to charity, I rise today to express my support. However, while I believe this legislation is a step in the right direction, H.R. 7 is but a first step. Frankly, we need to do more, and in my remarks today I would like to highlight a number of items that I believe need to receive further consideration by the Ways and Means Committee and the Congress in the near future. My first comments relate to the largest provision in this legislation in terms of revenue impact--the charitable deduction for non-itemizers. I do not believe there is a member in Congress who has fought longer or harder for restoring the charitable deduction for non-itemizers than I. The non-itemizer charitable deduction actually existed in the tax code from 1981-1986. It was created in the 1981 Reagan tax bill, but the language in the 1981 bill sunset the provision after 1986. In January 1985, at the start of the 99th Congress, I introduced legislation, H.R. 94, to make the non-itemizer deduction permanent. The year after the provision expired in 1986, I introduced legislation, H.R. 113, to restore the deduction. In every Congress since that time up to the present, I have introduced legislation to restore this deduction. For the record, I would like to insert the following table identifying the Congress, date and bill number of the legislation that I have introduced on this subject: 99th Congress--1/3/85--H.R. 94; 100th Congress--1/6/87--H.R. 113; 101st Congress--1/4/89--H.R. 459; 102nd Congress--1/3/91--H.R. 310; 103rd Congress--1/5/93--H.R. 152; 104th Congress--4/7/95--H.R. 1493; 105th Congress--9/18/97--H.R. 2499; 106th Congress--3/25/99--H.R. 1310; and 107th Congress--2/28/01--H.R. 777. While I am gratified that Congressman Watts included that the non- itemizer deduction in H.R. 7, I am disappointed that the limitations on the amount of the deduction were set so low. Indeed, I am concerned that the deduction limits have been set so low as to have a very minimal impact toward the goal of increasing charitable giving. Frankly, the deduction allowance ought to be set substantially higher. I applaud President Bush for his proposal to allow the deduction up to the amount of the standard deduction. However, despite my concerns with the limitations contained in H.R. 7, I still believe that this provision represents a positive first step--a step on which the Ways and Means Committee can build a more substantial deduction. Moreover, I hope that the other body takes up similar legislation this year and that it considered the concerns I am raising today. With regard to those individuals who do itemize their deductions, I want to mention two proposals that were not contained in H.R. 7 but hopefully will be considered at a later date. The first of these proposals relates to Section 170 of the tax code. Under current law, individuals who contribute appreciated property (such as stocks and real estate) to charity are subject to complex deduction limits. While donors can generally deduct charitable contributions up to 50 percent of their income, deductions for gifts of appreciated property are limited to 30 percent of income. For gifts of appreciated property to charities that are private foundations, deductions are limited to 20 percent of income. In my view, these limits under present law discourage charitable giving from the very people who are in the best position to make large gifts. Someone who has done well in the stock market should be encouraged to share the benefits. In order to fix this problem we should consider allowing contributions of appreciated property to be deductible within the same percentage limits as for other charitable gifts. The proposal I have in mind would increase the percentage limitation applicable to charitable contributions of capital gain property to public charities by individuals from 30 percent to 50 percent of income. thus, both cash and non-cash contributions to such entities would be subject to a 50 percent deductibility limit. In addition, I would propose increasing the percentage limitation for contributions of capital gain property to private foundations from 20 percent to 30 percent of income. While these proposals were not included in H.R. 7, I want to thank Ways and Means Chairman Thomas for publicly acknowledging that these issues are worthy of consideration. As a follow-up to his comments in the Ways and Means Committee, Chairman Thomas has written a letter to the Staff Director of the Joint Committee on Taxation asking for a revenue estimate and additional information with respect to this proposal. In addition, I would like to thank the Chairman for making a similar request with regard to the other proposal I believe needs to be addressed--removal of charitable contributions from the cutback of itemized deductions commonly referred to as the ``Pease'' limitations. Even though the cutback of itemized deductions is being phased out under current law, its impact on charitable giving will remain in effect for several years. It is my strong belief that extracting charitable contributions from the Pease limitation will do much to encourage further generosity from those in a position to give the most. Mr. Speaker, I am pleased to have this opportunity to express my support for H.R. 7 and I hope that I will return to the floor one day soon to address the other important issues I have raised in my remarks.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Florida (Mr. Keller).

Mr. CRANE. Mr. Speaker, I yield 3 minutes to the distinguished gentleman from California (Mr. Dreier).

Mr. CRANE. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Arizona (Mr. Kolbe).

Mr. CRANE. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in strong opposition to H. J. Res. 50, which would terminate Normal Trade Relations with China 60 days after enactment. This resolution jeopardizes the jobs and livelihoods of nearly 400,000 American workers and their families who depend upon trade with China. It also sells out millions more Chinese striving hard to reform a nation with an exceptionally complex and painful past, and for what? Let me suggest that there is a better way. Commercial engagement with China has been and continues to be the cornerstone of America's productive and maturing relationship with China. Since the historic 1979 U.S.-China Agreement on Trade, every American President has understood the importance of integrating China and its one-fifth share of humanity into the international system. Since the end of the destructive Maoist era, I believe that China has been experiencing nothing less than a ``great awakening.'' In ever- larger strides China has proceeded to open its doors to free enterprise and engage in international trade and commerce, now reaching $500 billion per year. On October 10 last year, President Clinton signed legislation that terminated the provision of the 1974 Jackson-Vanik statute that requires the annual consideration of China's Normal Trade Relations status, NTR. By a vote of 237 to 197, the House voiced its unwavering, bipartisan support for the reforms taking place in China and committed to extend Permanent Normal Trade Relations, PNTR, status to China when it becomes a member of the World Trade Organization. Under the accession agreement, our tariffs on Chinese imports will not change, while Chinese tariffs on our exports will be sharply reduced, giving us access to 1.2 billion customers. This agreement also requires China to undertake a wide range of market-opening reforms to key sectors of its economy still under state control, covering agriculture, industrial goods and services. On June 11, Ambassador Zoellick reached a breakthrough agreement with China on most of our remaining bilateral trade liberalization issues. In light of the progress made so far, it is very possible that China will become a WTO member by the end of this year. Therefore, it appears that Congress needs to reauthorize NTR status one last time for the span of just a few months. In light of our historic PNTR vote last fall, we must keep moving forward toward our common goal of integrating China into the international system of rules and standards. After 15 years, we are almost there. Mr. Speaker, relations with China this year have been anything but smooth. We are all angered and frustrated by the two steps forward, one step backward behavior of the Beijing government. The world expects much more from China. Yet, denying China NTR will not bring about political and religious freedom for the Chinese. In fact, it will have a quite opposite effect. A better way to America's long-term national security interests in China and the Asian region will be to help China begin this century on an economic reform path shaped and refined by the economic trade rules of the WTO, and I urge a no vote on House Joint Resolution 50. Mr. Speaker, I ask unanimous consent for the gentleman from Illinois (Mr. Weller) to control the time on our side.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am proud to introduce with my colleagues the Economic Revitalization Tax Act of 2001. This legislation is designed to revitalize one of America's most important economic partners. The Commonwealth of Puerto Rico, home to 3.9 million U.S. citizens, purchases over $16 billion a year in goods and services from the rest of the United States. A strong economy in Puerto Rico helps generate over 320,000 jobs in the U.S. mainland. A strong Puerto Rican economy should be important to all of us. We need to recognize that since October of 1996 manufacturing employment in Puerto Rico has declined by 16,000 jobs, a drop of over ten percent. No other U.S. jurisdiction has lost manufacturing jobs at such a high rate. In calendar 2001, a growing number of American companies, including Intel, Coach, Sara Lee, Phillips Petroleum, Star Kist and Playtex have announced that they will close or reduce operations in Puerto Rico. This will entail a loss of more than 8,700 additional direct jobs. These jobs are being lost to foreign competitors. Puerto Rico's main competitors enjoy significant advantages. For example, Singapore, Malaysia and Mexico have significantly lower wages and fringe benefits. Ireland enjoys low transportation costs and duty- free access to the European Market. Malaysia and Mexico not only have much lower wage costs but have less stringent environmental, health, safety and welfare standards. To reverse this trend, today we are introducing legislation that will help make Puerto Rico more attractive to investors. Our bill simply states that if you invest in Puerto Rico instead of in a foreign country, you may bring your profits back into the U.S. at a preferred tax rate. This will not only help Puerto Rico directly, but it will also help the American economy by returning profits to the U.S. where they can be invested in other job creating activities. In 1993 Congress imposed significant restrictions on the value of these tax incentives to raise more than $3.7 billion in revenue to help balance the federal budget. In 1996, Congress approved a ten-year phase-out of what remained of these provisions (section 936 and section 30A of the Internal Revenue Code) to offset more than $10 billion in the cost of federal tax benefits enacted to alleviate the impact of the increase in the minimum wage. This legislation is Puerto Rico's best opportunity to participate in the tax reduction measures that Congress enacted earlier this year. Puerto Rico helped reduce the budget deficit. It is now time for the U.S. citizens of Puerto Rico to benefit from the budget surplus.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I would like to voice my support for H. Res. 168. This resolution would show the House of Representative's dedication to respecting the first inhabitants of this great nation by calling on our citizenry to honor native Americans for all of their accomplishments and contributions to society. American Indians have influenced every aspect of American life. It is our duty as Americans to recognize and honor the impact that native Americans have had in the shaping of our nation. By exploring these lands thousands of years prior to any Europeans, native Americans were able to develop the techniques and strategies necessary to survive on this continent. Without the instruction and aid from neighboring native American communities, the Mayflower pilgrims and original settlers would not have survived the brutal American winters and would have been unable to build the foundation that our country is built upon. The legacy of the native American reaches much further than the original settlers, however. From the fight for independence from Britain to the battlefields of Nazi-occupied Europe, native Americans have proven that they will heed a call to arms to defend the basic American principles of democracy and freedom. The influence of native American culture can be seen throughout America today. Great American cities, states, and rivers are still referred to today by names granted to them by native Americans hundreds of years ago. The proud history of the native American can be found in the classrooms of America and the museums of the world. It is time that the American people honor our native American brethren for the contributions they have provided to our great nation. As a descendant of the Cherokee nation, I hold deep feelings of love and respect for both the American Indians of the past and the present. I understand the true beauty of the native American and recognize first hand the troubles and turmoil that have plagued these peoples since the introduction of European influence. Unfortunately, the lifestyle of the American Indian did not fit with that of the white man and many natives suffered and died from relocation and disease sparked by the presence of the European. My own ancestors were forced to give up their land and livelihood and march from North Carolina to Oklahoma on the infamous Trail of Tears. Native Americans have dealt with negative stereotypes and stigma for too long. H. Res. 168 is the first step in bringing out awareness of the true beauty of native American culture. In conclusion, I call on all Americans to show respect and honor to all native Americans, as their accomplishments, in all areas, have been major influences in the construction of the complete American culture.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I am pleased to announce that I, along with my friend and Colleague Congressman Bob Matsui, are introducing the American Breakthrough Research Act of 2001. This important legislation remedies a shortcoming in the federal income tax incentives available for research and development activities. To a considerable extent, our country's competitive position in the world economy and our citizens' standard of living are dependent on maintaining and enhancing our leadership in pure science and in the equally important commercialization of the fruits of scientific discovery. Over many years, the Congress and administrations across political parties consistently have supported tax incentives for those crucial activities. Much of the risky and capital intensive work of developing the commercial potential of scientific findings is undertaken by relatively small and even start-up businesses. It often takes many years and many millions of dollars of investment to turn discoveries into products, and along the way these entrepreneurs tend to have few if any products to sell and little or no revenues. The U.S. bioscience industry, for example, which many call the industry of the 21st century is comprised of about 1200 companies, most of which are relatively small. While the medicines and treatments that these companies are developing hold great promise to reduce or eliminate major diseases such as cancer and cystic fibrosis, few companies can go to the market with products to sell. A key goal of Congress in enacting and re-enacting the research tax credit and expensing provisions of the Code has been to foster this long-term intensive R&D work. Yet the fact is that many such companies derive no benefit from these provisions. As estimated by a major U.S. accounting firm, 95 percent of the Nation's biotechnology firms did not earn any profits in 2000. The existing research tax incentives thus fail to reach these companies because the incentives can be utilized only by companies that have significant profits and taxable income. This is a fundamental problem that we need to address now. This defect in existing law puts these companies, which are critically dependent on investment to sustain their research, at a disadvantage in raising capital compared with other, often larger companies that do have current income. Without current access to these tax incentives, these smaller companies whose research activities are so vital to our Nation, are hard pressed to find needed capital. The Crane-Matsui legislation fixes this shortcoming. It provides eligible long-term research companies with the opportunity to obtain a current benefit from these tax attributes through an election to claim a refundable tax credit in exchange for relinquishing the research- related losses and credits. There is growing precedent for this type of proposal among the States, several of which have enacted or are considering similar provisions to provide research companies with a current benefit from otherwise unusable tax incentives. We hope our colleagues will join us in supporting this important legislation.

Mr. CRANE

Mr. CRANE. Mr. Chairman, I want to praise President Bush for putting forth an education plan that offered children in failing schools a chance to get a better education. It is too bad that Democrats and supporters of the failing status quo were allowed to gut the legislation, H.R. 1, at the Committee level to remove any chance for failing schools to successfully improve their performance or to let parents have the option to move their children to better schools. I believe that control of education should be retained at the local level. Last year, Illinois high school students led the nation in Advanced Placement scores. With a few exceptions we have good schools in the 8th District and I don't want to force local parents, school boards, and teachers into a one-size fits all approach that might work in New York City or Atlanta but not in Barrington or Wauconda. One of the reasons I support tax relief, including eliminating the marriage tax penalty and doubling the child tax credit, is because it lets 70,000 married couples and families with 125,000 children in the 8th District of Illinois keep $162 million per year in their pockets. That is $162 million per year that families could spend in our district on education if they chose to do so. When we send a dollar to the federal government from Illinois, we only get 73 cents back. In my district, we send more than $2 to Washington and only get a dollar back. With a return like this, it is easy to see why I support letting taxpayers keep more of their hard earned money and having parents decide locally how their money should be spent on education. I believe the best way to improve education is to return dollars and decisions back home to the parents and teachers who know our children's names and their educational needs. That is why I am a cosponsor of The Dollars to the Classroom Act, a bill that directs federal elementary and secondary education funding for 31 programs directly to public school classrooms of this country. Federal education funding is at an all-time high, and H.R. 1 increases it by a huge amount, yet student achievement continues to lag. Most Republicans in Congress want to give local schools more freedom to use new models to solve old problems while maintaining high accountability standards. H.R. 1 in its current form does not come close to accomplishing this worthy goal. Former President Ronald Reagan, in a March 12, 1983 radio address to the nation on education, said, ``Better education doesn't mean a bigger Department of Education. In fact, that Department should be abolished. Instead, we must do a better job teaching the basics, insisting on discipline and results, encouraging competition and, above all, remembering that education does not begin with Washington officials or even State and local officials. It begins in the home, where it is the right and responsibility of every American.'' The legislation now before the House heads in the other direction. it continues increasing the amount of taxpayer money sent to the bureaucrats at the Department of Education while, as President Reagan said in his radio address, ``our traditions of opportunity and excellence in education have been under siege. We've witnessed the growth of a huge education bureaucracy. Parents have often been reduced to the role of outsiders.'' One concept that has strong support from parents is President Bush's proposal to improve public education by testing children in reading and math in grades three through eight once each year. Under President Bush's proposal, schools would be held accountable for either improving scores within three years or losing their federal money, which accounts for seven cents of every education dollar. The rest comes from states and localities. I voted against the amendment co-sponsored by Congressmen Peter Hoekstra and Barney Frank to remove President Bush's test requirement from the bill. The tough new testing regimen designed to identify failing public schools--an idea at the heart of President Bush's education plan--survived when the amendment failed. But the rest of the President's plan to give local schools more control to make the changes necessary to improve and to give parents the option to move their children to a better school were stripped out of the bill. For the reasons I have outlined, I decided to vote against H.R. 1. I want to praise President Bush for his leadership in proposing creative solutions to improving the education of our children. I encourage him to continue to move the federal government out of the way and to give schools more flexibility and parents more choices for their children.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I rise today and join my good friend and colleague, Bob Matsui of California, to introduce the Printed Circuit Investment Act of 2001. This simple and straightforward bill allows manufacturers of printed wiring boards and printed wiring assemblies, known as the electronic interconnect industry, to depreciate their production equipment in three years rather than the five years in current law. Printed wiring boards are those ubiquitous little green boards loaded with tiny wires and microchips that are the nerve centers of electronic items from television sets to computers to mobile phones and electronic organizers. The interconnecting industry, like so much of the electronics industry, has changed dramatically in just the last decade. This industry, which has $44 billion in annual sales, was once dominated by large companies. Now it consists overwhelmingly of small firms. The rapid pace of technological advancement today makes interconnecting manufacturing equipment obsolete in 18 to 36 months. This makes the interconnecting industry very capital intensive. In fact, capital expenditures last year totaled more than $3 billion and continue to grow. The depreciation rules found in the tax code have not kept pace with the realities of this dynamic market. The industry currently relies on tax law passed in the 1980s, that was based on 1970s era electronics technology. US competitors in Asia, however, enjoy much more favorable tax treatment as well as direct government subsidies, The Printed Circuit Investment Act of 2001 will provide necessary tax relief to the interconnect industry and the 400,000 Americans whose jobs directly rely on the success of this industry. I urge my colleagues to join Congressman Matsui and I in supporting this important legislation.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I rise in strong support of the ``Hope for Children Act of 2001.'' This important legislation continues our commitment to providing families assistance when adopting children who might otherwise be in need of a loving home. I've had many constituents tell me that the current costs of adoption can, in many cases, exceed $25,000 or even $30,000. Raising the adoption tax credit from $5,000 to $10,000 and making it permanent will go a long way toward alleviating the burden of these burdensome costs. I truly believe that there is no greater gift that a person can give than placing a child in a loving and nurturing environment. There are many young couples today looking to adopt a child, but the costs associated with adoption prevent them from this noble mission. I do not believe that this legislation creates an artificial incentive for people to adopt. They simply want to bring a child into the world and give it all of the love and affection they have to offer. The adoption tax credit just makes it easier for people to fulfill that dream. I have raised a household full of children. I've watched them grow and mature into fine individuals. I've been there through good times and bad. Nothing has brought me greater joy in my life than my children and I hope this bill will give people across America that same opportunity.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I thank my friend for yielding time to me, and I rise in support of the Comprehensive Retirement Security and Pension Reform Act of 2001. In a voluntary, employer-sponsored pension system, businesses must be given incentives to start, maintain, and expand their plans. H.R. 10 dramatically increases contribution and benefit levels available under these private plans. However, to take advantage of these increased levels, key decision-makers will have to establish a qualified retirement plan or make benefit improvements in their existing plan. Likewise, we should not create disincentives that might bar an employer from establishing a pension plan. Toward this end, the Committee on Ways and Means in this legislation has called for further study into the issue of whether our tax laws create disincentives for pension plan funding by employers who are experiencing economic hardships. Specifically, H.R. 10 would require the General Accounting Office to consider whether pension funding would be enhanced if section 172(f) of the Internal Revenue Code were modified to list payments to defined benefit plans as an item for which 10-year specified liability loss carrybacks may be available. The committee's call for this study arose out of a concern that restrictions under section 172(f) imposed by Congress in 1998 may have inadvertently undercut the goal of secure pension funding. Following the 1998 change, I am concerned that taxpayers experiencing financial losses are not able to carry back pension contributions under section 172(f). As a result, such taxpayers are subject to a higher after-tax cost of maintaining pension funding levels. This could jeopardize the employer's ability to meet future funding obligations, and act as a disincentive to making contributions beyond the minimum requirements. I look forward to the GAO report. Ultimately, I am hopeful we will consider enactment of legislation restoring pension contributions as an item eligible for a 10-year carryback under section 172(f). The GAO's findings will help us to weigh the merits of such legislation. I congratulate my colleagues, the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin), on this outstanding bill and look forward to seeing it signed into law.

Mr. CRANE

Mr. CRANE. I thank the gentlewoman for yielding me this time. Mr. Speaker, I am pleased to be able to support the bill put forward today to reduce and eventually repeal the estate tax. As many people know, I believe the estate tax is a tax that is one of the most unfair, obscene and immoral of all taxes. The estate tax, or the commonly referred to death tax since it is triggered solely by death, has outlived any worthwhile purpose and the time has come for us to put an end to it. No American, no matter his or her income, should be forced to pay 55 percent of his or her savings, business, or farm in taxes when he or she dies. Clearly, no American should have the IRS follow him or her to the funeral home. The last thing that a family grieving over the loss of a loved one should have to worry about is losing the family business or farm to the Internal Revenue Service because of an archaic law intended to raise money for wars that have long since ended. But when a person dies in this country, an outrageous tax of 37 to 55 percent kicks in on the poor soul's estate. I am pleased that the House of Representatives is taking up the issue to repeal this unfair tax so that family businesses can be passed on to children and grandchildren and family farms can continue to exist. Less than half of all the family-owned businesses survive the death of a founder and only about 5 percent survive to the third generation. Under the tax laws that we currently have, it is cheaper for someone to sell a business before dying and pay the capital gains tax than it is to pass it on to his children. This is a grave injustice that must be corrected. It has been said that only in America can one be given a certificate at birth, a license at marriage and a bill at death. The death tax is contrary to the freedom and free market principles on which this Nation was founded. We should be encouraging businesses, especially small businesses, not creating obstacles for their existence. The Republican Congress has a track record of being pro-family and pro-business. We take family businesses very seriously. When mom-and- pop shops are closing up because of an outdated tax policy, it requires leadership and determination to remedy the situation. I am pleased to be a part of this effort.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I thank my distinguished colleague, the gentleman from Illinois (Mr. Weller), for yielding me this time. Mr. Speaker, I am pleased to support the bill brought forth today reducing the marriage tax penalty and reducing taxes on families with children. This bill is the second installment on a tax relief plan put forward by President Bush to let overtaxed Americans keep their money. We are running enormous surpluses that are more likely to grow than shrink in the coming years if we do not act. President Bush has a responsible program of tax relief refunding these surpluses to the people who pay the bills. The marriage tax penalty should never have been allowed to creep into the Tax Code in the first place. It violates sound tax policy and runs counter to bedrock American traditions. It has a tremendous negative impact on the people of my district. More than 70,000 couples pay an average marriage tax penalty of $1,400 per year in the eighth district of Illinois. That is nearly $100 million per year that families could spend in our district on education if they chose to do so. This bill also doubles the per child tax credit as President Bush recommends. According to the Heritage Foundation, families in my district have nearly 125,000 children that would benefit from this increased tax credit. That is equal to $62.5 million per year that families can spend on health care, clothing, and their education. This is obviously important for reducing the tax burden on families, but it also reduces marginal tax rates for affected families. Because of the various phase-outs and other provisions in the Tax Code, a relatively low-income family with children can easily find themselves paying marginal tax rates that are higher than those paid by the richest Americans. Doubling the child tax credit eliminates this terribly unfair situation. It is urgent that we move quickly to convince taxpayers that we mean business. Consumer confidence will improve when people gain confidence that we will give them a pay hike by cutting their taxes. I am also pleased that the Committee on Ways and Means is marking up a bill today to repeal the death tax. We still have more work to do to pass the President's charitable-giving tax reform, including two proposals I have advanced for years to allow nonitemizers to deduct their charitable contributions and to allow charitable IRA rollovers; and we must continue to work to pass fundamental pension reform.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I am pleased to join with Representative Neal and Ms. Johnson, Ms. Dunn, and Mr. Johnson of the Committee on Ways and Means in introducing the ``Cellular Telecommunications Depreciation Clarification Act.'' This legislation will amend the Internal Revenue Code to clarify that cellular telecommunications equipment is ``qualified technological equipment'' as defined in section 168(i)(2). When an asset used in a trade or business or for the production of income has a useful life that extends beyond the taxable year, the costs of acquiring or producing the asset generally must be capitalized and recovered through depreciation or amortization deductions over the expected useful life of the property. The cost of most tangible depreciable property placed in service after 1986 is recovered on an accelerated basis using the modified accelerated cost recovery system, or MACRS. Under MACRS, assets are grouped into classes of personal property and real property, and each class is assigned a recovery period and depreciation method. For MACRS property, the class lives and recovery periods for various assets are prescribed by a table published by the Internal Revenue Service found in Rev. Proc. 87-56, 1987-2 C.B. 674. This table lists various Asset Classes, along with their respective class lives and recovery periods. Rev. Proc. 87-56 does not specifically address the treatment of cellular assets, but rather addresses assets used in traditional wireline telephone communications. These wireline class lives were created in 1977 and have remained basically unchanged since that time. In 1986, Congress added a category for computer-based telephone switching equipment, but there are no asset classes specifically for cellular communications equipment in Rev. Proc. 87-56. This is largely due to the fact that the commercial cellular industry was in its infancy in 1986 and 1987. Since the cellular industry was not specifically addressed in Rev. Proc. 87-56, the cellular industry has no clear, definitive guidance regarding the class lives and recovery periods of cellular assets. Therefore, the Internal Revenue Service and cellular companies have been left to resolve depreciation treatment on an ad hoc basis for these assets as the industy has rapidly progressed. The result is that both cellular telecommunications companies and the Internal Revenue Service are expending significant resources in auditing and settling disputes involving the depreciation of cellular telecommunications equipment. This process is obviously costly and inefficient for taxpayers and the Service, but it also leaves affected companies with a great deal of uncertainty as to the tax treatment, and therefore expected after-tax return, they can expect on their The Treasury Department's ``Report to the Congress on Depreciation Recovery Periods and Methods'' tacitly acknowledges this point. In its discussion about how to treat assets used in newly-emerging industries, such as the cellular telecommunications industry, the report states: [t]he IRS normally will attempt to identify those characteristics of the new activity that most nearly match the characteristics of existing asset classes. However, this practice may eventually become questionable in a system where asset classes are seldom, if ever, reviewed and revised. The cellular phone industry, which did not exist when the current asset classes were defined, is a case in point. This industry's assets differ in many respects from those used by wired telephone service, and may not fit well into the existing definitions for telephony-related classes. Rather than force cellular telecommunications equipment into wireline telephony ``transmission'' or ``distribution'' classes, a better solution would clarify that cellular telecommunications equipment is ``qualified technological equipment.'' The Internal Revenue Code currently defines qualified technological equipment as any computer or peripheral equipment and any high technology telephone station equipment installed on a customer's premises. The cellular telecommunications industry has been one of the fastest growing industries in the United States since the mid-1980s, as evidenced by the following statistics: The domestic subscriber population has grown from less than 350,000 in 1985 to 86 million by 1999, and is projected to grow to 175 million by 2007. The industry directly provided 4,334 jobs in 1986, which grew to over 155,000 directly provided jobs and one million indirectly created jobs by 1999. Capital expenditures on cellular assets exceeded $15 billion in 1999. The rapid technological progress exhibited by the cellular telecommunications industry illustrates how the tax code needs to be flexible to adapt to future technologies and technological changes. Continued rapid advancement is on the horizon, including wireless fax, high-speed data, video capability, and a multitude of wireless Internet services. It is impossible in 2001 to anticipate properly the new equipment that will support this growth even two years hence. I urge my colleagues to support this important clarification to the tax law.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing the International Competitiveness Act, along with my colleagues Congresswoman Jennifer Dunn, Congressman Adam Smith, and Congressman Richard Hastings. This legislation would eliminate an irrational provision in our tax code that reduces the amount of foreign capital flowing into the United States, and redirects some of the capital that flows in away from U.S.- based mutual funds toward foreign-based mutual funds. Under present law, most kinds of interest income and short-term capital gains received directly by a foreign investor or received through a foreign mutual fund are not subject to the 30 percent withholding tax on investment income. However, interest income and short-term capital gains earned by a U.S. mutual fund on its holdings are recharacterized as dividend income when distributed to a foreign investor and is therefore subject to the withholding tax. Mutual funds are very popular tools for investors. Many foreign investors, like U.S. investors, prefer to rely on professional managers of mutual funds in choosing an appropriate portfolio, rather than having to do the research themselves. However, a foreign investor looking to invest in the U.S. currently has two options. The first option is to pay a steep withholding tax on all income and short-term capital gains earnings from a U.S. mutual fund, or invest through a foreign mutual fund. Few foreign investors are willing to bear a 30 percent withholding tax, and so they either invest through the foreign mutual fund or forego investing in the United States. Either way, the real loser is the United States. As Chairman of the Ways and Means Subcommittee on International Trade, I also look at this issue from a trade policy perspective lens. And this lends show me that we have in this tax provision an artificial barrier to the free flow of trade in the form of financial services and to the free flow of capital. In this respect the current income tax clearly gives foreign mutual funds as competitive advantage with no compensatory advantage gained by any American interest whatsoever. Mr. Speaker, I believe this legislation makes good sense as tax policy, trade policy, and economic policy, and I urge my colleagues to lend it their support.

Mr. CRANE

Mr. CRANE. Mr. Chairman, the fiscal year 2002 budget resolution-- Securing America's Future, A Budget that Works for Every Family--is a budget that is realistic and reasonable. While I personally would like to see a slower increase in the overall growth of spending and supported the Republican Study Group's amendment to do so, this budget does attempt to hold spending increases to roughly the rate of inflation. Republicans have already proven that we can balance the budget and pay off the federal debt. With this budget we are refusing to squander the $5.6 trillion surplus projected over the next 10 years. The Republican budget has the right balance of priorities: cutting taxes, paying off debt, strengthening Social Security, modernizing Medicare, and bolstering our national defense. The Republican plan will pay off $2.3 trillion of the national debt, the maximum that can be repaid without penalty. The Republican plan will also provide needed tax relief for working families by cutting tax rates, eliminating the marriage tax penalty, doubling the child tax credit, and repealing the death tax. Looking back a decade ago, it seems impossible that the government could ever dig itself out of its financial hole. For too long, uncontrollable spending and reckless ``borrowing'' reigned in Washington. Now, thanks to a fiscally-responsible Republican Congress, we have a budget that is realistic and reasonable, holding the overall growth of spending to roughly inflation, while increasing spending on important priorities that will ensure a more secure future for every American family. This budget reins in government spending, limiting it to the about same rate of growth as the average family's budget. It reduces federal taxes. It pays down the debt. And it takes care of important priorities like Social Security, Medicare, and national defense.

Mr. CRANE

Mr. CRANE. Mr. Speaker, I rise in strong support of the Economic Growth and Tax Relief Act of 2001. When Governor Bush released his tax relief proposal during the campaign with tax reductions as its centerpiece, I knew we had the right program at the right time. I congratulate the gentleman from California (Mr. Thomas) for moving the rate reductions so quickly through the Committee on Ways and Means. I urge my colleagues to support it, and I urge the Senate to pass the same measure at the earliest possible occasion. I know many of our friends on the other side of the aisle are concerned that we have moved this bill so quickly. Some, like my friend the gentleman from New York (Mr. Rangel), have said we should wait until we have a budget resolution. I respectfully disagree. There is no question the surplus projections will permit the size of tax cut before us without endangering Social Security or Medicare and without endangering our other priorities, including debt reduction. The only information a budget resolution would provide us is how much additional tax relief the Congress can provide this year. I also believe it is imperative that we pass this bill without delay. We must act quickly to build credibility with the American people that this Congress will make good on the President's promise to cut taxes. We have experienced a high degree of gridlock in recent years. The American people are waiting to see if President Bush can work with the Congress to enact important legislation. Nowhere is this more true than with respect to tax relief. We have talked about major tax relief for many years, with little to show for it because of President Clinton's opposition. The American people, naturally enough, are skeptical that we will really give them the tax relief that President Bush has promised. With our economy struggling, timely tax relief is exactly the right complement to the interest rate cuts made by the Federal Reserve in recent weeks. But the real effect of these cuts is not that it puts cash in people's pockets today but that it promises to reduce their taxes tomorrow. It is the expectation of lower tax rates that alters decisions to invest and work today that increases economic activity today and tomorrow. Incentive effects like these, which are the real engine of a tax policy that strengthens the economy, are forward looking. But for these incentive effects to take hold, taxpayers must have some confidence that the tax cuts will be enacted. And that is why we must act so quickly, to build confidence in the minds of the taxpayers that we will enact the promised tax relief, so that they can build these lower tax rates into their plans, so that the economy will strengthen more rapidly. I urge my colleagues to support the bill.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing, along with Representatives Matsui, English, Lewis, Becerra, Rangel, Weller, Sam Johnson, Collins, Ramstad, McNulty, Hulshof, Shaw, and Nussle legislation that would repeal a number of limitations contained in the consolidated return provisions of the Internal Revenue Code. These limitations, originally enacted in 1976, are a relic from a time when the financial markets were highly regulated and financial institutions were taxed very differently than they are today. The limitations serve no good purpose and yet they complicate the tax code for both the taxpayer and the Internal Revenue Service and they place affiliated corporations that include life insurance companies at a competitive disadvantage relative to other corporate groups. I had hoped we could have addressed this problem long ago, and indeed, much of the bill I am introducing today was included in the 1999 tax bill vetoed by President Clinton. It is my hope that we can focus our attention on this problem again this year, either in the context of a tax simplification effort, an income tax system maintenance effort, or as part of tax relief for business. Background The consolidated return provisions in the tax laws were enacted so that the members of an affiliated group of corporations could file a single tax return. The right to file a ``consolidated'' return is available regardless of the nature or variety of the businesses conducted by the affiliated corporations. The purpose behind consolidated returns is simply to tax a complete business entity and not its component parts individually. It should not matter whether an enterprise's businesses are operated as divisions within one corporation or as subsidiary corporations with a common parent company. If the group is one economic entity, it should be taxed as a single entity and file its return accordingly. Corporate groups that include life insurance companies, however, are denied the ability to file a single consolidated return until they have been affiliated for at least five years. Even after groups with life insurance companies are permitted to file on a consolidated basis, they are subject to two additional limitations that do not apply to any other type of group. First, non-life insurance companies must be members of an affiliated group for five years before their losses may be used to offset life insurance company income. Second, non-life insurance affiliate losses (including current year losses and any carryover losses) that may offset life insurance company taxable income are limited to the lesser of 35 percent of life insurance company taxable income or 35 percent of the non-life insurance company's losses. The historical argument against allowing life insurance companies to file consolidated returns with other, non-life companies was that life insurance companies were not taxed on the same tax base as non-life companies. This argument is unfounded today. Prior to 1958, life insurance companies were taxed under special formulas that did not take their underwriting income or loss into account. Legislation enacted in 1959 took a major step toward taxing life insurance companies on both their investment and underwriting income. In fact, at the same time the present rules were under consideration in 1976, the Treasury Department took the position that full consolidation was consistent with sound tax policy. In 1984 and 1986, Congress reviewed the taxation of life insurance companies and made a number of substantial changes that have resulted in these companies paying tax at regular income tax rates on their total income. Today, life insurance companies are fully taxed on their income just like other corporations. There is no reason to treat them differently today, especially with respect to consolidation. The Problem The current restrictions place affiliated groups of corporations that include life insurance companies at a competitive disadvantage compared with other corporate groups and also create substantial administrative complexities for taxpayers and for the Internal Revenue Service. The five-year limitations, in particular, create irrational disparities between groups containing life insurance companies and other consolidated groups. For example: First, when a consolidated group acquires another consolidated group that includes a life insurance company member, the acquired group is deconsolidated. This means that, unlike other groups, intercompany gains in the acquired group would be recognized as current income while losses would continue to be deferred. Second, for the five year period following a consolidated group's acquisition of a life insurance company, gains on any intercompany transactions are subject to current tax and cannot be deferred. However, gains of other groups that are allowed to file a consolidated return are allowed to be deferred. Third, section 355 spin-off transactions raise questions concerning the five year ineligibility period for the spun-off company even if the group had existed and been filing a consolidated return for many years. The ability to file consolidated returns is particularly important for affiliated groups containing life insurance companies. Many corporations in other industries can, in effect, consolidate the returns of affiliates by establishing divisions within one corporation, rather than operating as separate corporations. Unfortunately, state law and other, non-tax business considerations generally require a life insurance company to conduct its non-life business through subsidiaries. The inability to file consolidated returns thus operates as an economic barrier inhibiting the expansion of life insurance companies into related areas. Solution There are no sound reasons to deny affiliated groups of corporations including life insurance companies the same unrestricted ability to file consolidated returns that is available to other financial intermediaries (and corporations in general). Allowing the members of an affiliated group of corporations to file a consolidated return prevents the business enterprise's structure, i.e., multiple legal entities, from obscuring the fact that the true gain or loss of the business enterprise is the aggregate of each of the members of the affiliated group. The limitations contained in present law are so clearly without policy justification that they should be repealed. The legislation we are introducing today will repeal the two five- year limitations for taxable years beginning after this year. For revenue reasons, the legislation will phase out the 35 percent limitation over seven years. This bill should be part of any simplification or tax relief legislation that may be enacted.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing three pieces of legislation to refine the tax proposal put forward by President Bush. Let me state at the outset that I fully support President Bush's tax proposal as he laid it out. I think it is appropriate for the times and well-designed. Even so, there is no legislation or proposal that cannot be improved upon. And so I offer these three bills in this spirit and in the belief that the President in all likelihood would and should support them. This bill takes as its starting point the income tax rate reductions proposed by President Bush, phased-in over ten years. I have included these rate reductions to provide the context for my proposed refinement, which is to repeal the phase-down of itemized deductions and the phase-out of personal exemptions contained in the current code. These provisions are sometimes known by the names of Pease and PEP, the former named for its originator. Congressman Don Pease, a distinguished Member of the Ways and Means Committee during the 1986 Tax Reform Act, and the latter an acronym for personal exemption phasesout. The income tax contains a number of unfortunate provisions that phase-out various credits, exemptions, and deductions. For example, the amount an individual can take as itemized deductions falls for married taxpayers with adjusted gross income (AGI) over a $132,950 threshold. These taxpayers see a reduction in their total itemized deductions at the rate of 3 percent for every $1,000 earned over the threshold. The proportion of a taxpayer's itemized deductions that can be lost due to this provision is capped at 80 percent of their otherwise allowable deductions. Similarly, for 2001 a taxpayer's allowable personal exemptions are reduced by 2 percent for every $2,500 over and above $199,450 in AGI. This provision raises the marginal tax rate by .8 percent for affected taxpayers. The itemized deduction phase-down and the personal exemption phase- out exist for only one reason--to increase taxes on the affected taxpayers. Even more troubling, they do so by significantly increasing tax complexity. Even worse, they raise taxes by raising marginal rates and they do so, not through an explicitly higher statutory tax rate, but through a hidden device. The reduction of marginal tax rates is a hallmark of the Bush tax proposal. High marginal tax rates discourage people form investing, saving, creating new businesses, and so forth. Reducing these rates is therefore one of the effective things we can do to ensure a stronger economy in the future. The bill I am introducing today eliminates two hidden marginal tax rate increases and is, therefore, completely consistent with the strategy of the Bush tax rate reductions. The bill I am introducing today is also fully consistent with sound tax policy because it makes the tax code more transparent. Taxpayers ought to be able to determine with little effort the tax consequences of their economic decisions. Hidden marginal rate increases are therefore inconsistent with sound tax policy and ought to be eliminated. Further, everyone involved in tax policy agrees that the tax code is too complex, too costly to comply with, and too costly to administer. This bill certainly does not sweep away all the cobwebs of complexity, but it will make the code simpler for those affected by these two provisions.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing three pieces of legislation to refine the tax proposal put forward by President Bush. Let me state at the outset that I fully support President Bush's tax proposal as he laid it out. I think it is appropriate for the times and well-designed. Even so, there is no legislation or proposal that cannot be improved upon. And so I offer these three bills in this spirit and in the belief that the President in all likelihood would and should support them. The bill I am introducing takes as its starting point the income tax rate reductions proposed by President Bush, phased-in over ten years. I have included these rate reductions to provide the context for my proposed refinement, which is to reduce the top corporate income tax rate to 33 percent to be consistent with the top individual income tax rate in the Bush proposal of 33 percent. The driving force of the Bush tax program is the importance of reducing tax rates. This is manifested in the reduction in the statutory tax rates, but also in such provisions as the doubling of the per child credit, the effect of which is to soften the high effective tax rates many lower-income taxpayers face due to the phase-out of the Earned Income Tax Credit (EITC). When we reduce these ``marginal'' tax rates, we reduce the most important disincentives our tax system imposes on work effort, saving, and investment. Think of it! Just as an individual or a family starts to climb the economic ladder they face a marginal tax rate of almost 50 percent thanks to the combination of the federal individual income tax, the phase-out of the EITC, the payroll tax, and any state income taxes imposed. When it comes to tax policy, reducing marginal tax rates is the best insurance policy we can buy for ensuring a strong economy in the future. By reducing tax rates as he has proposed, the President would reduce disincentives for individuals, partnerships, sole proprietorships, and even for a special brand of economic organization called an S Corporation. However, his program does not provide similar relief to the more common corporate form, known as the C corporation. The bill I am introducing today extends the principle of reducing tax rates to the top corporate income tax rate faced by C corporations, which currently stands at 35 percent. My bill would reduce this tax rate to 33 percent, and in so doing would provide tax relief to almost all corporate taxpayers. Reducing the corporate income tax rate to 33 percent would reduce the disincentive facing corporations to invest in new plants and equipment. Thus, the level of investment would increase, helping America out of its current economic slowdown and putting us on a path of stronger growth in the future. The extraordinary growth we experienced prior to the current slowdown was driven largely by productivity growth that is largely attributable to increased capital formation. Reducing the corporate income tax rate would encourage a resumption of this capital formation and, in the process, would increase the competitiveness of America's corporations and America's workers. As the corporate community searches for tax relief that is broad in application, defensible in principle, and conducive to prosperity at home and greater competitiveness abroad, they can hardly do better than to reduce the corporate income tax rate as I have proposed in this bill. That is not to say that other changes would not also be beneficial. For example, repeal of the corporate Alternative Minimum Tax, reform of our international tax laws, and a thorough modernization of our system of capital cost recovery system would each be highly beneficial and worthy of consideration. However, in the context and an era of individual tax rate reduction, I believe a simple reduction in the corporate income tax rate has the greatest chance for success at this time. And so I urge my colleagues to support this legislation, modest though it is, to permit America's corporations and America's shareholders to share in tax relief while ensuring our companies remain strong and competitive.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing three pieces of legislation to refine the tax proposal put forward by President Bush. Let me state at the outset that I fully support President Bush's tax proposal as he laid it out. I think it is appropriate for the times and well-designed. Even so, there is no legislation or proposal that cannot be improved upon. And so I offer these three bills in this spirit and in the belief that the President in all likelihood would and should support them. The first bill I am introducing takes as its starting point the income tax rate reductions proposed by President Bush, phased in over ten years. I have included these rate reductions to provide the context for my proposed refinement, which is to reduce the tax rates of the individual Alternative Minimum Tax (AMT) from 26 and 28 percent to 25 percent, consistent with the reduction of an individual income tax rate under the Bush proposal from 28 to 25 percent. The individual (AMT) is a complex and unfortunate aspect of our tax code. Most taxpayers are blissfully unaware that they are, in fact, subject to two federal income taxes--the regular income tax and the AMT--and that their annual tax liability is the greater of the two produced by these two systems. The modern AMT was intended to ensure that certain upper-income taxpayers paid a significant amount of tax. It was to achieve this objective by denying to these taxpayers certain deductions and exemptions available under the regular income tax. For example, in addition to denying taxpayers any of a set of ``preferences'', such esoteric items as excess intangible drilling costs and a deduction for pollution control facilities, the AMT denies taxpayers the personal exemptions allowed under the regular income tax, and denies them a deduction for State and local taxes paid. For a variety of reasons, the number of taxpayers, especially middle- income families, subject to the individual AMT has been soaring in recent years, and this trend is expected to continue. Ideally, the AMT should be repealed outright. The abuses the AMT was established to address have long since been eliminated from the income tax. Until full repeal becomes timely, however, we must at least ensure that matters do not worsen. In the context of the Bush income tax rate reductions, the AMT poses additional problems because these rate reductions do not extend to the AMT rate. This means that many taxpayers currently subject to the AMT suffer the additional wrong of being excluded from any tax relief under the Bush program. This is patently unfair as many Members on both sides of the aisle have pointed out. It also means that many more taxpayers will see far less tax relief than is intended. This would occur for those taxpayers whose current regular income tax liability barely exceeds their AMT liability. Once the Bush rate reductions are put into effect, these taxpayers' regular income tax liability will drop below their AMT liability. They will still receive some tax relief, to be sure, but far less than they expected and far less than was anticipated when the Bush proposal was developed. The new income tax rate structure suggested by President Bush starts at 10 percent, and then rises to 15 percent, 25 percent, and finally 33 percent. The current individual AMT has two rates of 26 and 28 percent. My bill reduces the AMT rates to a single rate at 25 percent to be more consistent with the President's proposed rates. Thus, my proposal would reduce marginal tax rates for AMT filers so they, too, have a better incentive to work, save, and invest. Just as important, however, under my bill current AMT filers and near AMT filers would join with all other taxpayers in enjoying significant tax relief. This legislation is sound tax policy. By any measure it increases fairness in the tax code. And it deserves the support of this Congress.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing legislation entitled the ``IRA Charitable Rollover Incentive Act of 2001''. This is one of three bills I am introducing today to correct certain peculiarities in the tax code that discourage charitable giving. I introduced a similar bill in the 106th Congress, which garnered 125 co-sponsors. The essence of this bill was included in the tax bill vetoed by President Clinton in 1999 and was included again in the pension reform bill that passed last year. This legislation would allow individuals age 59\1/2\ or older to contribute amounts currently held in Individual Retirement Accounts (IRAs) directly to qualified charities without having to first recognize the income for tax purposes and then take a charitable deduction. This legislation will give individuals more freedom to allocate their resources as they see fit while providing badly needed resources to churches, colleges and universities, and other social organizations. All IRA withdrawals are generally taxed as ordinary income. Currently, individuals may withdraw funds from an IRA without incurring an early withdrawal penalty once they reach age 59\1/2\. Under so- called minimum distribution rules, an individual must begin making withdrawals by April Ist following the year he or she reaches age 70\1/ 2\. The IRA was intended to encourage individuals to save for retirement, but due to the strong economy in recent years and the general increase in asset values, many individuals have more than sufficient funds to retire comfortably. Thus it is a common practice for retirees to transfer some of their wealth to charities and, in some cases, that wealth is held in an IRA. If our tax code were not so laden with peculiarities and oddities, this legislation would not be needed. A taxpayer could readily recognize the income for tax purposes and take a charitable deduction. Unfortunately, in many cases under current law such a simple arrangement results in a loss of some portion of the charitable deduction. For example, charitable contributions are subject to the itemized deduction ``haircut'' under which certain taxpayers lose a portion of their charitable deduction. I have introduced separate legislation to address this problem. Another problem results when a donation exceeds 50 percent of the taxpayer's adjusted gross income--30 percent if the gift is to a private foundation. In this case the taxpayer cannot take the full deduction immediately; it must be spread over a period of years. Given the time value of money, delaying the timing of the deduction means the taxpayer call only effectively deduct a fraction of the value of the total gift. It is impossible to know how much capital is trapped by the current rollover rules and thus unavailable to our nation's charities. According to one report, there is over $1 trillion held in IRA accounts. If only I percent of this would be donated to charity but for the tax problems associated with charitable rollovers, this represents a $10 billion loss of resources to these organizations that do so much good. This is sound legislation that has consistently received strong bi- partisan support. I hope we can finally see its enactment in 2001. Charity benefits both the giver and the receiver in like proportions. The act of giving elevates the heart of the giver. The act of receiving elevates the condition of the recipient. Charity is thus a blessed act that should suffer no discouragement from something so mean as the tax code.

Mr. CRANE

Mr. CRANE. Mr. Speaker, today I am introducing legislation to help our charitable organizations and promote fairness in our tax code by encouraging charitable giving. This is one of three bills I am introducing today to correct certain peculiarities in the tax code that discourage charitable giving. Many taxpayers today contribute to charitable organizations out of the goodness of their hearts and in the expectation that they will not be subject to federal income tax on their gifts. However, in some cases taxpayers suffer a reduction in the amount of their charitable deductions. For example, under current law itemizing taxpayers with incomes above a certain threshold ($128,950 this year for a married couple filing jointly) suffer a phase-down in the total amount of charitable contributions they can take. The phase-down is at the rate of 3 percent of their itemized deductions for every $1,000 over the threshold, up to a total in lost deductions of 80 percent. Thus, a taxpayer making a $10,000 contribution and subject to this phase-down could lose up to $8,000 in charitable deduction. This is part of the itemized deduction ``haircut'' administered as part of the 1986 Tax Reform Act. Obviously, most individuals give to charity because the act of charity is a blessing for both the giver and the receiver. It is hard to imagine the individual who gives for the purpose of getting a tax deduction. Nevertheless, taxes can affect the amount an individual is willing to give. When the tax burden overall increases, individuals have less discretionary income and thus less income to give to charity. And when the effective price of charitable giving rises, which is exactly the consequence of the phase-down in itemized deductions, there is a disincentive to give. The legislation I am introducing today is very simple. It excludes from the itemized deduction ``haircut'' all qualified charitable contributions. Qualified medical expenses, certain investment interest expense, and deductions for casualty losses already receive this treatment. Certainly charitable contributions should be treated no worse. This legislation is good social policy because it provides additional, private resources to charitable organizations. It also helps to develop the strength of our social fabric by encouraging more individuals to become involved in their communities through charitable organizations. In many instances, individuals first become involved through financial contributions before applying their personal time, energy, and creativity. This legislation is also good economic policy because charitable organizations help to build up those on the paths to success while acting as an effective safety net to those in trouble or need. As welfare reform has taught us abundantly, given the right incentives and the proper assistance, almost every individual can evolve from being a ward of society to being a productive member. And this legislation is sound tax policy. Whether we have an income tax or a consumption tax, one principle remains clear and unchanging. No one should be taxed on property given to someone else. This legislation is an important step toward increasing the resources of our charitable organizations. I hope my colleagues will join me as co-sponsors. I hope President Bush will endorse this legislation as part of his faith-based program. And I hope it can find its way to his desk this year for his signature. Charity benefits both the giver and the receiver in like proportions. The act of giving elevates the heart of the giver. The act of receiving elevates the condition of the recipient. Charity is thus a blessed act that should suffer no discouragement from something so mean as the tax code.