Wendell Ford

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. Mr. President, today I introduce the Fort Campbell Tax Fairness Act. This legislation is designed to restore some sense of balance and maintain some level of fairness in the taxation of individuals who work at the Fort Campbell military installation in Kentucky and Tennessee. My colleagues may recall that earlier this month, an unprecedented provision was included in the Defense Authorization bill which granted special tax status for a single site--Fort Campbell--to Tennessee residents who work on the Kentucky side of the border. Even worse, the provision in the Defense bill preempted State tax law. It preempted the ability of my State to administer its own tax laws in a fair manner, and in a way in which the State determined was fairest and best. The provision adopted in the Defense bill exempts Tennessee residents who work in Kentucky at Fort Campbell from paying Kentucky state income taxes. This special exemption was snuck into the House version of the bill, and then maintained in the conference committee. It is extremely unfair. Mr. President, the Congress has no business dictating to States how they should administer their own tax laws. This is a matter for the States to determine by themselves. The basic principle of taxation is that income is taxed at the location where it is produced. There are exceptions to this rule, but generally they are worked out among and between States themselves. The only other exceptions of which I am aware relate to federal employees with a unique interstate aspect to their jobs, like members of the military or Members of Congress, or other employees with a special interstate job situation, like Amtrak employees or those involved in constructing interstate highways. I have never heard of a special State tax exemption for private sector employees at a single site. That is, I had never heard of it until I saw this year's Defense Authorization bill. But Mr. President, the provision in the Defense Authorization bill is a one way street. It preempts Kentucky state law for Tennessee residents who would otherwise be taxed within Kentucky's borders. But there is no comparable preemption of Tennessee state law for Kentucky residents who are taxed at Fort Campbell within Tennessee's borders. As a matter of basic fairness, if Tennessee residents are to be granted a special tax exemption while on the Kentucky side of Fort Campbell, Kentucky residents should be given equal consideration while on the Tennessee side of Fort Campbell. In addition, it is currently the case that unemployment compensation for any Tennessee residents who work on the Kentucky side of Fort Campbell are paid out of Kentucky tax dollars. This should no longer be the case now that Tennessee workers are being given a special tax status and are exempt from Kentucky laws. My legislation attempts to correct these new inequities created by the passage of this year's Defense Authorization bill. First, it would direct that Tennessee sales taxes imposed on the Tennessee side of Fort Campbell apply only to Tennessee residents. The distinguished Senator from Tennessee, in debate on the Defense Authorization bill, asserted that no such taxes are currently collected at Fort Campbell. Therefore, he should have no objection to this provision whatsoever. However, I have been informed that Tennessee sales taxes are in fact collected from private business operations within the Fort Campbell boundaries. So this provision is badly needed as a matter of fairness. Second, the legislation clearly states that the Commonwealth of Kentucky has absolutely no obligation to continue paying the unemployment benefits of Tennessee residents out of Kentucky tax dollars. Since Tennessee residents have been given this special tax status and preemption of State laws, Kentucky should no longer have any liabilities should these workers become unemployed. Those claims should be the responsibility of the State of Tennessee. Mr. President, I have always attempted to fiercely defend the interests of my State during my 24 years in the Senate. The special tax preemption provision tucked into the Defense Authorization bill was one of the most unfair provisions imaginable, singling out my State for unfair treatment. I realize the time is short in the current session, and the odds of enacting this legislation are not great in the days ahead. However, I am introducing this bill to go on the Record in advocating fairness for my State. It is my hope that when the Congress reconvenes vigorously pursue efforts to pass this legislation and correct an unfairness which has been imposed upon my State.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. Mr. President, I move to reconsider the vote.

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from South Carolina (Mr. Hollings) are necessarily absent.

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) is necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) is necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn), is necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from New York (Mr. Moynihan) are necessarily absent.

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from New York (Mr. Moynihan), are necessarily absent.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from New York (Mr. Moynihan) are necessarily absent. I further announce that, if present and voting, the Senator from New York (Mr. Moynihan) would vote ``aye.''

Mr. FORD

Mr. FORD. I announce that the Senator from California (Mrs. Boxer), the Senator from Illinois (Mr. Durbin), the Senator from Ohio (Mr. Glenn), the Senator from South Carolina (Mr. Hollings), and the Senator from New York (Mr. Moynihan) are necessarily absent. I further announce that, if present and voting, the Senator from New York (Mr. Moynihan) would vote ``aye.''

Mr. FORD

Mr. FORD. Mr. President, I yield myself 1 minute from the time remaining of the Senator from Arkansas, Mr. Bumpers. Mr. President, we have talked about catalog sales and the loss of funds. Yesterday, on the DOD authorization bill, we usurped States in their ability to tax, and now we are turning that around. Yesterday, we told the States that we are going to usurp a tax if we don't think it is fair locally or statewide. The residents of Tennessee who work in Kentucky at a Federal installation, who have been paying taxes--and the States have worked it out--were excluded yesterday. And then my residents in Kentucky are paying the Tennessee sales tax, and they were not exempt because Tennessee goes on a high sales tax and no income tax. So, yesterday we said to State and local governments that you can't tax. There are 240 installations around the country. I think you will rue the day that you usurped the Buck Act and you said to the States that we are Big Brother and we will tell you how to tax. Now we have a catalog question before us that says we ought to get the tax. So we have to be very careful what we are doing. Yesterday was a bad day, not necessarily for Kentucky, but for others. Oregon had the same problem with Washington. They passed a law and worked it out and everything is fine. That is what we ought to do between States. This was not a Federal tax. I yield the floor.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn), the Senator from South Carolina (Mr. Hollings), and the Senator from Illinois (Ms. Moseley-Braun) are necessarily absent.

Mr. FORD

Mr. FORD. I suggest the absence of a quorum, and it be charged equally to both sides.

Mr. FORD. Well, I understand why the Senator from Tennessee does not want to debate this; because he is wrong. I like him. He is a nice fellow, friendly. Oh, you could not ask anybody to be any friendlier than the Senator from Tennessee. And I have always enjoyed his acting. In fact, I have seen some reruns. I have enjoyed watching those a second and third time. I look for him. But that does not mean he is wrong or right all the time. But in this case he is wrong. And I wish this would not happen because, I say to my colleagues, when we start telling the States how to tax, when we take that authority away from the States, then we have gone a long way in disrupting what the Founding Fathers said this country should be made up of. So I will not leave this Senate without having made this statement. I understand where the votes are. I understand what is going to happen to this bill. But at some point, I believe, sincerely, that it will be in court. And the constitutionality of this and the preemption of States' ability--not a Federal tax but a State tax--they give a preferred class of taxpayer here. You have two people sitting across the table, having lunch, and both are working for the same company; both do the same job; both make the same money; but the fellow from Tennessee pays no tax; the fellow from Kentucky pays it on a military installation. There are 240 of these, at least, out there. And as I said, Mississippi is going to be one of the most vulnerable States. Mr. President, I yield the remainder of my time to Senator Levin for his use, and I yield the floor.

Mr. FORD. The Senator says that this only applies to two States really, or very few. But the precedent here is the dangerous thing. We start under the Buck Act, and I am sure the Senator, being a legal expert, is fully familiar with the Buck Act and what it says about the State's ability to tax its own. Now, if he is not familiar with that, I can help him a little bit in trying to explain the Buck Act. But the two States were in the process of negotiating when they were informed, or at least the Tennessee side was informed, that it would be taken care of here. And it was being taken care of, so the negotiations were called off. I remember when Tennessee called a special session to prevent Kentucky contractors from doing business in Tennessee. This is a long- term thing. It is just not the first one. I go back into the early 1960s when this occurred. So, Mr. President, I understand what the Senator is trying to do, but I wonder how he voted on the unfunded mandates bill. You are eliminating $4 million a year--$4 million a year--from Kentucky's income. Are Kentuckians excused from the high Tennessee sales tax? Why not? Why wasn't that put in this bill? If you are going to be exempt from our income tax, why don't you exempt Kentuckians, who are identical employees with an identical employer? What about the restaurants and the canteens and the cleaners and such that are going to be exempt under this, the private sector? This is a broad, broad piece of legislation. Broad, broad. Let me read the Buck Act. Of course, we have the authority, I guess, to do that, but is it right? There are 240 known installations similar to this situation. And Mississippi is one of the most vulnerable States in the country as it relates to this type of legislation. The Buck Act says: No person shall be relieved from his liability for any income tax levied by any State, or by any duly constitutional taxing authority therein, having jurisdiction to levy such a tax by reason of his residing within a Federal area or receiving income from transactions occurring or services performed in such area. And such State or taxing authority shall have full jurisdiction and power to levy and collect such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area. That is the Buck Act. My colleague lays out exempting military employees. When I served in World War II, we got exempted then. You only paid taxes in the State where you resided. That is nothing new. That is 55 years old, I guess-- something near that. It has been here for 55 years. He talked about Amtrak employees. They are on a train, they are going across the country. Would they pay tax in every State? Of course not. That is common sense, to let them pay tax in the State where they reside. We have a lot of employees on the Interstate Highway System. They live in one State and they work in several States, as they construct interstate highways through various States. They are exempted. That is common sense. But, to take an exemption and cost a State $4 million--what kind of surplus does Tennessee have? He refers to the surplus of Kentucky. What kind of surplus does Tennessee have? That has nothing to do with the principle and the character of this provision under the armed services defense authorization bill. The Senator can argue all he wants to, but when he talks about in- State and out-of-State college, that individual renounced his Kentucky citizenship and moved to Tennessee. You enjoyed him moving over there. You probably welcomed him with open arms. But then you come in here and say he cannot get exemption in another State? Why didn't he go to Tennessee, if he likes it so much? We have a few universities there that are pretty good. They get State exemption, residential exemption. He just happened to want to go to a better school. So, you fuss about that. They moved to Tennessee. Anybody else from any other State would not be exempted. Tennessee would not exempt a Kentuckian residing in the State of Kentucky to go to a Tennessee school. That seems to me a pretty thin reason for having this section of the armed services bill. Mr. President, I go back to the point--I have heard many, many Senators in this body talk about States rights. There is a lot of rhetoric here. There is a difference between talk and action--talk and action. The talk is States rights. The action is taking it away. This bill is going to pass. There is no question about that. I have no illusions. I have counted votes around here longer than the Senator from Tennessee, and I understand what the vote will be. But you have something in the legislation that is not right, that is not fair, that the States were in the process of trying to work out and to negotiate. Then the word comes from Big Brother: ``Don't you worry about it, we'll take care of it. Big Brother is going to preempt the States. Big Brother is going to take care of a few residents in this legislation.'' There are other States that have already settled. The Senator from Tennessee has the letter setting it out and objecting to what he is trying to do here because they worked it out as a State. You preempt the States. What would happen if we were preempting Tennessee? Oh, it would be a bear in here. There would be growling and fighting and fuming and fussing over preempting Kentuckians in Tennessee. I hope my colleague from Kentucky, Senator McConnell, will offer an amendment or something next year so Kentuckians who are in the same position will not have to pay the outrageous Tennessee sales tax. Just have a drivers license, show it, so we can be exempt. Mr. President, I reserve the remainder of my time and yield the floor.

Mr. FORD. I am delighted that the distinguished Senator from Tennessee would come to the floor to explain his reasons for using the Armed Services legislation in an authorization bill for a tax provision. One of the things my distinguished friend said is that Kentucky provides no facilities. Well, if a person who is employed at Fort Campbell files for unemployment benefits in Tennessee, guess who pays for it. Guess who pays for it. Kentucky reimburses Tennessee. Isn't that a service? I heard talk about other States. Let's talk about our States--the roads that enter at the nearest gate. Sure, we have electrical service that is provided. That comes out of Kentucky into Fort Campbell. We have cooperative fire suppression. If they say it is serious, both Tennessee and Kentucky would be there. Unemployment benefits--I am surprised the Senator would say that we don't pay anything. We reimburse Tennessee for the unemployment. Kentucky pays. He raised the fact that the Governmental Affairs Committee held a hearing on this but the Finance Committee did not. When did the Governmental Affairs Committee take over for the Finance Committee? The Senator has talked about Oregon quite a bit. I have a copy of a letter to the Senator, written from the director of the Department of Revenue, saying that they settled their own problem, that Oregon passed their bill and the States worked it out. There is no need for them to be included in this legislation. Here is the letter, dated October 21, 1997. The Senator had it almost a year, but yet they put Oregon and Washington in this legislation and they don't need it. The States have worked it out themselves. Mr. President, I ask unanimous consent that a letter to Senator Thompson from the director of the Oregon Department of Revenue be printed in the Record.

Mr. FORD. Mr. President, I suggest the absence of a quorum.

Mr. FORD. Mr. President, I ask unanimous consent that the time during the quorum be charged equally to the four entities that have time on this bill.