Orrin Hatch

Mr. HATCH

Mr. HATCH. Mr. President, will the Senator yield?

Mr. HATCH. On your amendment, and then Senator Gramm.

Mr. HATCH. I understand. I am just wondering if we can have some idea when we can go to a vote, and then I would be able to give people some sort of notice.

Mr. HATCH. When the Senator has concluded, I will move to table.

Mr. HATCH. Could the Senator give me some indication when he is willing to go to a vote on this amendment?

Mr. HATCH. I yield back whatever time I have. I move to table, and I ask for the yeas and nays.

Mr. HATCH. Mr. President, is all time yielded back?

Mr. HATCH. Mr. President, the effect of the amendment is to strike section 431 to 445, all of subtitle B of title IV of the bill, the provisions which reform bankruptcies for companies that are ``small businesses''. A ``small business'' is a company that, together with its affiliates, has debts under $3,000,000 and is not primarily a real estate owning and operating company, but only if an unsecured creditor's committee has not been appointed. Also propose a Small Business Administration study of bankruptcy and small businesses. Our present law: Although the Bankruptcy Code now contains provisions on small business bankruptcies, they are optional and rarely used. Present chapter 11 is complicated and expensive for debtors. It is a lawyer's paradise because their services are very necessary. Chapter 11s also tend to be long drawn out affairs, seemingly managed by the professionals to extract the largest possible fees. Small business creditors often complain about the delays and expense of trying to collect debts owed them. On bill provisions, the bill provides the following reforms: It creates streamlined, standardized forms so small business bankruptcies can be more cheaply managed by small business debtors. Under present law, a chapter 11 reorganization is made expensive by the need to tailor a plan and disclosure statement, a job done by a highly paid lawyer. The bill creates nationwide uniform reporting requirements so that chapter 11 cases involving a small business can be standardized, simplifying the procedures debtors must comply with. The bill standardizes the information a small business must provide to the trustee, like tax returns, schedules, financials and the like. Debtors must meet plan filing and confirmation time deadline standards, specially developed for small business cases. The duties of the United States trustee with respect to a small business case are spelled out. The bill also contains controls on abusive use of chapter 11, like multiple filing of cases and unreasonable delay in resolving the case. It contains a study of small business bankruptcy by the Small Business Administration. Requires in single asset real estate company cases that interest be paid to creditors at a certain point in the case. Provides administrative expense priority to any amount the debtor owes arising from certain real estate lease defaults. In response, Congress created in 1994 a National Bankruptcy Review Commission to study the bankruptcy laws and suggest reforms, which closely studied small business bankruptcy and recommended reforms. The provisions the Kerry amendment would cut out are the result of those recommendations. The NBRC found that small business bankruptcies needed reforms in order to benefit both small business debtors and to benefit small businesses when they were creditors. The bill provides the protections and benefits the NBRC recommended. The amendments streamline bankruptcy for small businesses. It allows them to save lawyer fees. It allows them to promptly reorganize, to their benefit and that of their creditors. Additional study is unnecessary. This matter has already been studied for 4 years by a blue ribbon panel of bankruptcy experts, who unanimously recommended the reforms. But even if more study is necessary, the bill provides for the same study Senator Kerry is now proposing. Oppose the Kerry amendment. Senator Kerry last year sponsored an amendment that seriously impaired the reforms in this part of the bill. He now seeks to gut them completely. It is clear that he opposes all reform. Yet reform is needed.

Mr. HATCH. Mr. President, I move to table the amendment and ask for the yeas and nays.

Mr. HATCH. Before the vote--in other words, we will divide the time up until 10 until 12, equally divided with no further amendments before the vote, and I will move to table at that time, and we will have a vote.

Mr. HATCH. Mr. President, how much time do we have?

Mr. HATCH. I ask unanimous consent that I have 1 additional minute.

Mr. HATCH. That is right.

Mr. HATCH. I ask unanimous consent that be the case, and I will move to table at the conclusion of that time. No second degree will be in order.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on Thursday, March 8, 2001, at 10 A.M., in closed session to receive testimony on current and future worldwide threats to the national security of the United States.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Thursday, March 8, 2001, at 10:30 a.m., to hold a hearing (agenda attached).

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet to hold a joint hearing with the House Committee on Veterans' Affairs to receive the legislative presentations of the Paralyzed Veterans of America, Jewish War Veterans, Blinded Veterans Association, the Non-Commissioned Officers Association, and the Military Order of the Purple Heart. The hearing will be held on Thursday, March 8, 2001, at 9:30 a.m., in room 345 of the Cannon House Office Building.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Rules and Administration be authorized to meet during the session of the Senate on Thursday, March 8, 2001, at 4 p.m., to consider the omnibus funding resolution for committees of the Senate for the 107th Congress.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a markup on Thursday, March 8, 2001, beginning at 10 a.m. The markup will take place in Dirksen Room 226.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet in executive session during the session of the Senate on Thursday, March 8, 2001, at 9:30 a.m.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Governmental Affairs be authorized to meet on Thursday, March 8, 2001, at 2 a.m., for a business meeting to consider pending Committee business.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet on Thursday, March 8, 2001, at 10 a.m., to conduct a markup on S. 350, the Brownfields Revitalization and Environmental Restoration Act of 2001.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to introduce legislation designed to increase tax fairness for America's primary and secondary school teachers. Over the past few years, much has been said about the inequities of some of the provisions of the Internal Revenue Code. Indeed, one does not need to look very far in the Code to begin to see provisions that are just plain unfair. I would like to highlight just one egregious example of this unfairness today, and introduce legislation to begin to rectify it. Mr. President, our public school teachers are some of the unheralded heroes of our society. These women and men dedicate their careers to educating the young people of America. School teachers labor in often difficult and even dangerous circumstances. In most places, including in my home state of Utah, the salary of the average public school teacher is significantly below that of other similarly educated and experienced professionals in our society. Moreover, school teachers find themselves further disadvantaged by unfair treatment from the tax code as to the deductibility of professional development expenses and of the out-of-pocket costs of classroom materials that practically all teachers find themselves supplying. Let me explain. Like many other professionals, most elementary and secondary school teachers regularly incur expenses to keep themselves current in their field of knowledge. These include subscriptions to journals and other periodicals as well as the cost of courses and seminars designed to improve their knowledge or teaching skills. These expenditures are necessary to keep our teachers up to date on the latest ideas, techniques, and trends so that they can provide our children with the best education possible. Furthermore, almost all teachers find themselves providing basic classroom materials for their students. Because of tight education budgets, most schools do not provide 100 percent of the material teachers need to adequately present their lessons. As a result, dedicated teachers incur personal expenses for copies, art supplies, books, puzzles and games, paper, pencils, and countless other needs. If not for the willingness of teachers to purchase these supplies themselves, many students would simply go without needed materials. I realize that many employees incur expenses for professional development and out-of-pocket expenses. In many cases, however, these costs are fully reimbursed by the employer. This is seldom the case with school teachers. Other professionals who are self-employed are able to fully deduct these types of expenses. Under the current tax law, unreimbursed employee expenses are deductible, as miscellaneous itemized deductions. However, there are two practical hurdles that effectively make these expenses non- deductible for most teachers. The first hurdle is that the total amount of a taxpayer's deductible miscellaneous deductions must exceed 2 percent of adjusted gross income before they begin to be deductible. The second hurdle is that the amount in excess of the 2 percent floor, if any, combined with all other deductions the taxpayer has, must exceed the standard deduction before the teacher can itemize. Only about 30 percent of taxpayers have enough deductions to itemize. The unfortunate effect of these two limitations is that, as a practical matter, only a small proportion of teachers are able to deduct these expenses. Let me illustrate this unfair situation with an example. Let us consider the case of a fifth-year high school chemistry teacher in Utah who I will call Wendy Ruffner. Wendy is single and earns $35,000 per year. Last year she incurred $750 in expenses for chemistry periodicals and for a course she took over the summer to increase her knowledge of chemistry. Wendy also incurred $100 in out- of-pocket expenses for classroom supplies such as copies, periodical charts, and equipment for classroom experiments. Under current law, Wendy's expenditures are deductible, subject to the limitations I mentioned. The first limitation is that her expenses must exceed 2 percent of her income before they begin to be deductible. Two percent of $35,000 is $700. Thus only $140 of her $840 total expenses is deductible, that portion that exceeds $700. As a single taxpayer, Wendy's standard deduction for 2000 is $4,400. Her total itemized deductions, including the $140 miscellaneous deduction for professional expenses, fall short of the standard deduction threshold. Therefore, not even the $140 of the original $840 in professional expenses is deductible for Wendy. What the first limitation did not block, the second one did. The legislation I introduce today, the Tax Equity for School Teachers, or TEST Act, would eliminate the unfairness teachers face in regards to these limitations by making all professional development and out-of-pocket expenses an above-the-line deduction. This means a teacher could deduct these expenses without regard to the 2 percent of AGI limitation and whether he or she itemizes or not. Let us return to my previous example of Wendy Ruffner. Under this bill, Wendy would be allowed to deduct all $840 of her professional expenses from her taxable income. This would help provide tax equity, and a measure of much-needed tax relief for an underpaid professional. Some might argue that this would be giving teachers preferential treatment. I disagree. Most organizations provide training for their employees that is fully deductible to the organization and non-taxable to the employee. Yet, public teachers, who are some of the most vital professionals in our society, are left to foot the bill on their own. Office supplies and instructional materials are also fully deductible to businesses. Shouldn't teachers who provide these similar materials for their classrooms be afforded the same tax treatment? School teachers deserve better tax treatment than what they receive. With the low pay teachers typically receive, it is no wonder that many areas of the country are facing severe shortages of experienced teachers. The tax code is compounding the problem by adding insult to injury. We need to remove the unfair disincentives that discourage motivated and qualified individuals from pursuing teaching as a profession. I note that President Bush's tax cut plan also recognizes this need and provides for a deduction of up to $400 in teachers' out-of-pocket classroom expenses. This is a good step in the right direction. My bill, however, provides an unlimited deduction for out-of-pocket expenses and goes further and also includes the costs of professional development expenses. I do not believe we need to place a limit on these deductions. Teachers are going to provide their students with materials and take the professional development courses regardless of a tax deduction. They should be able to deduct these expenditures. Mr. President, this bill would provide modest tax equity for teachers who, for too long, have been footing the bill for improving the quality of teaching by themselves. It is time we the tax code recognized this unfairness and corrected it. I thank the Senate for the opportunity to address this issue today, and I urge my colleagues to support this legislation. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to introduce legislation designed to increase tax fairness for America's primary and secondary school teachers. Over the past few years, much has been said about the inequities of some of the provisions of the Internal Revenue Code. Indeed, one does not need to look very far in the Code to begin to see provisions that are just plain unfair. I would like to highlight just one egregious example of this unfairness today, and introduce legislation to begin to rectify it. Mr. President, our public school teachers are some of the unheralded heroes of our society. These women and men dedicate their careers to educating the young people of America. School teachers labor in often difficult and even dangerous circumstances. In most places, including in my home state of Utah, the salary of the average public school teacher is significantly below that of other similarly educated and experienced professionals in our society. Moreover, school teachers find themselves further disadvantaged by unfair treatment from the tax code as to the deductibility of professional development expenses and of the out-of-pocket costs of classroom materials that practically all teachers find themselves supplying. Let me explain. Like many other professionals, most elementary and secondary school teachers regularly incur expenses to keep themselves current in their field of knowledge. These include subscriptions to journals and other periodicals as well as the cost of courses and seminars designed to improve their knowledge or teaching skills. These expenditures are necessary to keep our teachers up to date on the latest ideas, techniques, and trends so that they can provide our children with the best education possible. Furthermore, almost all teachers find themselves providing basic classroom materials for their students. Because of tight education budgets, most schools do not provide 100 percent of the material teachers need to adequately present their lessons. As a result, dedicated teachers incur personal expenses for copies, art supplies, books, puzzles and games, paper, pencils, and countless other needs. If not for the willingness of teachers to purchase these supplies themselves, many students would simply go without needed materials. I realize that many employees incur expenses for professional development and out-of-pocket expenses. In many cases, however, these costs are fully reimbursed by the employer. This is seldom the case with school teachers. Other professionals who are self-employed are able to fully deduct these types of expenses. Under the current tax law, unreimbursed employee expenses are deductible, as miscellaneous itemized deductions. However, there are two practical hurdles that effectively make these expenses non- deductible for most teachers. The first hurdle is that the total amount of a taxpayer's deductible miscellaneous deductions must exceed 2 percent of adjusted gross income before they begin to be deductible. The second hurdle is that the amount in excess of the 2 percent floor, if any, combined with all other deductions the taxpayer has, must exceed the standard deduction before the teacher can itemize. Only about 30 percent of taxpayers have enough deductions to itemize. The unfortunate effect of these two limitations is that, as a practical matter, only a small proportion of teachers are able to deduct these expenses. Let me illustrate this unfair situation with an example. Let us consider the case of a fifth-year high school chemistry teacher in Utah who I will call Wendy Ruffner. Wendy is single and earns $35,000 per year. Last year she incurred $750 in expenses for chemistry periodicals and for a course she took over the summer to increase her knowledge of chemistry. Wendy also incurred $100 in out- of-pocket expenses for classroom supplies such as copies, periodical charts, and equipment for classroom experiments. Under current law, Wendy's expenditures are deductible, subject to the limitations I mentioned. The first limitation is that her expenses must exceed 2 percent of her income before they begin to be deductible. Two percent of $35,000 is $700. Thus only $140 of her $840 total expenses is deductible, that portion that exceeds $700. As a single taxpayer, Wendy's standard deduction for 2000 is $4,400. Her total itemized deductions, including the $140 miscellaneous deduction for professional expenses, fall short of the standard deduction threshold. Therefore, not even the $140 of the original $840 in professional expenses is deductible for Wendy. What the first limitation did not block, the second one did. The legislation I introduce today, the Tax Equity for School Teachers, or TEST Act, would eliminate the unfairness teachers face in regards to these limitations by making all professional development and out-of-pocket expenses an above-the-line deduction. This means a teacher could deduct these expenses without regard to the 2 percent of AGI limitation and whether he or she itemizes or not. Let us return to my previous example of Wendy Ruffner. Under this bill, Wendy would be allowed to deduct all $840 of her professional expenses from her taxable income. This would help provide tax equity, and a measure of much-needed tax relief for an underpaid professional. Some might argue that this would be giving teachers preferential treatment. I disagree. Most organizations provide training for their employees that is fully deductible to the organization and non-taxable to the employee. Yet, public teachers, who are some of the most vital professionals in our society, are left to foot the bill on their own. Office supplies and instructional materials are also fully deductible to businesses. Shouldn't teachers who provide these similar materials for their classrooms be afforded the same tax treatment? School teachers deserve better tax treatment than what they receive. With the low pay teachers typically receive, it is no wonder that many areas of the country are facing severe shortages of experienced teachers. The tax code is compounding the problem by adding insult to injury. We need to remove the unfair disincentives that discourage motivated and qualified individuals from pursuing teaching as a profession. I note that President Bush's tax cut plan also recognizes this need and provides for a deduction of up to $400 in teachers' out-of-pocket classroom expenses. This is a good step in the right direction. My bill, however, provides an unlimited deduction for out-of-pocket expenses and goes further and also includes the costs of professional development expenses. I do not believe we need to place a limit on these deductions. Teachers are going to provide their students with materials and take the professional development courses regardless of a tax deduction. They should be able to deduct these expenditures. Mr. President, this bill would provide modest tax equity for teachers who, for too long, have been footing the bill for improving the quality of teaching by themselves. It is time we the tax code recognized this unfairness and corrected it. I thank the Senate for the opportunity to address this issue today, and I urge my colleagues to support this legislation. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that, pursuant to the Standing Rules of the Senate, the rules of the Senate Committee on the Judiciary as approved by the committee today be printed in the Record.