Amo Houghton

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am not going to take my two minutes because there have been many figures cited, there have been many comparisons. There are always problems in trade agreements, whether they are labor conditions or environmental or currency or intellectual property rights. The only thing I can say is, I have been there. I have done business in Chile. I have manufactured, I have sold, and I have never had a situation where they have abused the trading privilege. There are two issues here: one is to protect the jobs, and we all do that. The gentleman from Michigan (Mr. Levin) and I were down at the International Trade Commission talking about section 201 and the steel case. Of course, we are trying to protect our jobs, and we have got to do it, and we have got to do more. But at the same time we have got to open up markets. Because, as everybody knows, 95 percent of the world's population is outside of the United States, and we cannot build a wall around us. This is a good agreement. It is not a perfect agreement, but it is a good agreement with a good country, and I urge Members to support it.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I have been listening to all of the discussion on the other side; and I may be missing something, but I think this bill makes sort of sense. I believe in Head Start. I work with the people who have taught and been in it. My kids have been a part of the program. It works the way it should in some areas. In other areas it does not. Where it works, the kids compete and succeed and it is fine. Where it does not work, we find those kids as they move into kindergarten no better off than the kids who do not go to Head Start. That is not right. If we have a program we spend money on, it ought to work. This new program, at least to me, is a win-win situation. If a State wants to take a look at its programs, it can. If it needs help, it can get it. The bill adds over $200 million to that. If on the other hand the State likes what it has, does not want to change, it does not apply for the demo project. It does not have to do it. And if it does, every single one of those demo projects is guaranteed to have the full 5-year funding. I think the program makes sense, and I hope I am not missing something essential.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I respect the gentleman from Maryland as an individual, I hear what he has to say; but I must say I disagree with some of these points that he has made. We have passed our own bill. Why should we go and pass the Senate bill? Our own bill is our own bill. That is what we want. This is not a new issue or a new motion from our colleagues in the House. I once again urge my associates and my Members here to reject the motion to instruct conferees. We have debated this issue for several days now. I will not prolong the debate, particularly with the lateness of this hour and the discussion, the turmoil we had earlier for those who are seeking to return to their districts. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. How much time remains, Mr. Speaker?

Mr. HOUGHTON. Mr. Speaker, I reserve the balance of my time.

Mr. HOUGHTON. No, I do not, Mr. Speaker.

Mr. HOUGHTON. Mr. Speaker, I yield back the balance of my time.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, as the Senior Marine in the Congress, I rise to pay tribute to Lieutenant Colonel David Byrnes, United States Marine Corps, on the occasion of his retirement from active duty. Lieutenant Colonel Byrnes has served our Marine Corps and our great Nation for more than a quarter of a century. A native of my home state, Lieutenant Colonel Byrnes grew up in Stoneybrook, New York. After graduating from Smithtown High School in 1977, a young David Byrnes followed in the footsteps of several great generations of New Yorkers and enlisted in the military. Like a few good New Yorkers before him he chose a challenging path--the Marine Corps. Lieutenant Colonel Byrnes' service as an enlisted aircraft technician took him from Memphis, Tennessee, to Beaufort, South Carolina, and eventually to Jacksonville, North Carolina. In 1981, after these successful tours, Lieutenant Colonel Byrnes continued to excel and take on greater challenges, transferring to the reserves to attend Dowling College in Oakdale, New York, where he was awarded a Bachelors of Arts degree in 1982. By 1984 he had earned a commission as an Officer of Marines. From 1985 to 2000, Lieutenant Colonel Byrnes served in many of my colleagues' home states including South Carolina, New York, Kansas, Oregon, Virginia, and Louisiana. As a testament to his talent and versatility Lieutenant Colonel Byrnes earned three military occupational specialties during these tours, including Aircraft Maintenance Officer, Adjutant, and Legal Officer. He served with distinction and honor in all of these roles. In 2000, Lieutenant Colonel Byrnes was selected to attend the Naval War College in Newport, Rhode Island, where he earned a Masters Degree in National Security and Strategic Studies. He immediately put this education to use serving in the J8 Forces Division on the Joint Staff, where he had responsibilities for the Secretary of Defense's Annual Report to the President and the Congress. After his joint staff tour, Lieutenant Colonel Byrnes began his last tour of duty in the Marine Corps--serving in the Marine Corps' Office of Legislative Affairs. In this position he interacted with the Congress to explain Reserve Affairs to Congressional Members and their staffs. This was a position of enormous responsibility, made all the more so because of the ongoing War on Terror, Operation Enduring Freedom and Operation Iraqi Freedom, which have all called for a large measure of devotion from our reserve forces. Lieutenant Colonel Byrnes has performed this highly challenging and difficult task flawlessly, always providing wise counsel and plain speaking. We have been fortunate to have such a capable Marine officer interact with us. Throughout his career, Lieutenant Colonel Byrnes has demonstrated strong character, discerning wisdom, and a sincere, selfless sense of duty to his Marines. In recognition of his devotion to duty and exemplary performance Lieutenant Colonel Byrnes was awarded the Defense Meritorious Service Medal, Meritorious Service Medal with 1 star, Navy and Marine Corps Commendation Medal with 2 stars and a Navy and Marine Corps Achievement Medal. On behalf of all my colleagues, I would like to recognize Lieutenant Colonel Byrnes' accomplishments and his devoted service to the Nation. Congratulations to Dave, his wife Quinn, and son Charlie, on the completion of a long and distinguished career. I wish them all the best as they continue to live life beyond our beloved Corps.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, will the gentleman yield?

Mr. HOUGHTON. Mr. Speaker, I would like to underscore the point made by my colleagues, the gentleman from New Jersey (Mr. Holt) and the gentleman from Georgia (Mr. Kingston) and the gentleman from Virginia (Mr. Moran), that Congress as a whole currently lacks the scientific base to assess the technologies that are crucial for our national security, economic prosperity and personal and environmental health of this Nation. I would also like to underscore that scientific expertise is unique in that it can be provided in an inherently nonpartisan way; and I can attest to that personally, having been on the OTA board. The OTA board was governed by a bipartisan technology assessment board. There were six House members, six Senate members, both parties equally represented, and the OTA had a reputation for producing reports that were often cited by both sides of a debate; and they were very, very helpful. In essence, we need to start, I think, in getting serious about rebuilding the capacity in the legislative branch to provide this nonpartisan technical expertise to Congress in a timely manner.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I thank the gentleman for yielding me this time, and I thank also the gentleman from North Dakota. The theme of this bill, and I, of course, support it, is to improve the IRS. Before I give a few quick examples, I do want to say that I have stood up here at least three times, and my script is getting musty because I have used the same words year after year. I hope that somehow we are going to be able to pass this legislation this year. But, basically, some of the examples are this. We allow the IRS to waive unfair penalties for honest taxpayers who make mistakes. We allow that. For example, a taxpayer who mails his return on April 15 with a check for $5,000, with a balance due, and he mistakenly puts the wrong stamp on it, he is in trouble. And the IRS cannot waive any penalties to people who make an honest mistake. I know of this personally because of a friend in my area who did this; owed lots and lots of money. There was no maneuverability on it. Another example is when the IRS erroneously assesses or levies a taxpayer's assets. There is a limited time during which the service can provide relief to the taxpayer. And this is, of course, especially unfair if the IRS ends up levying the taxpayer's retirement account. So let us say the IRS, just to take this a little more, misapplies a tax payment and consequently levies on a taxpayer's IRA account taking away $25,000. The IRS then later realizes its mistake, but it is unable to restore the IRA balance. That is problem we have here. Very, very inflexible rules. So the result under current laws does not make any sense at all. Now, this bill requires the IRS to extend the time limit for taxpayers to contest levies and requires the IRS to provide relief to taxpayers whose retirement accounts are affected. Lastly, and the gentleman from Louisiana, my good friend, also referred to the ten deadly sins that try to strike a balance between making sure that IRS employees are not engaging in improper behavior on the one hand and not placing a straitjacket on IRS employees and the commission on the other hand. These changes are strongly supported by former Commissioner Rossotti, who did an extraordinary job in reorganizing and putting more life into the IRS, and have the support of the National Treasury Employees Union. So I guess the only thing I can say to sum up, Mr. Speaker, is that this a good bill. I am honored to be able to join these gentlemen in urging my colleagues to support this legislation.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, in reply to my friend on the Democratic side, I am a Republican and I am aware and I am old, but I do not quite remember Teddy Roosevelt. What I would like to do is just to talk a little bit about this whole issue of eliminating the death tax. I do not know where this is going. I do not know whether it has got momentum, but I assume it has. It sounds appealing. One pays taxes all their life and then why when one should be honored in more does the IRS is swoop in and take another bite of out of their estate? But if we look at the great estate taxes from a different angle, I have a sense of what this country is all about, that democracies are not where one gets a free ride and stand on another's shoulders forever. I have two specific worries. One, the corrosive effect this tax would have an a subsequent generation who no longer has to work or earn. That has all been taken care of, and I have seen this effect on other countries where there is an establishment of a landed gentry, a privileged entitled class, and that is not good, and that is not what has made the United States what it is today. The second issue I have is the first question one asks in planning an estate is what flexibility do I have? What should I protect so the bulk of what I have earned will not be siphoned off by the Government? It is at this great point that the great philanthropic gifts are considered. So, believe me, absent a death tax, the question would not even be raised. So I can see nothing bad from this bill. The assets we have, the ability we have, the motivation to give less, anyway, I do not think it is a great bill, and I hope people vote against it. Assets we have--the ability, the motivation, to give to those less fortunate than we. This is not a good bill. It should be defeated. Increase the exclusion dramatically. Protect the family farm or business. But do not wipe out and make permanent the repeal of the estate taxes.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, today I am joined by my colleague from New York, Mr. Rangel, in introducing our bill, ``Encouraging Work Act of 2003.'' The bill would permanently extend the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Credit (W-t-W) and make other changes discussed below. Both programs are currently due to expire on December 31, 2003. The credits are tax incentives designed to encourage employers to hire public assistance recipients and other individuals with barriers to employment. They are important tools in our efforts to help needy individuals become productive employees. Improvements in the programs the past few years have made WOTC and W- t-W far more effective in providing employment, with training, for our nation's disadvantaged. Such training can be costly and the credits provide an incentive to employers to hire the disadvantaged and provide the needed training while offsetting costs associated with the latter effort. Of course, many believe the programs would be even more successful if they could be extended indefinitely. We hear from both employers and state job services, which administer the programs, that the continued uncertainty surrounding short-term extensions impedes expanded participation and improvements in program administration. If the programs were made permanent, employers, both large and small, would be induced to expand their recruitment efforts and encourage the states to improve the administration of the programs. Such a change would benefit everyone. WOTC provides employers a 40-percent tax credit on the first $6,000 of wages paid to those from targeted groups who are working at least 400 hours, or a partial credit of 25 percent for those working 120-399 hours. W-t-W provides employers a 35-percent tax credit on the first $10,000 of wages for those leaving welfare and working 400 hours in the first year. In the second year, the W-t-W credit is 50 percent of the first $10,000 of wages paid to qualifying employees. In addition to making the credits permanent, our bill would simplify WOTC and W-t-W, as President Bush recommended in the Administration's FY 2004 budget, by combining them into one credit and making the rules for computing credits simpler. Among other changes, the bill would expand the food stamp category by increasing the age limit from 24 to 39 years of age for members of food stamp households and residents of enterprise zones or renewal communities (``a designated community resident''). The current ceiling of 24 limits the availability of individuals in these targeted categories. There are many individuals, over the age of 24, who could be gainfully employed if the age limit was expanded. Currently, the programs do an excellent job of helping women on welfare enter into the workforce. Over 80 percent of the hires in the programs are women. However, men from welfare households face a greater barrier to employment because they are no longer eligible for welfare once they turn 18. However, they can qualify up to age 24 if they are a member of a household receiving food stamps or live in an enterprise zone or renewal community. We believe increasing the age limit to 39 will provide employers an incentive to hire more ``at- risk'' males and provide them with a sense of personal responsibility and self-esteem in assuming their responsibilities as parents and members of society. More than 80 percent of the 2.2 million individuals hired under the WOTC and W-t-W programs were previously dependent on public assistance programs. However, during periods of slow economic growth and rising unemployment, employers have more hiring options. The jobs skills of those coming off welfare today--many because they have reached their 5- year life time eligibility ceiling--are even less than the first generation that left the welfare rolls. Because of the high cost of recruiting, training, supervising low-skilled individuals, many employers will look elsewhere for employees if these programs are not renewed before the end of the year. WOTC and W-t-W are proven incentives for encouraging employers to seek employees from the targeted groups. We urge our colleagues to join us in cosponsoring this important legislation to extend and improve the two programs.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I thank the gentleman from Illinois (Mr. Crane), the gentleman from Michigan (Mr. Levin), the gentleman from California (Mr. Royce), the gentleman from New York (Mr. Rangel). I want to thank particularly the gentleman from Virginia (Mr. Wolf) here who has been a leading light in this whole proposition and also Tony Hall, who is the ambassador to the Food and Agricultural Organization in Rome whose spirit just pervades this whole Chamber on this issue. A lot of this has already been talked about. I will not go over it in detail, but let me just say a few things. This really is a follow-up to last year's bill. I will not give my colleagues the number, they know it, but this 1584 creates a system to monitor the blood diamonds coming from Africa. It is a very, very important bill for a variety of reasons, not the least of which the humanitarian aspect; and what it does, it attacks the problem of the trade in African diamonds by having the President implement the so-called Kimberley process. My colleagues know what that is. It is important. It is a vehicle for making this bill possible. What the bill mechanically does is three things. First of all, it bans noncompliant rough diamonds. It severely punishes the violators of this ban, and it also helps other countries to set up similar systems. Also, this bill will require various reports by the administration and a 24-month study by the GAO to report on the effectiveness of the system. It urges the President to continue negotiations to strengthen the system and protects the legitimate diamond trade and also remains consistent with our international trade obligations. Like so many other things we do around here, all great ideas ultimately degenerate into work; and the people who did the great work, David Kavanaugh, Mike Walsh, Viji Rangaswami of the Subcommittee on Trade, Frank Record of the Committee on International Relations, Jay Bruns of the State Department, and many friends of the Campaign to Eliminate Conflict Diamonds, world vision, Amnesty International, Oxfam, and Catholic Relief Services. All have added their weight here to this very important piece of legislation. I urge my associates and my colleagues to pass it.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Chairman, I rise in opposition to H. Con. Res. 95. I do so reluctantly. I respect the President. I admire the Speaker more than I can say. I think Jim Nussle has done an extraordinary job under impossible conditions. But I am going to oppose the Nussle bill because I think it moves us in the wrong direction. There are strong arguments against my position, such as: This is only a step in a long process; the conference report is where the real vote is cast; and we must be loyal to the President and to the troops overseas. But, Mr. Chairman, I don't think that being loyal to the President or our troops in the Persian Gulf--or for that matter to all the other citizens--is really an issue here. This is a democratic process with which we work--and I know there are party pressures, and I know we need a budget--but this particular budget is not particularly helpful in solving our problems. At the very least I feel that we should wait until the President submits his ``supplemental'' request--based on what he feels the military will need. This will be, I assume, a rather large number. Also the issue of timing is critical. The expense budget which we will vote on is inherently tied to the tax reduction program. This scares me. Together the numbers are not right--the timing is bad. I ask myself-- How can we vote to adversely impact medical and education expenses in a war atmosphere? How can we see our revenues collapsing in front of us and then consider a tax reduction bill which, while somewhat stimulating to our economy, will further deplete revenues? For me this package, I'm sorry to say, doesn't hang together. I just think we can do better. I hope we can do better--so that I can soon vote for a program which does right by us as a country long term, stimulates our economy short term--and keeps faith with the families of our troops in the Persian Gulf.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I would like to just make a few comments on H.R. 1307, and of course ask my colleagues to support it. Last summer I introduced a bill that contained two of the present provisions, very modest. The bill increased the tax-free death benefit from $3,000 to $6,000 to members of our Armed Forces. Second, the bill made a change to allow members of the Armed Forces to have the 5-year rule, the so-called 5-year rule, deferred during the period they are assigned away from their principal residence. What this does is to allow individuals to take advantage of the law that excludes gain on the sale of a residence up to $250,000 or $500,000 per couple and if they resided in the property for 2 of the 5 years preceding the sale, and that was that. The bill passed the House. Both of these provisions are in and are part of H.R. 1307. The bill also expands the definition of ``member'' to include ancestors and lineal descendants for purposes of certain requirements of tax-exempt veterans organizations. These are all good changes. I recommend them. I support them.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Chairman, I'd like to speak on behalf of the Greenwood Amendment H.R. 534. This has to do with research to help save human lives. It's not a question of human cloning. The process we're talking about--therapeutic cloning--takes embryos, many of which are fertilized in a laboratory petri dish. They are saved. The cells are separated so they can continue to grow. We learn about a mechanism to better understand tissues in the body. There will be an ability to cure diseases such as Parkinson's, Diabetes, Heart Muscle Disease, Chronic Liver Disease--the list is endless. So please don't stop this exciting area of breakthrough new science. Don't confuse the issue with reproductive cloning. Hammers are used to build a building, but they can also be used as a lethal weapon. Because a hammer can be used as a murder weapon, we don't automatically outlaw it. Please support the Greenwood Amendment.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, today I am pleased to join my colleague from Georgia, John Lewis, in introducing the ``Good Samaritan Tax Act'', a bill that has been introduced in three previous Congresses. Former Congressman Tony Hall (OH), now our Ambassador to the United Nations Agencies for Food and Agriculture, who originally initiated this proposal, was a cosponsor of the prior bills and the leading advocate for feeding the less fortunate. The purpose of the bill is to help meet the demand for food for the needy. The end of the economic boom has increased the need for additional resources to feed the hungry. In fact, as more and more citizens are removed from the welfare rolls, or lose their jobs, many turn to food banks for help. The bill would increase the incentives for restaurants, farms and other businesses in the food industry to donate food to food banks, homeless shelters and other charitable organizations. The Internal Revenue Code actually discourages contributions because of the uncertainty regarding the tax treatment of donations of food as compared to donations of other inventory. The bill has been designed to correct that deficiency. We believe this bill would remove the uncertainty and provide the necessary incentive for businesses to increase their food donations. This would be accomplished by adding a provision to Section 170(e) of the Code that would indicate that the fair market value of donated food is determined, (1) without regard to internal policies, lack of market, or similar circumstances, whether the food cannot or will not be sold, and (2) if applicable, by taking into account the price at which similar products are sold by the taxpayer at the time of contribution. These have been points of controversy with the Internal Revenue Service, causing uncertainty as well as disincentives to incur the administrative and other costs necessary for the proper handling and preservation of food being donated. In addition, Section 170(e) would be amended to include businesses in addition to C corporations, as the current law provides. We hope our colleagues will join us in cosponsoring this legislation.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from California, Mr. Becerra, together with my colleague, Mr. Boehlert from New York in reintroducing a bill intended to clarify the tax treatment of certain environmental escrow accounts. This bill was first introduced in the 107th Congress. The provisions in the bill would encourage prompt and efficient settlements with the Environmental Protection Agency (``EPA'') for the clean-up of hazardous waste sites. Currently, there is some uncertainty in the tax treatment of certain ``settlement funds'' that are, in effect, controlled by the EPA, in their role of resolving claims under Comprehensive Environmental Response, Compensation and Liability Act of 1980 (``CERCLA''). This uncertainty may prevent taxpayers from entering into prompt settlements with the EPA for the cleanup of Superfund hazardous waste sites and reduce the ultimate amount to funds available for cleanup of such sites. The EPA has recognized this problem and has recently written to the Department of the Treasury expressing support for clarification that these ``funds will, for Federal income tax purposes, be treated as beneficially owned by the United States government and therefore not subject to Federal income tax if certain conditions are met.'' I include in the record, a copy of the EPA letter dated February 7, 2003 Our bill follows the recommendations of the EPA on this important issue. Under our bill, if certain conditions are met, the EPA (U.S. government) will be considered the beneficial owner of funds set aside in an environmental settlement fund account. These conditions include the fund being: (1) established pursuant to a consent decree; (2) created for the receipt of settlement payments for the sole purpose of resolving claims under CERCLA; (3) controlled (in terms of expenditures of contributions and earnings thereon) by the government or an agency or instrumentality thereof; and (4) upon termination, disbursed to the government or an agency or instrumentality thereof (e.g., the EPA). If such conditions are met, the EPA will be considered the beneficial owner of the escrow account for tax purposes and the account will not be considered a grantor trust for purposes of Sections 468B, and 671- 677 of the Internal Revenue Code. These escrow accounts, which are established under court consent decrees, are a necessary tool to enable the EPA to carry out its responsibilities and resolve or satisfy claims under CERCLA. Under these types of consent decrees, the EPA should be considered the owner of such funds for Federal tax purposes. Due to the current uncertainty as to the proper Federal income tax treatment of such government-controlled funds, taxpayers may be hesitant to promptly resolve their claims under CERCLA by contributing to the settlement funds. One of the underlying purposes of CERCLA is to ensure prompt and efficient cleanup of Superfund hazardous waste sites. This goal is being frustrated by the existing uncertainty in the tax laws. The bill resolves these uncertainties and expedites the cleanup of Superfund hazardous waste sites by treating these escrow accounts as being beneficially owned by the U.S. government and not subject to tax. We urge our colleagues to join us in cosponsoring this legislation. Environmental Protection Agency, Washington, DC, February 7, 2003. Ms. Pamela F. Olson, Assistant Secretary--Tax Policy, Department of the Treasury, Washington, DC Dear Ms. Olson: I am writing to express support by the Environmental Protection Agency (``EPA'') for clarification of the tax treatment of certain environmental cleanup ``settlement funds'' under IRC section 468B. The clarification would provide that such funds will, for Federal income tax purposes, be treated as beneficially owned by the U.S. government and therefore not subject to Federal income tax if certain conditions are met. As General Counsel to the agency, I am not offering an opinion on the legal issue or any other fiscal or tax policy aspects to this proposal. We defer to the Treasury Department on these issues. However, after consultation with our office of Enforcement and Compliance Assurance, I offer this letter to provide our views based on the environmental issues involved, that I hope will assist you in your review of this issue. The cleanup of Superfund hazardous waste sites is sometimes funded by environmental ``settlement funds'' or escrow accounts. These escrow accounts are established in consent decrees between the EPA and the settling parties under the jurisdiction of a federal district court. They are a tool to enable the EPA to carry out its responsibilities and resolve its claims against private parties under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (``CERCLA''). While the escrow accounts are funded by the settling parties (defendants), some of these consent decrees require that the EPA approve expenditures of such funds (including the payment of costs and reimbursements), and provide that any remaining funds after termination will be paid to the

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from Maryland, Mr. Cardin, together with a bipartisan group of our colleagues, in introducing the ``Artists' Contribution to American Heritage Act of 2003.'' The bill would alleviate an unfairness in the tax law as it applies to charitable donations of property by the taxpayer/creator and significantly enhance the ability of museums and public libraries to acquire important original works by artists, writers and composers, and ensure the preservation of these works for future generations. The proposed legislation is the same as we introduced in the 106th and 107th Congresses, except for advancing the effective date by a year. Since 1969, the law has provided that the creator of the artistic property is only allowed a charitable deduction equal to the cost of materials that went into the property. For example, an established artist who donates a painting to the local museum is allowed a deduction for the cost of the canvas, brushes and paint, etc. used to produce the painting. Of course, these amounts are de minimus. There is no real tax incentive to contribute such works of art for the public to enjoy. In fact, the tax law works in the other direction. It makes more financial sense to the creator to sell his or her work. If a collector or art buff buys a painting that appreciates over time, because the artist becomes well established or was a known and collected artist when the painting was purchased, the collector is allowed a deduction for fair market value when the painting is contributed to the local museum. This is the fairness issue. Before 1969, the artists/taxpayers received the same treatment--the deduction was based on fair market value. The law was changed, primarily because of the perception that some taxpayers were taking advantage of the law through less than accurate valuations of their charitable gifts. After the law was changed in 1969, gifts of donor generated art work (paintings, manuscripts, compositions, artistic and historically significant correspondence and papers) to qualifying charitable organizations and governmental entities dropped significantly. Creators were more likely to sell their works than to contribute them. The situation has not improved over the years. There have been significant changes in the valuation process since 1969. All taxpayers making charitable contributions of art work (other than donor generated art work) are required to: (a) provide and/or retain relevant information as to the value of the gift, (b) provide appraisals by qualified appraisers or, in some cases, (c) subject them to review by the IRS's Art Advisory Panel, depending on the dollar amount of the contribution. These changes would apply to creator- donated property under our proposal. In addition to the valuation safeguards already in the law, our proposal would add additional protections to prevent abuse. These include the following: (a) limiting the value of the deduction to the amount of income the creator received from similar property and/or similar activities, (b) providing that the deduction can only be claimed in the year of contribution, i.e. the carry over rules do not apply, (c) limiting the deduction to property created at least 18 months before the contribution, (d) limiting the deduction to gifts related to the purpose of the institution which receives it, and (e) excluding contributions of property (letters, memos, etc.) created by taxpayers in their role as employees or officers of an organization. The benefit to the nation when artists are encouraged to contribute their work during their lifetime cannot be overemphasized. It allows the public, historians, scholars and others to learn from the artist his/her aesthetic aims for the work; how it was intended to be displayed, performed or interpreted; and what influences affected the artist. Our proposal represents an important step in providing some tax incentive, with needed safeguards, for the creators and moves toward putting them on the same footing as collectors who contribute similar property. It could make the difference in a decision by the creator/ donor to contribute some of their created work to a museum or public library. That way important works are preserved and we all benefit. We urge our colleagues to join us in cosponsoring this legislation.

Mr. HOUGHTON

Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from Massachusetts, Mr. Neal, together with a number of our colleagues in introducing our bill, ``The Life Insurance Tax Simplification Act of 2003.'' The bill repeals two sections of the Internal Revenue Code, which no longer serve valid tax policy goals. Except for the effective date, the bill is identical to the one we introduced in the 107th Congress. Congress has taken a major step forward in rewriting the regulatory structure of the financial services industry in the United States. This realignment is having a positive impact on the way life insurance companies serve their customers, conduct their operations and merge their businesses to achieve greater market efficiencies. Unfortunately, the tax code contains several provisions which no longer represent valid tax policy goals, and, in fact, are carry-overs from the old tax and regulatory regimes that separated the life insurance industry from the rest of the financial world and differentiated between the stock and mutual segments of the life insurance industry. Today, the lines of competition are not between the stock and mutual segments of the life insurance industry. Rather, life insurers must compete in an aggressive, fast moving global financial services marketplace contrary to the premises underlying these old, outmoded tax rules. The bill would repeal section 809 that imposes a tax on the policyholder dividends of mutual life insurance companies, and section 815 that applies to policyholder surplus accounts of stock-owned life insurance companies. Both of these provisions are vestiges of an outdated tax scheme developed in 1984 when the lines of competitive balance existed between stock and mutual life insurance companies. Section 809 was added to the Code in 1984, in part, to address a perceived imbalance between the tax treatment of stock and mutual companies. In 1984, there were over 100 mutual life insurers, including many large mutual companies, accounting for about one-half of industry activity. Today, about 40 mutual life companies remain, including only a few large companies, and mutual insurers account for only about 10 to 15 percent of the industry. Stocks as well as mutuals agree that section 809 is not now needed to provide competitive balance. Both mutual and stock life insurers believe that their policies provide superior value to consumers. Repeal of section 809 would result in more nearly neutral taxation of stock and mutual companies and allow consumers to focus more on nontax considerations in selecting their insurance provider. As a result, repeal of section 809 is one of the few corporate tax relief measures endorsed by the Consumer Federation of America and the National Cooperative Business Association. Section 815 was added to the Code as part of the 1959 changes to the life insurance companies tax structure. Before 1959, life insurance companies were taxed only on their investment income. Underwriting (premium) income was not taxed, and underwriting expenses were not deductible. The change provided that all life insurance companies paid tax on investment income not set aside for policyholders and on one- half of their underwriting income. The other half of underwriting income for stock companies was not taxed unless it was distributed to shareholders (so-called ``policyholders surplus account or PSA''). The 1959 tax structure sought to tax the proper amount of income of stock and mutual companies alike and the PSA mechanism helped implement that goal. In 1984, Congress rewrote the rules again. Both stock and mutual companies were subjected to tax on all their investment and underwriting income. In this context, dividend deductions for mutuals were limited under section 809, and the tax exclusion for a portion of stock company's underwriting income was discontinued. Congress made a decision not to tax the amount excluded between 1959 and 1984. Rather the amounts are only taxed if one of the specific events described in the current section 815 occurs (principally dissolution of the company). The bill would repeal the obsolete section 815 provision. Since 1984, the Federal government has collected relative small amounts of revenue with respect to PSAs as companies avoid the specific events which trigger PSAs taxation. There is not a ``fund'', ``reserve'', ``provision'' or ``allocation'' on a life insurance company's books to pay PSA taxes because, under generally accepted accounting principles, neither the government nor taxpayers have ever believed the significant amounts of tax would be triggered. Nevertheless, the continued existence of the PSAs does result in a burden on the companies in today's changing financial services world--a burden based on bookkeeping entries made from nineteen to forty-three years ago to comply with Congress' then vision of how segments of the life insurance industry should be taxed. The repeal of these two provisions, sections 809 and 815, would provide certainty, less complexity, and remove two provisions from the Internal Revenue Code, which no longer serve a valid tax policy goal in the life insurance tax structure of the Code. We urge our colleagues to join us in cosponsoring this legislation.