Richard Neal

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. I yield 1 additional minute to the gentleman.

Mr. NEAL of Massachusetts. Madam Speaker, I yield myself such time as I may consume. The provisions of H.R. 7005, the Alternative Minimum Tax Relief Act of 2008, as scheduled for floor action today, provides alternative minimum tax relief. Ways and Means Committee Chairman Rangel and the ranking member, Mr. McCrery, have asked the nonpartisan Joint Committee on Taxation to make available to the public a technical explanation of the bill. The technical explanation expresses the committee's understanding and legislative intent behind this important legislation. It is available on the joint committee's Web site at www.jct.gov. I want to thank Mr. Rangel for his diligent work on a flurry of last minute bills here. There is some urgency to the bill we are debating today. I also want to acknowledge, to his everlasting relief, that this is the last time Mr. Reynolds will have a chance to speak on the issue of the alternative minimum tax. If we do not pass this legislation today, 25 million families will pay higher taxes this year. That is right, this tax relief is for this year. I might add to this conversation that one of the nice things about this bill, despite how tumultuous these days have been for Members of Congress and for the American citizens watching what has happened to their 401(k) plans, this legislation actually provides middle class tax relief. The current patch expired at the end of the last year, and it is urgent that we pass this relief now. Of those 25 million families facing higher taxes, 84 percent of them earn less than $200,000. In my constituency alone, families paying alternative minimum tax will rise from 8,000 to 69,000 if we do not enact this patch, and only 500 of those unlucky 69,000 people earn more than half a million dollars annually. Clearly, the alternative minimum tax is not the millionaire's tax it was designed to be. For the last decade I have sought to repeal or radically reform the AMT because of the unfairness it wreaks on our progressive tax system. The AMT patch we are considering today costs more than $60 billion, and a reminder to all, next year, $70 billion. But unlike the version we considered earlier this year, we should acknowledge, this one is not offset. Despite partisan efforts in outreach to the other side on the issue of fiscal responsibility, we have, unfortunately, been unable to find common ground. We have run up against the reality of the closing days of Congress, and this legislation simply must be accomplished. Again, I want to congratulate Chairman Rangel on crafting a responsible bill and one which picks up on the good work of our colleagues, Mr. Van Hollen of Maryland and Mr. Johnson of Texas, on the issue of incentive stock options. For a decade, Mr. Johnson and I have tried to find relief for those taxpayers unfortunately caught with a massive AMT bill on phantom stock gains, and today's bill provides relief by abating penalties and interest on underpayments and by allowing quicker recovery of AMT credits. The bill we are considering today is a true hold-harmless patch because it not only extends but increases the AMT exemption level. It also extends protection from AMT for taxpayers with personal, nonrefundable credits, such as education credits and the dependent care credits. Otherwise, taxpayers might lose these essential credits to AMT. I urge adoption of this bill, Madam Speaker. Madam Speaker, I reserve the balance of my time.

Mr. NEAL of Massachusetts. Madam Speaker, I appreciate my friend, Mr. Dreier's, comments, about the alternative minimum tax and how we are going to proceed today, but, let me be blunt, over my objections for the last 8 years, what we talked about today is simply this for the American people that might be viewing this discussion, we are going to borrow the money. I object to it, but I have tried time and again to find concurrence on the other side with a common way forward and have been unsuccessful. Madam Speaker, I would like to yield 2 minutes to the gentlelady from Nevada, a very valued member of the Ways and Means Committee, Ms. Berkley.

Mr. NEAL of Massachusetts. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 7005) to amend the Internal Revenue Code of 1986 to provide alternative minimum tax relief for individuals for 2008.

Mr. NEAL of Massachusetts. I would be prepared to close upon listening to the eloquence of the gentleman from New York.

Mr. NEAL of Massachusetts. Madam Speaker, let me, as I close, acknowledge the work of Chairman Rangel. He has given me considerable latitude not only on this issue but on a range of other issues within the jurisdiction of the committee. We have come up with some pretty good pieces of legislation during the last couple of years. What is striking about this debate is we find ourselves in the same predicament where we will once again convene next year to discuss it. Mr. Rangel's legislation that I helped to author actually repealed the alternative minimum tax and did it in a responsible manner. The fact that we are here today because we couldn't find enough numbers in the House to move forward on the proposal, I think, demonstrates the frustration that we all feel with what has now become a very onerous position for the Congress to entertain. But I do want to thank my friend, Tom Reynolds. And he is my friend. We probably on tax policy disagree on where the sun rises and the sun sets, but it is an example of a friendship that has been able to supersede any of those differences because after the debate of this House is over, socially he has been a good pal for a long time. And I have the impression that he is not going to miss debating alternative minimum tax when he is back in New York. His position has been steadfast in this arena on the issue of AMT, and we have really worked hand in glove with one minor difference: I think rather than borrow the money, I think we should pay for it. And at the same time, I must tell you, he has been a good and humorous friend along the way, and we will miss his presence in the House and on the Ways and Means Committee. Madam Speaker, I urge adoption of the resolution.

Mr. NEAL of Massachusetts. I yield back the balance of my time.

Mr. NEAL of Massachusetts. Madam Speaker, on that I demand the yeas and nays.

Mr. NEAL of Massachusetts. Madam Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to insert extraneous material in the Record.

Mr. NEAL of Massachusetts. Madam Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Kind).

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Madam Speaker, today I am pleased to come before the House to introduce legislation ending the advantage of offshore reinsurance entities over American companies. In the past, I have offered a number of bills to limit offshore tax avoidance and have even previously offered bipartisan legislation on the issue of foreign reinsurance specifically. I am here today to try a different approach to tackle the problem of excessive reinsurance to related foreign entities and I hope my colleagues will join me in this timely effort. Now, some may question why it would be timely to offer this legislation considering that one of the largest U.S. insurance companies was just bailed out by the Fed. I think it is precisely the time to shore up the U.S. market. Already, the speculation has begun as to what parts of AIG will be sold off. A leading insurance industry research entity, Dowling & Partners, posed the question yesterday: ``Will the offshore tax issue be highlighted once again, with much of AIG's business potentially moving to competitors offshore?'' With the advantage of a no- or low-tax jurisdiction from which to operate, you can bet that foreign competitors are already eyeing purchases of the AIG business. There is no doubt that there is a legitimate role for reinsurance. It is a fundamental business technique for risk management and is to be fostered. But just as Congress and Treasury have attempted to measure what is legitimate in sharing debt and earnings between affiliates, there have been attempts to appropriately characterize reinsurance between related entities. Unfortunately, as recent data shows, those attempts have been unsuccessful. Since 1996, the amount of reinsurance sent to offshore affiliates has grown dramatically, from a total of $4 billion ceded in 1996 to $34 billion in 2007, including $19 billion alone to Bermuda affiliates. These insurance profits are shuttled out of the U.S. and then the investment income on those profits is also sheltered from U.S. taxes. It is easy to see why foreign reinsurers, with such a tax benefit, enjoy a significant market advantage. Now we are beginning to see a new problem: the offshore affiliates are writing direct insurance here in the U.S. We have seen in the last decade a doubling in the growth of market share of direct premiums written by groups domiciled outside the U.S., from 5.1 percent to 10.9 percent, representing $54 billion in direct premiums written in 2006. Again, Bermuda-based companies represent the bulk of this growth, rising from 0.1 percent to 4 percent. And it should be noted that during this time, the percentage of premiums ceded to affiliates of non-U.S. based companies has grown from 13 percent to 67 percent. Bermuda is not the only jurisdiction favorable for reinsurance, and in fact earlier this year, one company moved from the Cayman Islands to Switzerland citing ``the security of a network of tax treaties,'' among other benefits. Congress first recognized the problem of excessive reinsurance in 1984 and provided specific authority to Treasury under Section 845 of the tax code to reallocate items and make adjustments in reinsurance transactions in order to prevent tax avoidance or evasion. In 2003, the Treasury Department testified before Congress that the existing mechanisms were not sufficient. In 2004, Congress amended this provision to expand the authority of Treasury to not only reallocate among the parties to a reinsurance agreement but also to recharacterize items within or related to the agreement. Congress specifically cited the concern that these reinsurance transactions were being used inappropriately among U.S. and foreign related parties for tax evasion. Despite this grant of expanded authority, Treasury has still been unable to stem the tide moving offshore. Recently, a coalition of U.S.-based insurance and reinsurance companies has been formed to express their concerns to Congress. With more than 150,000 employees and a trillion dollars in assets here in the U.S., I believe it is a message of concern that we should heed. That is why I am filing legislation today to disallow deductions for excess reinsurance premiums with respect to U.S. risks paid to affiliated insurance companies that are not subject to U.S. tax. The excess amount will be determined by reference to an industry fraction, by line of business, which will measure the average amount of reinsurance sent to unrelated parties. The legislation provides Treasury the authority to carry out or prevent the avoidance of the provisions of this bill. My colleagues may be thinking that this sounds similar to another provision in the code, and they would be right. The tax code currently tries to limit the amount of earnings stripping--that is, sending U.S. profits offshore through inflated interest deductions--by disallowing the interest deduction over a certain threshold. In the reinsurance context, U.S. affiliates of foreign based reinsurance entities may be sending offshore excessive amounts of reinsurance to strip those premiums out of the purview of the U.S. tax system. My bill limits the deduction for those premiums to the extent the reinsurance to a related party exceeds the industry average. I hope that in the coming weeks, my colleagues and experts in the industry will carefully review this new proposal and provide constructive commentary on it. A fuller technical explanation of the bill will be posted on my website, which will provide some background on the industry as well as a technical description of the bill. Madame Speaker, I appreciate the opportunity to address the House on this important matter and I assure my colleagues that I will continue my efforts to combat offshore tax avoidance, regardless of what industry is impacted.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, as the House considers tax legislation to promote the development and deployment of alternative and renewable energy technologies, I rise today in support of the proposed plug-in electric drive motor vehicle tax credit and, in particular, making the tax credit even more robust and immediate by including in the credit road-certified two-wheel vehicles and low- speed neighborhood electric vehicles. I support the underlying bill, but hope as it progresses that this clean energy incentive may also be included. I know that House Ways and Means Committee Chairman Rangel and the House Leadership are committed to renewing existing energy tax provisions and enacting new incentives for environmentally-friendly, domestic energy production. And I believe that the tax credit for plug- in electric drive vehicles is a critical component of that commitment. This tax credit will encourage the ongoing efforts to develop and bring to the marketplace the technology that will be necessary for these vehicles to become a common occurrence on our roads and highways. Tailpipe emissions from the combustion of gasoline and diesel fuel are by far the largest contributors to climate change and the air quality problems that exist in many regions of our country. This tax credit will go directly at addressing these issues by displacing foreign oil with electricity that is domestically produced with--it is my hope--a significant and growing renewable component. The plug-in electric drive vehicle tax credit is so vital to our alternative and renewable energy priorities that it should begin working as soon as it is enacted, but it can only do so by expanding the credit to include both road-certified two-wheel vehicles and low- speed neighborhood electric vehicles, which are now in retail production. These vehicles are specifically designed to address the short-haul transportation needs of urban and suburban communities. Because the first mile of a trip creates the most tailpipe emissions, these vehicles can play an important and significant role in mitigating the unique contribution of urban and suburban transportation to our air quality and climate change problems. If enacted, the plug-in electric drive motor vehicle tax credit will be an important element of our policy to encourage the development and deployment of alternatives to the consumption of foreign oil. As the manufacturers of electric drive two-wheel and low-speed vehicles already are demonstrating, this policy also has the added benefit of creating quality jobs here in the U.S. While the technology for plug-in electric cars is still being developed, road-certified two-wheel vehicles and low-speed neighborhood electric vehicles can begin reducing our reliance on foreign oil today, and including these vehicles in the tax credit will help develop a consumer market for them, just as the credit will help create a market for plug-in electric automobiles and trucks that are expected to come on-line in a few years. Again, I thank the Speaker and Chairman Rangel for their important work on the critical issue of ensuring our Nation's energy security.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Madam Speaker, I rise today in support of the Research and Development tax credit, a credit which has been championed here in the House by my friend and colleague, Representative Sander Levin. He has authored legislation to extend this important credit and I have joined him in this effort. Today, I want to highlight a letter sent to all Members of Congress signed by 3,400 American workers, representing 43 States and well over 100 U.S. companies, ranging from small to large. In this letter, these workers in the research industry urge us to extend and strengthen the R&D tax credit, which expired on December 31, 2007. Already, the House has passed legislation to extend the R&D tax credit. But our Senate colleagues have been unable to do the same. As many of my colleagues already realize, this tax credit is like no other. Without this credit, much of this innovative research would likely migrate to other countries, many which offer their own incentives. Congress needs to enact a seamless and retroactive extension of this credit to ensure that these highpaying technology jobs stay in America. As the 3,400 workers in the R&D industry aptly stated in their letter to Congress: We write to you--from companies across the country both large and small--to address an issue that we believe will affect the likelihood that high-skilled jobs such as ours are located in our communities and in our country. Simply put, we are dismayed that Congress has allowed the R&D tax credit to expire. We know that most of you have lauded the benefits of the credit, and we appreciate this support. We urge you to act now to enact into law an extension of a strengthened credit because research-dependent jobs are at stake. I ask that this letter be included in the Record immediately following my comments. Madam Speaker, I urge my colleagues to contact their counterparts in the Senate to demand immediate action on tax extenders. American workers are waiting and these jobs are simply too good to lose. September 10, 2008. Hon. Harry Reid, Majority Leader, U.S. Senate, The Capitol, Washington, DC. Dear Majority Leader Reid: Our country has always been a hospitable place for invention. It is a reflection of our values and ingenuity. Government policies such as the R&D tax credit are expressions of our desire to innovate and create. We write to you--from companies across the country both large and small--to address an issue that we believe will affect the likelihood that high-skilled jobs such as ours are located in our communities and in our country. Simply put, we are dismayed that Congress has allowed the R&D tax credit to expire. We know that most of you have lauded the benefits of the credit, and we appreciate this support. We urge you to act now to enact into law an extension of a strengthened credit because research-dependent jobs are at stake. The signatures you see on this letter represent just some of the tens of thousands of real people who have benefited positively from the effects of the credit over the past 26 years. You can read studies and surveys, but we are living proof that the vast majority of R&D credit dollars go directly to pay the wages of highly skilled American workers. Between high gas prices and falling home values, it is a difficult time for all Americans. As you work to boost U.S. economic activity, please act quickly to reinstate and strengthen a program with a track record of more than two decades of success. We thank you for your commitment to our country and to U.S. workers. Sincerely, Signed by 3,400 workers in the R&D industry.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 3221.

Mr. NEAL of Massachusetts. Mr. Speaker, at this time I would like to yield 2 minutes to the gentleman from Oregon (Mr. Blumenauer), another member of the Ways and Means Committee.

Mr. NEAL of Massachusetts. With that, Mr. Speaker, I would like to recognize the gentleman from Georgia (Mr. Scott) for 3 minutes.

Mr. NEAL of Massachusetts. Mr. Speaker, as usual, we appreciate the judicious approach to legislation that Mr. McCrery has offered today. As is always the case with legislation that comes to this floor, there are parts of it that some of us don't care for. But he addressed the issue of urgency. The Secretary of the Treasury spoke to the issue of urgency. President Bush dropped his veto threat. And a reminder, the people that are responsible for the tax title portion of this legislation voted for it 35-5 in the Ways and Means Committee. This is complex legislation. There is a virus that is moving through the housing market across America. The result is everywhere for us to see. The softening of markets everywhere are directly related to what's happened in the housing market. We have a chance today to stem the tide of those effects. We should take advantage of it.

Mr. NEAL of Massachusetts. Mr. Speaker, a reminder that the Bush administration and the Secretary of the Treasury, one might argue the most important appointment the President of the United States makes, they have been party to this proposal, they have been involved from day one, they support what we are doing here today. With that, I would like to yield 2 minutes to the gentlelady from New York (Mrs. Maloney).

Mr. NEAL of Massachusetts. Mr. Speaker, might I inquire as to how much time I have remaining?

Mr. NEAL of Massachusetts. Mr. Speaker, I would like to yield 2 minutes to the gentleman from Illinois (Mr. Emanuel), who's had a longstanding interest from the executive branch of government to the legislative branch of government in housing matters, my friend.

Mr. NEAL of Massachusetts. Mr. Speaker, just a quick response. The FHA, which supports this legislation, is a part of the Department of HUD which is appointed by President Bush. In addition, Secretary Paulson, I believe, supports this legislation, and the White House has withdrawn their veto threat. With that, I would like to yield 1 minute to the gentleman from Connecticut (Mr. Larson), also a member of the Ways and Means Committee.

Mr. NEAL of Massachusetts. Mr. Speaker, I recognize myself for 30 seconds. The role of the speculator will be enhanced if we allow this virus to continue to spread. As the homes fall into foreclosure, the speculator and the reach of the speculator will drive prices down in communities across the country. I acknowledge, as the gentleman defined the problem, the challenge, but at the same time, not to act today would be irresponsible. And with that, I would like to yield 2 minutes to the gentleman from New Jersey, a former mayor, Mr. Pascrell.

Mr. NEAL of Massachusetts. Mr. Speaker, I would like to yield at this time 2 minutes to the gentleman from Michigan (Mr. Levin), a member of the Ways and Means Committee. (Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself so much time as I might consume. Mr. Speaker, Finance Committee Chairman Frank and Ways and Means Committee Chairman Rangel have asked the nonpartisan Joint Committee on Taxation to make available to the public a technical explanation of this legislation. The technical explanation, JCX-63-08, expresses the committee's understanding and legislative intent behind this important legislation. It is available on the Joint Committee on Taxation Web site, at www.jct.gov. Mr. Speaker, I stand today in support of H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008. I want to begin by commending Mr. Rangel, the chairman of the Ways and Means Committee, and Mr. Frank, the chairman of the Financial Services Committee, for their tireless efforts on behalf of this bill. It has certainly not been an easy task. With bank failures and foreclosures continuing to headline the news, the pressure to respond has been most remarkable. I have seen it in my back yard. Massachusetts is the sixth in the Nation community for foreclosure activity. In Springfield, the heart of my district, 300 homes have been foreclosed this year, and over 2,000 mortgages will reset to higher interest rates through 2009. In response today, we have a tax title with broad bipartisan support. The tax provisions in this bill are an appropriate mix of incentives for home purchasers, owners, renters, for builders, developers and lenders. Quite simply, they help the housing and real estate industry regain their footing; and they offer struggling home owners a lifeline. How critical that provision. This bill offers hope that if we can get this industry up and moving again, and provide security for distressed home owners, maybe the economy will respond and get back on track as well. We all know how important the housing industry is, not only to American economic security, but to overall economic gain. The provisions in the tax title include: A $7,500 refundable tax credit for first-time home buyers which is available for purchases through next July. An additional standard deduction for property taxes for those who do not itemize. I can't emphasize how important that provision is and how well received it will be. It will be a huge benefit, especially for seniors who have paid off their mortgages but still face property tax bills. A temporary increase in the low-income housing tax credit, which provides affordable housing for working families in all 50 states. A temporary increase in State-issued mortgage revenue bonds and a provision allowing the proceeds to be used to refinance certain subprime loans. The tax title of this bill is fully paid for with three previously approved offsets. I want to just point something out. We have had significant Republican support in the past for these offsets, meaning simply that Republicans have supported the pay-for provisions that we've used. First, the bill uses the Bush administration's credit card reporting proposal which obligates third-party financial institutions that process credit card payments to report to the IRS on annual credit card receipts to a business. Second, the bill delays for 2 years the worldwide interest allocation rule. This tax benefit was enacted in 2004 but delayed until 2009. We simply push off for 2 years a benefit these companies haven't used yet to claim more foreign tax credits and lower their U.S. tax bill. Finally, the bill limits the exclusion of gains on vacation homes. This provision will limit the exclusion of gains to the amount of time a vacation home was a principal residence over the total time owned after January 1, 2009. Mr. Speaker, these tax provisions, along with the provisions brokered by Mr. Frank, are urgently needed. With that, I reserve the balance of my time.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, the issue has been vetted in committee. The House has had an opportunity to work its will, and we're simply asking for an extension based upon the bipartisan support demonstrated here today. I urge adoption of the resolution and urge adoption of the extension.