Don Nickles

Mr. NICKLES

Mr. NICKLES. I want to lend by voice to the positions expressed by both Senator Murkowski and Senator Breaux. It does not make sense to me that sales commission/costs can be anything but deductible.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and the Senator from Florida (Mr. Mack) are necessarily absent.

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo), is necessarily absent.

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) is necessarily absent.

Mr. NICKLES. I announce that the Senator from Florida (Mr. Mack) is necessarily absent.

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) is necessarily absent.

Mr. NICKLES. I announce that the Senator from Florida (Mr. Mack) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from New Mexico (Mr. Domenici) is necessarily absent.

Mr. NICKLES. I announce that the Senator from Utah (Mr. Hatch) and the Senator from New Mexico (Mr. Domenici), are necessarily absent.

Mr. NICKLES. I announce that the Senator from Utah (Mr. Hatch) and the Senator from New Mexico (Mr. Domenici) are necessarily absent. I further announce that, if present and voting, the Senator from Utah (Mr. Hatch) would vote ``no.''

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Utah (Mr. Hatch), the Senator from Missouri (Mr. Bond), the Senator from New Mexico (Mr. Domenici), the Senator from Arizona (Mr. McCain), the Senator from Alabama (Mr. Sessions), and the Senator from Alabama (Mr. Shelby) are necessarily absent. I further announce that, if present and voting, the Senator from Utah (Mr. Hatch) would vote ``yea.''

Mr. NICKLES

Mr. NICKLES. Mr. President, I have been working for several years to clarify a provision of the tax code which treats certain truck drivers as ``statutory employees,'' meaning they are independent contractors except for payroll tax purposes. Prior to 1991, these individuals could pay their own payroll taxes if they had a substantial investment in a distribution route. However, a 1991 IRS ruling said that an investment in a distribution route no longer qualified as an investment in ``facilities.'' This reversal by the IRS has created much uncertainty, particularly in the bakery industry. I have prepared an amendment to clarify that an investment in facilities can include a substantial investment in a distribution route, area, or territory. Thus, an independent-contractor truck driver who has a substantial investment in a distribution route or territory will not be treated as a statutory employee for FICA and FUTA tax purposes. Unfortunately, I am prevented from offering my amendment to this tax reconciliation bill because it affects the Social Security program. Under Section 310(g) of the Budget Act, the adoption of my amendment would cause the entire bill to be subject to a 60-vote point of order. Therefore, I will not offer my amendment to this bill. However, I ask my colleague from Delaware, Senator Roth, if he would work with me to consider this amendment on the next non-reconciliation tax measure considered by the Senate Finance Committee.

Mr. NICKLES. Mr. President, if I might have the attention of the Senate, a moment ago we had a voice vote on the Snowe amendment and there was some question on the outcome. I think the Chair ruled ``no'' on the Snowe amendment, and I personally think there was a significant question about that. A lot of people voted in favor of the Snowe amendment. So I move to reconsider the vote on the Snowe amendment.

Mr. NICKLES. Mr. President, I urge my colleagues to support the Gregg amendment.

Mr. NICKLES. Mr. President, I urge our colleagues to vote no on this amendment, both on substance and also on a germaneness point, which I will raise in a moment. The Senator is proposing a $6,000 tax credit if somebody is trained as a high-tech employee. We are going to have the Federal Government saying in this one area we want to pay $6,000 for this person to be trained how to run computers. I want people to learn how to run computers. Millions of people are doing it today. They don't need the Federal Government to give them $6,000 to do it. What about steelworkers? What about auto workers? What about oil workers? What about factory workers? We don't do it for them. We shouldn't do it for this industry. Also the Senator pays for it by taking away the tax benefits we have that allow people to enhance their retirement income. I think that is a serious mistake. I make a point of order against the amendment under section 305 of the Budget Act on the grounds that it is not germane, and I ask for the yeas and nays.

Mr. NICKLES. One, I appreciate our colleague's willingness to have a voice vote. I encourage others to have voice votes. For the information of all Senators, I think we are making good progress. We only have a few amendments left, maybe just three or four that require votes. I urge our colleagues, on this particular motion--despite my colleague's very good intentions--to vote no by voice vote.

Mr. NICKLES. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. BINGAMAN addressed the Chair.

Mr. NICKLES. I think this procedure would be a serious mistake. We don't want Federal bureaucrats trying to improve school construction programs. I think it would be a serious mistake. We should leave those decisions of which schools to be building and which schools to repair to the State and local governments. I move to table the motion, and I ask for the yeas and nays.

Mr. NICKLES. Mr. President, I thank the majority leader, the minority leader, and also Senator Roth, Senator Reid, and Senator Moynihan. We have made very good progress in reducing the number of amendments. I think we are down to maybe a few amendments. I know that on this side we are only looking at one or two that would require a rollcall vote. We are trying to make it one or two. We have a few more requests. I think we are making good progress. I know Senator Reid is making good progress. That is for the information of our colleagues. We would also like to keep the rollcall votes to 10 minutes. The last rollcall vote went a little extra. We are going to finish this bill today. It is in everybody's interest to stay on the floor and to have timely rollcall votes. We expect to accept a couple of amendments right now. That will help expedite the process. I yield the floor. Amendment No. 1452 (Purpose: To increase the mandatory spending in the Child Care and Development Block Grant by $10,000,000,000 over 10 years in order to assist working families with the costs of child care, and for other purposes)

Mr. NICKLES. Mr. President, we should not be passing a law on a tax cut bill to say it is against the law anywhere in the country to work for $6.10 an hour, that the Federal Government, in its infinite wisdom, decided if you don't have a job that pays at least $6.15 an hour you should be unemployed. That would be a serious mistake. This language in this amendment is not germane to the bill now before us. I now raise a point of order under section 305(b)(2) of the Congressional Budget Act.

Mr. NICKLES. I move to lay that motion on the table. The motion to lay on the table was agreed to. Motion to Recommit

Mr. NICKLES

Mr. NICKLES. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. NICKLES. Looking at the provision offered by our colleagues, in the substitute they have $19 billion of estate tax relief and the estate tax relief offered by the underlying proposal is $63 billion. So it does a lot more in estate tax relief in the chairman's bill than what is offered in the substitute. I happen to believe in estate tax reform very strongly, and not because it benefits the wealthy. I happen to believe it is a matter of fundamental fairness and freedom. People should be able to work their entire life and be able to pass their property on to their kids without Uncle Sam coming in and saying that we want half or even over half. The chairman's amendment helps make that change. Also in the underlying bill, we increase retirement savings. Everybody in this room knows we do not save near enough. What we do under the underlying bill is we increase IRAs over a 3-year period from $2,000 to $5,000. We do that in both the IRAs that are tax exempt going in and the Roth IRAs, into which you may put after-tax dollars. That means we are allowing people to put in more money to save for their own retirement. The $2,000 limit goes back for years and has not been indexed for inflation. Frankly, we in Congress should encourage savings. We want people to be less dependent on Government, more dependent on themselves, to be able to save for their retirement. Increasing this amount from $2,000 to $5,000 is a giant step in the right direction. Again, I compliment the chairman. This provision is in his bill. It is not in most of the other bills. I do not believe it is in the substitute as well. Finally, I want to touch on one other thing, and that is the self- employed health care deductibility. The chairman's bill says, for self- employed persons, we are going to allow 100-percent deductibility. We had this debate actually when we were debating the Patients' Bill of Rights. It was included in the measure we passed on the floor of the Senate. I argued then if we want to increase health care access, we should at least make the Tax Code equitable, and it is not equitable. Major corporations today get to deduct 100 percent of their health care costs; self-employed deduct 45 percent. What is right about that? What is right about a code that says: Self-employed person, you deduct 45 percent but GM or any corporation in America, you deduct 100 percent? I am offended by that section in the Tax Code and I support this bill for making that much needed change. I used to be self-employed. I used to run a corporation. A corporation deducts 100 percent, but if you are self employed tough luck, you only get to deduct 45 percent. Then the chairman's package also has a major expansion for people who do not get anything from their employer. If they pay over half their health care cost, they get to have an above-the-line deduction for their health care expense. Again, why in the world, if we are going to use the Tax Code to encourage health care, why do we not let it apply to everybody in America? We do not do that today. If you do not work for a generous employer who subsidizes your health care, you are out of luck. If you are not self-employed, you are out of luck. You have to pay for your health care with after-tax dollars. You do not get any deduction. The chairman's bill changes that inequity and says, yes, you eventually get a 100-percent deduction. It phases that in, but eventually that person gets a 100-percent deduction for their health care cost as well, and they do not have to itemize to get it. All taxpayers would get it. Again, this is a giant step in the right direction in bringing tax equity in health care costs. When we allow people to buy homes and we say you can deduct your interest, we do not say you have to work for a generous employer to be able to deduct the interest. Everybody gets it. We are free to use the Tax Code to encourage health care. It should apply to everybody, and again, the chairman's package makes a giant step in that direction. The chairman's package does many other things. It allows an extension of time for people to be able to deduct their student loans; it allows a continued deduction for companies that have educational plans and benefits; it has a plan to help in education; it has a plan to help in health care; it has a plan to help increase savings and retirement and 401(k)s; it has a plan to allow people to keep more of their own money; it eliminates the marriage penalty. I tell my colleagues that those are things we need which will help American families. That is not just a tax cut for the wealthy. That is not something my colleagues can demagog. They may want to, but if they want to demagog, where do they want to cut? Do they want to eliminate the permanent R&D tax credit? Do they want to eliminate the self- employed deductibility? Do they want to eliminate the marriage penalty? Do they want to eliminate the reduction in rate from 15 to 14? Do they want to eliminate the expansion of the 15-percent tax bracket? I don't think so. I think the chairman has put together a good package and that package, yes, costs $792 billion. I say costs. It is going to allow people to keep $792 billion of their own money. They are going to be sending in over $3 trillion more than the Federal Government needs in the next 10 years. We are saying we are going to let them keep some of that themselves. The chairman has crafted this in a way that is going to help a lot of middle-income working Americans who are interested in health care, who are interested in education, who want to not be penalized because they happen to be married. So I compliment him for his package. I urge my colleagues, with all great respect for the amendment that is pending, I urge them to vote no on that amendment because we can do more, and we should do more. The American taxpayers deserve more, deserve better. I hope our colleagues vote no on the pending amendment and vote yes on final passage, hopefully tonight. I will mention, as far as procedurally, I hope we can finish this bill tonight. It is possible. It will not be easy, and our colleagues will have to work together to make that happen, but I hope it will be possible for us to have final passage on the underlying amendment later tonight. I yield the floor. I thank my colleague from Delaware.

Mr. NICKLES. I ask an additional 10 minutes on the amendment.

Mr. NICKLES. Mr. President, first I would like to thank my colleague, Senator Roth, for his management of this bill and for bringing this bill to the floor of the Senate. I am going to talk preliminarily about the bill. First, let me say to our colleagues who are offering the $500 billion substitute that I compliment them for the fact that they are trying to work to reduce taxes. I think that is important. There are several provisions they have in their bill that I compliment them for. Most of all, I want to talk about the bill that is before us, the bill as reported out of the Finance Committee by a vote of 13-7. That was a bipartisan vote. I think that is important. Again, I think that happened in large part because of the Senator from Delaware and because of the content of the bill. I think that maybe we spent too much time talking about numbers. Maybe that is partly my fault. I like talking about numbers. We have a $3 trillion surplus. We are going to give a tax cut of $782 billion. That is about 25 cents on the dollar. We are going to take two-thirds of the surplus and use that for debt retirement. That is good. Some people say: Wait a minute. You are not reducing the debt enough. We reduced the debt more than Clinton's proposal. Maybe that is good. I think that is probably good. Concerning the tax cut and total of the estimated surplus: Some people may say: Maybe the estimates aren't right. Maybe they are too optimistic. And even though we are only taking one-fourth of the surplus and allowing people to keep it, they don't want to give it back to the taxpayers. They'd rather spend it. Well, that is not what a tax cut is. A tax cut let's people keep more of their money. They do not have to get it back from Washington, DC. Is it their money, or is it Washington's money? It is their money. Is it not a gift from us. We are taking it from them right now. In some cases we are taking too much. In some cases the taxes we are taking from people are unfair. I am going to talk about that because the bill we have before us alleviates some of those problems. It doesn't solve all the problems, but it alleviates some of the problems. Is it the best bill imaginable and perfect? No. But it does go a giant step toward eliminating inequities and injustices in the tax bill. I say ``injustices.'' There are some cases in the 1999 Tax Code where the taxes are unfair. It is absolutely unfair for a married couple to have to pay more taxes than if they were living together and unmarried. It is unfair to have a tax penalty for being married--absolutely unfair. That is in the Tax Code today. The bill of the Senator from Delaware eliminates that. We want to get rid of it. Unfortunately, that doesn't happen under the Democrats' proposal. Let me talk about that for a second. Somebody says: Well, you eliminate the marriage penalty. What does the House do? The House basically doubles the exemption for single people and for couples. That is one way of taking care of the exemption. But it doesn't eliminate the fact that a lot of people have combined incomes that push them into higher income brackets. For example, an individual with a taxable income of $25,000 is taxed at 15 percent. Anything above that, they are taxed at 28 percent. That is kind of simple. Let's say you have two teachers who are married, and they have a taxable income of $25,000. If they file as individuals, they are both taxed at 15 percent. If they are married, their combined income pushes them into a 28-percent tax bracket. They are penalized. It just so happens, as it works out, that in this case they are penalized $1,400. Where did I get that? They have a combined income of $50,000. A 28-percent tax bracket actually kicks in at $42,000. They have $8,000 that is taxed at a 14- percent rate. It is higher than what somebody is paying at the 14- percent rate. Senator Roth's bill moves the bottom rate from 15 to 14. The difference between 28 and 14 is 14 percent. Fourteen percent times the number of thousands, if it is $10,000, that is $1,400. This hypothetical couple pays an additional $1,400 more per year for being married. We shouldn't penalize them for that. In the bill each couple has the option of being taxed individually. If one member of the couple is taxed at 28 percent, fine. It doesn't mean the next spouse has to be taxed at that rate as well. Maybe the income of that spouse, male or female, might be significantly lower. It would be taxed at a lower rate. Why tax them at the highest rate? We shouldn't do that. We eliminate that in this bill. That is not insignificant. The example I gave was a $1,400 differential. CBO says the average marriage penalty is $1,400. We should be able to eliminate that, and we do eliminate it in this bill. Who benefits? Nineteen million married returns would have that inequity eliminated. That is in this bill. Let me talk about the 14-percent bracket expansion. I wasn't particularly fond of this idea. I thought, why move the 15-percent rate to 14 percent? What does that mean? Somebody asked me the other day on a radio show: What does that mean to me as a taxpayer? It means we have a benefit for all taxpayers. Any taxpayer will benefit. How much do you benefit? Individuals, up to $250; and a couple, $430. Therefore, a couple who makes up to, I think, $48,000 receives a $430 benefit. Somebody said the tax benefit in the bill is only 50 cents a day. Their numbers are not adding up. The benefit of that is $430 a couple. I will touch on the bracket expansion. I want to compliment our colleagues on the pending amendment. They expand the 15-percent bracket up. We have that in this bill, too, under the pending bill authored by Chairman Roth. We expand the 15-percent bracket. That means a lot of people who are paying 28 percent will pay 15 percent. We increase that by $5,000 per couple or $2,500 for an individual. That means a couple will save $700. If they have a combined income of $42,000, we save them $700 by reducing the rate from 15 to 14. For a couple earning $40,000 or more will save $1,130 under the bill. That is almost $100 a month. I use the test sometimes of my son and his wife. He sells cars, and she is a schoolteacher. They have one child. How will this benefit them? From those two provisions alone, they will save almost $100 a month in taxes, and they are a middle-income, tax-paying family. I think that is a good provision. When combined with marriage penalty relief, the average married couple will realize significant savings through this bill. For instance, those items together come to $1,100 just in the rate reduction and the expansion of the 15-percent rate. Then there is $1,400 savings in eliminating the marriage penalty. Now we are talking about $2,500 per year for a married couple making $40,000, $50,000, or $60,000 a year. That is not insignificant. That is $200 a month. We are helping a lot of people. The number of people who would benefit from expanding the 15-percent rate upwards, so they don't have to pay 28 percent, is a reduction of 13 or 14 percent --13 percent by the substitute offered and 14 percent by Chairman Roth's proposal. Chairman Roth's proposal says to individuals in that category, we are going to cut their rate in half for that additional $5,000. That is a significant savings. Add that all together, and we are talking about $2,500 for a couple who make $40, $50, or $60,000. That is not insignificant. Mr. President, 98 million people will benefit from the reduction in the 15 to 14 percent income bracket, 80 million who have incomes less than $75,000. In other words, it is a tax cut for taxpayers, not necessarily targeted the way as some others might like, but it is a tax cut that is weighted on the lower end of the tax schedule. Moving the 14-percent bracket up, 36 million middle-class people will benefit from that provision; 19 million married returns will benefit from elimination of the marriage penalties. Then there is something else that hardly anybody is talking about. We have a provision that eliminates the penalty called alternative minimum tax that disallows a lot of the tax credits we have already passed. In 1997 we passed a tax credit, $500 per child. It was $400 last year, $500 this year. That is law. I know a lot of the people arguing against the Republican tax bill didn't like it when we passed that in 1997. I had an appearance last night with Gene Sperling, and he said the President supported the $500 tax credit for a child. Maybe a little history would be in order. The President campaigned for it in 1992, and he forgot about it in 1993 when he raised taxes on all Americans. Not only did he forget about it, but he did a tax increase rather than a tax cut. It wasn't until 1995 that the $500 tax credit passed again. That was when Republicans took control. We passed the bill, and the President vetoed it. We passed it again in 1997, and he signed it. Now they are trying to take credit for it. They didn't want a tax cut in 1995, they didn't want a tax cut in 1997, but we gave it to him and he signed it. Now that is law. Because of AMT, a lot of people are not able to take full advantage of that tax credit or child care tax credit--13 million families, and I tell my colleagues that number is growing every year. Senator Roth's amendment has significant relief. My colleagues will be interested to know that is $96 billion. Over one-tenth, about 12 percent, of the entire tax bill is targeted toward AMT relief on American families. I have not heard anybody talk about it. If anybody thinks that provision is wrong, offer an amendment to strike it out. If anybody thinks the marriage penalty provision, which is $112 billion--again, probably about 15 percent of this entire package--is too generous, if Members don't think we should have marriage penalty relief, offer an amendment and take it out. If Members don't think we should cut the rate from 15 percent to 14 percent--which is $298 billion, which is the biggest provision in this entire bill, which is three-eighths of the entire bill--if Members don't think it should be in there, take it out. I would oppose any such amendments, because these provisions are at the heart of this legislation and are what make this bill a tax cut for taxpayers on the lowest end of the ladder. A lot of people say the Republican package is a tax cut for the rich. It is not. Those people have not read the bill. This bill reduces taxes for all taxpayers, including people at the lowest end of the economic ladder. The provisions I discussed are $506 billion out of $792 billion. That is over five-eighths of the bill I have already described. I haven't heard anybody single out any of those sections and say: that is a bad provision, we shouldn't have that provision. Let me discuss a couple of other areas in this bill and why we should pass the bill. Let me talk about estate taxes. A lot of people are not aware of how the amendment of the Senator from Delaware works. It replaces the unified credit with an exemption. Most people say: What in the world are you talking about? Unified credit, under the existing system, says we will credit you so much in taxes, and you don't have to pay; but above that, you start paying taxes at whatever rate it is. It means if you have a taxable estate, once you start paying taxes, you start paying taxes at a 39-percent rate. If you have a taxable estate of $1 million, 39 percent goes to the Government. What we do by replacing the unified credit with an exemption is, once you run out of the exemption, you start paying taxes at the lowest rate, which is 18 percent. That is a big difference. That is a big difference for estates that are barely taxable. So, if you are over the exemption amount--the exemption amount today is $650,000--and you don't have to have a lot of property or a lot of wealth to have an estate of $650,000, if you get above that, your tax would be 18 percent instead of 39 percent. That is a big difference, and I compliment the chairman for doing it. Frankly, I would like to eliminate the estate taxes and have the taxable event not be death but when the property is sold. Senator Kyl and others have been advancing that. I think that is an excellent idea. You should not be taxing somebody because somebody dies. You should tax them when that property is sold. If the people who receive the property, the beneficiaries, the family, if they want to keep the business and keep the business operating and running, great. If they want to sell the business, tax it as a capital gain and tax it at the old valuation, at whatever escalation has been in the market value. That is the capital gain. That is what the taxable event should be, when the property is sold--not because somebody dies. Again, the chairman's provision, exchanging the unified credit for an exemption, is a giant step towards, basically, bringing about some relief in estate taxes which I think is critically important. If you believe, as do I, in family-owned businesses, if you believe the Government is not entitled to take over half of people's property just because they pass away then you should support this bill. Somebody said earlier this provision in the bill only benefits the wealthy. I disagree strongly with that statement. My father, unfortunately, passed away when I was pretty young and we had a family-owned business, Nickles Machine Corporation, in Ponca City, OK. We had a significant dispute with the IRS for 7 years about the valuation of this company. The IRS said: We think it is worth a whole lot more and we want you to pay a lot of taxes. My mother did not pass away; my brothers and sisters did not pass away--just my father. And he was second generation in this business. Yet the Government said: We want a chunk of it. The estate tax rate today says any estate over $3 million, they want 55 percent. Why in the world would the Federal Government be entitled to take over half of what somebody worked his or her entire life for because somebody passed away? One of the changes we made in 1981, it has been seldom noticed, but one of the great changes we made, we eliminated the inheritance tax between spouses so surviving spouses do not have to pay a dime of inheritance tax. That is a positive change. I was here and had a little something to do with it, and I am very pleased we made that change. But it isn't enough. Now, even though we have made that change, when the surviving spouse passes away and you have a taxable estate of $3 million--maybe it is a manufacturing company, maybe it is a farm or ranch, maybe it is a restaurant, and it happens to be worth $3 million--the Federal Government comes in and says: We want half. I absolutely think that is wrong. That is one of the many reasons why I think we need a tax cut today. That is one of the reasons why I think we need a greater tax cut than the alternative proposed by our colleagues that would provide $500 million. I note the estate tax relief they have in their provision----