IV

106TH CONGRESS

2D SESSION H. RES. 467

Expressing the sense of the House of Representatives that the tax and

user fee increases proposed by the Clinton/Gore administration in their

fiscal year 2001 budget should be adopted.

IN THE HOUSE OF REPRESENTATIVES

APRIL 10, 2000

Mr. TERRY submitted the following resolution; which was referred to the

Committee on Ways and Means

RESOLUTION

Expressing the sense of the House of Representatives that

the tax and user fee increases proposed by the Clinton/

Gore administration in their fiscal year 2001 budget

should be adopted.

Whereas on February 7, 2000, President Clinton and Vice

President Gore submitted a budget for fiscal year 2001

that raises taxes and fees on working families by $116

billion over 5 years, creates 84 new Federal programs,

places Government spending increases on auto-pilot, and

fails to offer any serious proposal to strengthen social security or medicare;

Whereas over the next decade the Clinton-Gore budget would

spend $1.3 trillion on bigger Government—consuming 70

percent of the projected $1.9 trillion in budget sur-
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pluses—thus spending more for the Federal bureaucracy,

and less for the American family;

Whereas as part of the $116 billion in tax and fee

increases—

(1) the President proposes to raise taxes by $12.8

billion on the insurance products which Americans rely

on to protect their families, homes, and businesses,

(2) the President proposes a stealth tax on our children by raising the death tax by $3.5 billion,

(3) the President asks us to increase taxes on energy

by $1.5 billion at a time of rising energy prices and increasing dependence on foreign oil, and

(4) the President wants to raise medicare premiums

and other health care costs by $3.2 billion at the very

time we are trying to insure our seniors’ health security

by preserving and protecting medicare; and

Whereas the President’s solution is to take hard-earned

money and send it to Washington where politicians can

spend it: Now, therefore, be it

1 Resolved, That is it the sense of the House of Rep2 resentatives that—

3 (1) despite having successfully balanced the

4 budget and created budget surpluses,

5 (2) despite having protected social security and

6 restored the integrity of the social security trust

7 fund,

8 (3) despite the fact that in 1999 governments

9 at all levels collected $9,562 in taxes for every man,

10 woman and child,
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1 (4) despite the fact our tax burden is at 20.0

2 percent of gross domestic product—a post-World

3 War II record high, and

4 (5) despite the fact that our oversight activities

5 have identified billions of taxpayer’s dollars that are

6 subject to waste, fraud and abuse,

7 the Congress should support the adoption of the package

8 of tax and user fee increases proposed by the Clinton/Gore

9 administration in their fiscal year 2001 budget, as reesti10 mated by the Joint Committee on Taxation, and as out11 lined below.

PROPOSED TAX AND FEE INCREASES

(Millions of dollars)

2000–05

I. PROPOSED TAX INCREASES

A. Corporate Tax Provisions

1. Five corporate tax provisions with general application ...... 2,340

2. Require accrual of time value element on forward sale of

corporate stock .................................................................... 41

3. Modify treatment of ESOP as S corporation shareholder 169

4. Limit dividend treatment for payments on self-amortizing

stock .................................................................................... 10

5. Prevent serial liquidations of U.S. subsidiaries of foreign

corporations ........................................................................ 43

6. Prevent capital gains avoidance through basis shift transactions involving foreign shareholders ................................ 270

7. Prevent mismatching of deductions and income inclusions

in transactions with related foreign persons ....................... 229

8. Prevent duplication or acceleration of loss through assumption of liabilities .......................................................... 93

9. Amend 80/20 company rules .............................................. 167

10. Modify corporate-owned life insurance (‘‘COLI’’) rules ... 2,026

11. Increase depreciation life by service term of tax-exempt

use property leases .............................................................. 66

B. Financial Products

1. Require cash-method banks to accrue interest on shortterm obligations .................................................................. 76

2. Require current accrual of market discount by accrual

method taxpayers ................................................................ 52
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•HRES 467 IH

PROPOSED TAX AND FEE INCREASES—Continued

(Millions of dollars)

2000–05

I. PROPOSED TAX INCREASES

3. Modify and clarify certain rules relating to debt-for-debt

exchanges ............................................................................ 136

4. Modify and clarify straddle rules ....................................... 95

5. Provide generalized rules for all income-stripping transactions ................................................................................. 65

6. Require ordinary treatment for options dealers and commodities dealers ................................................................... 93

7. Prohibit tax deferral on contributions of appreciated

property to swap funds ....................................................... NR1

C. Provisions Affecting Corporations and PassThrough Entities

1. Conform control test for tax-free incorporations, distributions, and reorganizations ................................................... 86

2. Treat receipt of tracking stock as property ....................... 477

3. Require consistent treatment and provide basis allocation

rules for transfers of intangibles in certain nonrecognition

transactions ......................................................................... 145

4. Modify tax treatment of certain reorganizations in which

portfolio interests in stock disappear .................................. 283

5. Clarify definition of nonqualified preferred stock .............. 73

6. Clarify rules for payment of estimated taxes for certain

deemed asset sales .............................................................. 120

7. Modify treatment of transfers to creditors in divisive reorganizations .......................................................................... 46

8. Provide mandatory basis adjustments if partners have

significant built-in loss in partnership property ................. 159

9. Modify treatment of closely-held REITs ............................ 45

10. Apply RIC excise tax to undistributed profits of REITs 4

11. Allow RICs a dividends paid deduction for redemptions

only if the redemption represents a contraction in the RIC 1,911

12. Require REMICs to be secondarily liable for the tax liability of REMIC residual interest holders ........................ 69

13. Deny change in method treatment in tax-free transactions ................................................................................. 25

14. Deny deduction for punitive damages .............................. 233

15. Repeal the lower-of-cost-or-market inventory accounting

method ................................................................................ 2,032

16. Disallow interest on debt allocable to tax-exempt obligations .................................................................................... 87

17. Capitalization of commissions by mutual fund distributors ...................................................................................... 461

D. Cost Recovery Provisions

1. Provide consistent amortization periods for intangibles .... 969

2. Establish specific class lives for utility grading costs ........ 307

3. Extend the present-law intangibles amortization provisions to acquisitions of sports franchises ............................ 245

E. Insurance Provisions

1. Require recapture of policyholder surplus accounts ........... 1,622
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•HRES 467 IH

PROPOSED TAX AND FEE INCREASES—Continued

(Millions of dollars)

2000–05

I. PROPOSED TAX INCREASES

2. Modify rules for capitalizing policy acquisition costs of insurance companies .............................................................. 5,084

3. Increase the proration percentage for property and casualty insurance companies .................................................. 323

4. Modify rules that apply to sales of life insurance contracts 140

5. Modify qualification rules for tax-exempt property and

casualty insurance companies ............................................. 87

F. Tax-Exempt Organization Provisions

1. Subject investment income of trade associations to tax ..... 730

2. Penalty for failure to file Form 5227 ................................ 7

G. Estate and Gift Tax Provisions

1. Restore phaseout of unified credit for large estates .......... 430

2. Require consistent valuation for estate and income tax

purposes .............................................................................. 50

3. Require basis allocation for part-sale, part-gift transactions ................................................................................. 5

4. Eliminate the stepped-up basis in community property

owned by surviving spouse .................................................. 229

5. Require that qualified terminable interest property for

which a marital deduction is allowed be included in the

surviving spouse’s estate ..................................................... 8

6. Eliminate non-business valuation discounts ....................... 2,985

7. Eliminate gift tax exemption for personal residence trusts 28

8. Eliminate the Crummey rule and modify requirements for

annual exclusion gifts ......................................................... 45

H. Pension Provisions

1. Increase elective withholding rate for nonperiodic distributions from deferred compensation plans ............................. 60

2. Increase section 4973 excise tax on excess IRA contributions .................................................................................... 39

3. Impose limitation on prefunding of welfare benefits .......... 873

4. Subject signing bonuses to employment taxes ................... 27

5. Clarify employment tax treatment of choreworkers employed by State welfare agencies ........................................ RS 2

6. Prohibit IRAs from investing in foreign sales corporations 126

I. Compliance Provisions

1. Modify the substantial understatement penalty for large

corporations ........................................................................ 15

2. Repeal exemption for withholding on certain gambling

winnings .............................................................................. 31

3. Require information reporting for private separate accounts .................................................................................. NR1

4. Increase penalties for failure to file correct information

returns ................................................................................. 47

J. Miscellaneous Revenue-Increasing Provisions

1. Modify deposit requirement for Federal Unemployment

Tax Act (‘‘FUTA’’) ............................................................. 1,367

2. Reinstate Oil Spill Liability Trust Fund excise tax and

increase trust fund ceiling to $5 billion (through 9/30/10) 1,022
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•HRES 467 IH

PROPOSED TAX AND FEE INCREASES—Continued

(Millions of dollars)

2000–05

I. PROPOSED TAX INCREASES

3. Repeal percentage depletion for non-fuel minerals mined

on Federal and formerly Federal lands .............................. 410

4. Impose excise tax on purchase of structured settlements .. 12

5. Require taxpayers to include rental income of residence in

income without regard to period of rental .......................... 75

6. Eliminate installment payment of heavy vehicle use tax ... 320

7. Require recognition of gain from the sale of a principal

residence if acquired in a like-kind exchange within 5

years of the sale .................................................................. 45

K. International Provisions

1. Require reporting of payments to, and restrict tax benefits for income flowing through, identified tax havens ....... 100

2. Modify treatment of built-in losses and other attribute

trafficking ........................................................................... 524

3. Simplify taxation of property that no longer produces income effectively connected with a U.S. trade or business .. NR1

4. Impose mark-to-market tax on individuals who expatriate 500

5. Expand U.S.-effectively connected income rules to include

more foreign-source income ................................................ 26

6. Limit basis step-up for imported pensions ......................... 50

7. Replace sales-source rules with activity-based rules .......... 7,828

8. Modify rules relating to foreign oil and gas extraction income .................................................................................... 1,151

9. Recapture overall foreign losses when controlled foreign

corporation stock is disposed .............................................. 18

10. Modify foreign office material participation exception applicable to certain inventory sales ....................................... 25

L. Other Provisions Requiring Amendment of the

Internal Revenue Code

1. Hazardous Substance Superfund Taxes:

a. Reinstate environmental tax imposed on corporate

taxable income and deposited in the Hazardous Substance Superfund ........................................................ 3,600

b. Reinstate excise taxes deposited in the Hazardous

Substance Superfund .................................................. 3,853

2. Convert a portion of the excise taxes deposited in the Airport and Airway Trust Fund to cost-based user fees (Administration’s estimate) ...................................................... 6,667

3. Increase excise taxes on tobacco products .......................... 37,313

4. Repeal harbor maintenance excise tax and authorize imposition of cost-based harbor services user fee ................... ¥2,742

5. Accelerate rum excise tax coverover payments to Puerto

Rico and the U.S. Virgin Islands ....................................... —

6. Restore Premiums for United Mine Workers of American

benefit fund ......................................................................... 43

Total: Provisions increasing revenue ............................. 88,946
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PROPOSED TAX AND FEE INCREASES—Continued

(Millions of dollars)

2000–05

II. PROPOSED FEE INCREASES

A. Proposals for Discretionary User Fees

1. Offsetting collections deposited in appropriation

accounts

Department of Agriculture:

Food Safety Inspection Service fees ....................................... 3,098

Animal and Plant Health Inspection Service ......................... 55

Grain Inspection, Packers and Stockyards Administration ... 115

Department of Commerce:

National Oceanic and Atmospheric Administration, Navigational assistance fees ........................................................... 70

Fisheries management fees ..................................................... 100

Department of Health and Human Services:

Food and Drug Administration fees ....................................... 95

Health Care Financing Administration fee proposals:

Managed care application and renewal fees ........................... 105

Provider initial certification fees ............................................ 65

Provider recertification fees .................................................... 250

Paper claims submission fees ................................................. 415

Duplicate and unprocessable claims fees ................................ 265

Increase Medicare+Choice fees .............................................. 646

Nursing home criminal abuse registry fee .............................. 20

Department of the Interior:

User fees on Outer Continental Shelf lands ........................... 50

Department of Justice:

Hart-Scott Rodino pre-merger filing fees ............................... 190

Department of Transportation:

Coast Guard, navigational services fees ................................. 2,826

Federal Railroad Administration, rail safety inspection fees 515

Hazardous materials transportation safety fees ..................... 95

Surface Transportation Board fees ........................................ 85

Department of the Treasury:

Customs, automation modernization fee ................................. 1,050

Federal Trade Commission:

Hart-Scott Rodino pre-merger filing fees ............................... 190

National Transportation Safety Board:

Commercial accident investigation fees .................................. 50

2. Offsetting collections deposited in receipt accounts

Department of Justice:

Immigration premium processing fee ..................................... 85

Increase inspection user fees .................................................. 835

Department of Transportation:

Pipeline safety fees ................................................................. 59

Environmental Protection Agency:

Pesticide registration fees ....................................................... 16

Pre-manufacture notice (PMN) fees ...................................... 36

Nuclear Regulatory Commission:

Extend Nuclear Regulatory Commission user fees ................ 1,475
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PROPOSED TAX AND FEE INCREASES—Continued

(Millions of dollars)

2000–05

Subtotal, proposals for discretionary user fees ............... 12,856

B. Proposed Fee Increases to Offset Mandatory

Spending

1. Offsetting collections deposited in appropriation

accounts

Department of Agriculture:

Federal crop insurance ........................................................... 69

Department of Labor:

Implement alien labor certification fees ................................. 626

Federal Emergency Management Agency:

Flood map license fee for flood map modernization ............... 546

2. Offsetting collections deposited in receipt accounts

Department of Agriculture:

Recreation and entrance fees .................................................. 162

Concession, land use, right of way, and filming permits ........ 52

Department of Health and Human Services:

Medicare premiums ................................................................. 1,446

Department of the Interior:

Recreation and entrance fees .................................................. 297

Filming and special use permits fees ..................................... 19

Hardrock mining production fees ........................................... 86

Department of the Treasury:

Customs, extend conveyance/passenger fee ............................ 889

Customs, extend merchandise processing fee ......................... 2,095

Subtotal user fee proposals to offset mandatory spending ............................................................................... 6,287

Total user fee proposals ....................................................... 19,143

1 Negligible or no revenue effect.

2Requires specification.

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