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[House Report 105-50]
[From the U.S. Government Publishing Office]

105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     105-50
_______________________________________________________________________

 
 PROPOSING AN AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES WITH 
                       RESPECT TO TAX LIMITATIONS

                                _______
                                

 April 10, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________

 Mr. Canady of Florida, from the Committee on the Judiciary, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                      [To accompany H.J. Res. 62]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
joint resolution (H.J. Res. 62) proposing an amendment to the 
Constitution of the United States with respect to tax 
limitations, having considered the same, report favorably 
thereon with an amendment and recommend that the joint 
resolution as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
  I. Application of the Amendment.....................................3
 II. The ``de minimis'' Exception and Implementing Legislation........3
III. Prior Legislative Action.........................................4
 IV. State Tax Limitation Laws........................................5
  V. Supermajority Requirements and Taxation..........................5
 VI. Standing to Sue Under the Tax Limitation Amendment...............7
VII. Differences Between the Tax Limitation Amendment and the House 
     Rule.............................................................8
Hearings.........................................................     8
Committee Consideration..........................................     9
Vote of the Committee............................................     9
Committee Oversight Findings.....................................    12
Committee on Government Reform and Oversight Findings............    12
New Budget Authority and Tax Expenditures........................    12
Congressional Budget Office Estimate.............................    12
Constitutional Authority Statement...............................    13
Section-by-Section Analysis......................................    13
Views............................................................    14

    The amendment is as follows:
    Strike out all after the resolving clause and insert in 
lieu thereof the following:

That the following article is proposed as an amendment to the 
Constitution of the United States, which shall be valid to all intents 
and purposes as part of the Constitution when ratified by the 
legislatures of three-fourths of the several States within seven years 
after the date of its submission for ratification:

                              ``Article --

    ``Section 1. Any bill, resolution, or other legislative measure 
changing the internal revenue laws shall require for final adoption in 
each House the concurrence of two-thirds of the Members of that House 
voting and present, unless that bill is determined at the time of 
adoption, in a reasonable manner prescribed by law, not to increase the 
internal revenue by more than a de minimis amount. On any vote for 
which the concurrence of two thirds is required under this article, the 
yeas and nays of the members of either House shall be entered on the 
journal of that House.
    ``Section 2. The Congress may waive the requirements of this 
article when a declaration of war is in effect. The Congress may also 
waive this article when the United States is engaged in military 
conflict which causes an imminent and serious threat to national 
security and is so declared by a joint resolution, adopted by a 
majority of the whole number of each House, which becomes law. Any 
increase in the internal revenue enacted under such a waiver shall be 
effective for not longer than two years.
    ``Section 3. Congress shall enforce and implement this article by 
appropriate legislation.''.

                          PURPOSE AND SUMMARY

    H.J. Res. 62, introduced by Congressman Joe Barton of 
Texas, would require a two-thirds vote for any bill that 
increases the internal revenue by more than a de minimis 
amount. The supermajority requirement would be waived when a 
declaration of war is in effect or when both Houses pass a 
resolution, which becomes law, stating that, ``the United 
States is engaged in military conflict which causes an imminent 
and serious threat to national security.'' The amendment 
authorizes Congress to enforce and implement the article 
through legislation.
    The Tax Limitation Amendment is intended to make it more 
difficult to raise taxes--it will make it more difficult for 
the Federal government to take more of the people's money. The 
Tax Limitation Amendment will require the Congress to focus on 
options other than raising taxes to manage the federal budget. 
It does not foreclose the possibility of raising taxes, but 
requires a broad political consensus to achieve that goal.
    According to testimony received during the hearing of the 
Subcommittee on the Constitution, in 1941, federal taxes were 
only 6.7 percent of the Gross Domestic Product (GDP). Since the 
late 1960's, federal taxes have approached twenty percent of 
GDP. Federal Taxes went from 5% of a family's income in 1934 to 
19% in 1994. A Tax Limitation Amendment will force Congress to 
carefully consider how best to use current resources before 
demanding that taxpayers dig deeper into their hard-earned 
wages to pay for increased federal spending.

                BACKGROUND AND NEED FOR THE LEGISLATION

    The Federal government seems to have forgotten a 
fundamental fact--the money we spend belongs to the people. It 
is only fitting that when we increase our demand of those 
earnings, with the force of law and its punishments, we do so 
with careful consideration and broad consensus. A supermajority 
requirement as found in the Tax Limitation amendment is a 
needed mechanism to impose fiscal discipline and constrain the 
growth of government.
    The amendment would not require a two-thirds vote for every 
tax increase in any bill. For example, a bill that both lowered 
and increased taxes, if it were revenue neutral, would not be 
subject to the two-thirds vote. In addition, the supermajority 
requirement would be waived when a declaration of war is in 
effect or when both Houses pass a resolution, which becomes 
law, stating that, ``the United States is engaged in military 
conflict which causes an imminent and serious threat to 
national security.'' The amendment authorizes Congress to 
enforce and implement the article through legislation.

I. Application of the amendment

    The amendment in the nature of a substitute adopted by the 
Committee ties application of the amendment to changes to the 
internal revenue laws. The amendment applies to any ``bill, 
resolution, or other legislative measure changing the internal 
revenue laws * * *''. Any bill changing the internal revenue 
laws would require a two-thirds vote, unless it was determined 
that the bill's provisions, taken together, raised revenue by 
less than a de minimis amount.
    Generally, the ``internal revenue laws'' covers taxes found 
in the internal revenue code--income taxes, estate and gift 
taxes, employment taxes, and excise taxes. This would cover the 
Internal Revenue Code and any future revenue laws even if they 
were not placed into the code.1 The tax limitation 
amendment will cover personal and corporate income taxes, 
estate and gift taxes, employment taxes and excise taxes. The 
amendment would not apply to tariffs, user fees, voluntary 
payments or bills that do not change internal revenue laws, 
even if they have by more than a ``de minimis amount.''
---------------------------------------------------------------------------
    \1\ The Internal Revenue Code, Title 26 of the United States Code, 
is not explicitly referenced because Congress could avoid the 
application of the amendment by passing tax legislation and putting it 
elsewhere in the code or characterizing it in a different fashion.
---------------------------------------------------------------------------

II. The ``de minimis'' exception and implementing legislation

    The amendment states that a determination must be made at 
the time of adoption of legislation, as to whether it raises 
the internal revenue by more than a ``de minimis'' amount. This 
determination shall be made ``in a reasonable manner prescribed 
by law.'' In an April 7, 1997 letter to Chairman Henry Hyde, 
Chairman Bill Archer of the House Ways and Means Committee, 
which would have jurisdiction over the drafting of such 
legislation, discussed the meaning of the ``de minimis'' 
standard and implementing legislation:

          [T]he Constitutional amendment excepts from the 2/3 
        requirement tax legislation that raises no more than a 
        ``de minimis'' amount of revenue. The amendment states 
        that Congress may ``reasonably provide'' how this 
        exception is applied. Details may be very important, 
        but they do not belong in the Constitution. Instead, 
        Congress would adopt legislation that implements the 
        Constitutional amendment by defining terms and fleshing 
        out procedures.
          It is up to this or a future Congress to design this 
        ``implementing legislation.'' However, it is my 
        understanding and intent that such legislation will 
        have the following characteristics:
          Revenue would be measured over a period consistent 
        with current budget windows. For example, measuring the 
        net change in revenue over a 5 year period would be 
        appropriate.
          Estimation would be made employing the usual revenue 
        estimating rules. As under the Budget Act, a committee 
        of jurisdiction or conference committee would, in 
        consultation with the Congressional Budget Office or 
        the Joint Committee on Taxation, determine the revenue 
        effect of a bill.
          A bill would be considered to raise a ``de minimis'' 
        amount of revenue if increased Federal tax revenues by 
        no more than 0.1 percent over 5 years.
          For purposes of determining whether a bill raises 
        more than a ``de minimis'' amount of revenue, only tax 
        provisions (i.e., provisions modifying the internal 
        revenue laws) in the bill would be considered. Other 
        provisions that increase Federal revenues or receipts 
        (such as asset sales, tariffs, user fees, etc.) would 
        not be taken into account in determining the revenue 
        raised by the bill.

    Opponents of the tax limitation amendment have argued that 
the amendment will make it more difficult to close tax 
loopholes. The amendment does not bar measures to close tax 
loopholes. Legislation to close a tax loophole, which would 
have the effect of raising revenue, would only require a two-
thirds vote if it raised revenue by more than a de minimis 
amount. That is, if the tax provisions in the bill, taken 
together, increased federal tax revenues by more than one-tenth 
of one percent of federal revenues over a five year period.

III. Prior legislative action

    The House voted on a constitutional supermajority 
requirement to raise taxes twice in the 104th Congress. During 
floor consideration of H.J. Res. 1 on January 25 and 26, 1995, 
the Full House voted on the Barton Balanced Budget proposal 
which would have required a three-fifths majority of the entire 
House and Senate to increase tax revenue and would have allowed 
a simple majority to waive the requirement in times of war, or 
in the face of a serious military threat. On April 15, 1996, 
for the second time in the 104th Congress, the House voted to 
amend the Constitution to require a supermajority vote of each 
House to raise taxes. The Barton substitute, H.J. Res. 169, 
made in order under the Rule, required a two-third's majority 
in each House for any measure that increased revenue by more 
than a de minimis amount. The House voted 243-177 in favor of 
the Barton Tax-Limitation amendment, thirty-seven votes short 
of the two-thirds majority needed to pass a constitutional 
amendment.

IV. State tax limitation laws

    There are presently fourteen states that require a 
supermajority vote to raise taxes: Arizona, California, 
Colorado (only emergency taxes require a two-thirds vote 
otherwise voter approval is necessary), Louisiana, Missouri 
(taxes that exceed $50 million), Nevada, South Dakota and 
Washington all require a two-thirds vote for tax increases. 
Delaware, Mississippi, and Oregon require a three-fifths vote 
to raise taxes. Florida requires a three-fifths vote to raise 
corporate income tax rates. Arkansas (applies primarily to 
sales and alcohol beverage taxes) and Oklahoma require a three-
fourths vote to raise taxes.
    Professor Barry W. Poulson, Professor of Economics of the 
University of Colorado, testified before the Constitution 
Subcommittee that when these fiscal discipline mechanisms are 
incorporated into state constitutions ``they are more likely to 
constrain the growth of government'' than statutory 
provisions.\2\
---------------------------------------------------------------------------
    \2\ ``Proposing an Amendment to the Constitution with Respect to 
Tax Limitations, 1997: Hearings on H.J. Res. 62 Before the Subcomm. On 
the Constitution of the House Judiciary Committee,'' 105th Cong., 1st 
Sess. (written statement of Dr. Barry Poulson).
---------------------------------------------------------------------------
    Daniel Mitchell, McKenna Senior Fellow in Political Economy 
at the Heritage Foundation, testified before the Subcommittee 
on the Constitution that empirical data from states suggests 
that supermajority requirements are successful in limiting the 
growth of government and enabling a more rapid pace of economic 
growth and job creation. States with supermajority requirements 
had lower spending increases, faster economic growth, more jobs 
and a more tightly controlled tax burden than states without 
such requirements.\3\
---------------------------------------------------------------------------
    \3\ ``Proposing an Amendment to the Constitution with Respect to 
Tax Limitations, 1997: Hearings on H.J. Res. 62 Before the Subcomm. On 
the Constitution of the House Judiciary Committee,'' 105th Cong., 1st 
Sess. (written statement of Daniel Mitchell).
---------------------------------------------------------------------------

V. Supermajority requirements and taxation

    There is nothing undemocratic or unusual about 
supermajority requirements in our system of representative 
democracy. Supermajority voting requirements are routinely used 
for legislative business in both the House and the Senate. 
Since 1828, the House has allowed a two-thirds vote to suspend 
rules and pass legislation. Senate rules require a two-thirds 
vote for suspension of the rules and for the fixing of time for 
considering a subject. The Senate requires a three-fifths vote 
of all Senators to end debate or to increase the time available 
under cloture. Senate Budget procedures require that three-
fifths of the full Senate must agree to waive balanced budget 
provisions or points of order to consider amendments that would 
violate the budget approved by Congress.
    There are ten instances in which the Constitution already 
requires a supermajority vote. Seven of these were part of the 
original Constitution and three were added through the 
amendment process.\4\
---------------------------------------------------------------------------
    \4\ There are ten instances in which the Constitution already 
requires a supermajority vote:
---------------------------------------------------------------------------

          Art. I, Sec. 3, cl. 6: Conviction in impeachment trials.
          Art. I, Sec. 5, cl. 2: Expulsion of a Member of Congress.
          Art. I, Sec. 7, cl. 2: Override a Presidential Veto.
          Art. II, Sec. 1, cl. 3: Quorum of two-thirds of the states to 
        elect the President.
          Art. II, Sec. 2, cl. 2: Consent to a treaty.
          Art. V: Proposing Constitutional Amendments.
          Art. VII: State ratification of the original Constitution.
          Amendment XII: Quorum of two-thirds of the states to elect 
        the President and the Vice President.
          Amendment XIV, Sec. 3: To remove disability for holding 
        office where one has engaged in ``insurrection or rebellion.''
          Amendment XXV, Sec. 4: Presidential disability.
    Opponents of the amendment point to the fact that one of 
the weaknesses that led to the demise of the Articles of 
Confederation was that they required a supermajority vote to 
raise federal revenue. It is true that the Framers did not 
impose a supermajority voting requirement to raise revenue. 
Their solution was far more severe--an explicit constitutional 
restriction on direct taxes found at Article I, Section 9, 
clause 4.\5\
---------------------------------------------------------------------------
    \5\ Art. I, Sec. 9, cl. 4 of the U.S. Constitution states: ``No 
Capitation, or other direct, tax shall be laid, unless in Proportion to 
the Census or Enumeration herein before directed to be taken.''
---------------------------------------------------------------------------
    As explained by Alexander Hamilton in Federalist No. 21, 
the taxing ability of the federal government was intentionally 
limited:

          It is a signal advantage of taxes on articles of 
        consumption [today called tariffs, sales and excise 
        taxes] that they contain in their own nature a security 
        against excess. They prescribe their own limit, which 
        cannot be exceeded without defeating the end proposed--
        that is, an extension of the revenue. When applied to 
        this object, the saying is as just as it is witty that, 
        ``in political arithmetic, two and two do not always 
        make four.'' If duties are too high, they lessen the 
        consumption, the collection is eluded; and the product 
        to the treasury is not so great as when they are 
        confined within proper and moderate bounds. This forms 
        a complete barrier against any material oppression of 
        the citizens by taxes of this class, and is itself a 
        natural limitation of the power of imposing them.\6\
---------------------------------------------------------------------------
    \6\ James Madison, Alexander Hamilton and John Jay, The Federalist 
Papers, XXI, (1787-8).

    As Lawrence Hunter, President of the Business Leadership 
---------------------------------------------------------------------------
Council testified before the Subcommittee on the Constitution:

          In Madison's and Hamilton's original design, the 
        taxing and spending authority of the Federal government 
        was hemmed in by the dual constraints of exclusive 
        reliance on indirect taxes (which ``prescribe their own 
        limit'') working side-by-side with the powerful 
        constraint on spending resulting from the limited 
        delegation of powers to the Federal government. This 
        limited delegation of powers severely restricted the 
        objects and activities on which the Federal government 
        could spend money. In other words, the original 
        constitutional design constrained both the means by 
        which Congress spent (taxation) and the ends on which 
        Congress spent (defined by a limited delegation of 
        powers).\7\
---------------------------------------------------------------------------
    \7\ ``Amendment to the Constitution Requiring Two-thirds Majorities 
for Bills Increasing Taxes, 1996: Hearings on H.J. Res. 159 Before the 
Subcomm. On the Constitution of the House Judiciary Committee,'' 104th 
Cong., 2nd Sess. 75.

    As ratified, the Constitution allowed no direct taxation of 
the income of citizens. For three-quarters of our history, the 
power of the U.S. government to tax was carefully constrained 
by explicit constitutional restraints. It was not until early 
in this century that the 16th Amendment swept away the 
Constitution's careful balance with respect to taxes. While in 
the 1780's, the federal government may have had a problem 
raising revenue, this is certainly no longer a problem today. 
As recently as 1940, federal taxes were only 6.7% of the Gross 
Domestic Product. Since the late 1960's federal taxes have 
approached 20% of GDP.
    Under our current system it is too easy to add to the 
already onerous tax burden Congress has placed upon the 
American people. The adoption of a supermajority provision will 
force Congress to give careful consideration to proposals to 
raise taxes, and will require a broad consensus in order to do 
so.

VI. Standing to sue under the tax limitation amendment

    As a general matter, in order to bring a lawsuit in federal 
court a plaintiff must have standing. In order to open the door 
of the courthouse, a plaintiff must demonstrate that he (1) 
suffered an actual injury of the type for which a court may 
give relief (2) by some action of the defendant and that (3) 
the court will be able to redress the injury.
    Prudential considerations, not rooted in the Constitution, 
also come into play. These rules require that (a) the defendant 
violated the plaintiff's legal right, not someone else's; (b) 
the plaintiff's injury is somehow differentiated from those of 
all other people in the country; and (c) the injury is of the 
type that the law or constitutional provision in question was 
designed to protect.
    Ordinarily, a taxpayer has no standing to sue the 
government for carrying out an arguably unconstitutional 
program that is wasting the public's money. Most direct 
constitutional challenges to the exercise of the government's 
spending power are beyond judicial reach. The mere fact that 
the government does not act constitutionally does not provide a 
plaintiff with standing.
    Under the amendment reported by the Committee, an increase 
in taxes does not automatically trigger a two-thirds vote. The 
amendment does not create a legal right to have taxes raised 
only where there is a two-thirds vote. Therefore, a taxpayer 
would not have standing to sue merely because his tax burden 
was increased. The amendment requires Congress to determine 
``at the time of adoption, in a reasonable manner prescribed by 
law'' whether the tax provisions in the legislation, taken as a 
whole, increase the internal revenue by more than a ``de 
minimis'' amount. An evaluation will need to be performed as to 
whether the legislation as a whole increases taxes by more than 
a ``de minimis'' amount.
    In other words, a bill raising some taxes and lowering 
others, would not necessarily trigger a two-thirds vote. A 
court would be extremely reluctant to substitute its own 
judgement on the revenue effects of a particular piece of 
legislation for that of the Congress. Under current 
interpretations of ``standing'' rules, it is highly unlikely 
that a court would allow a taxpayer to challenge Congress' 
determination that a bill raised revenue by less than a de 
minimis amount.\8\
---------------------------------------------------------------------------
    \8\ The strongest case for standing would be made where Congress 
failed entirely to make the evaluation of whether a bill changing the 
internal revenue laws did indeed ``increase the internal revenue by 
more than a ``de minimis'' amount. Even here, however, it is not 
entirely clear that a plaintiff whose taxes had been raised under such 
a scenario would have standing to sue under current requirements of 
this doctrine.
---------------------------------------------------------------------------

VII. Differences between the tax limitation amendment and the House 
        rule

    The House rule for the 104th Congress required a three-
fifths vote for any bill ``carrying a Federal income tax rate 
increase.'' The rule was waived several times during the 104th 
Congress. The proposed constitutional amendment requires a two-
thirds vote for any bill changing the internal revenue laws 
that increases revenue by more than a ``de minimis'' amount.
    At the beginning of the 105th Congress, the House rule was 
changed. Now, the Rule XXI(5)(c) requires a 3/5 vote for any 
bill that ``amends subsection (a), (b), (c), (d), or (e) of 
section 1, or to section 11(b) or 55(b), of the Internal 
Revenue Code of 1986, that imposes a new percentage as a rate 
of tax and thereby increases the amount of tax imposed by any 
such section'' (emphasis added).\9\
---------------------------------------------------------------------------
    \9\ As referred to in the House rule, Section (1)(a) covers the tax 
rate for married individuals filing joint returns and surviving 
spouses. Section (1)(b) covers heads of household. Section (1)(c) 
covers unmarried individuals. Section (1)(d) covers married individuals 
filing separate returns. Section (e) covers estates and trusts. Section 
11(b) covers the amount of tax on corporations. Section 55(b) covers 
the tentative minimum tax.
---------------------------------------------------------------------------
    The House rule applies to amendments to certain sections of 
the Internal Revenue Code that increase tax rates even if the 
bill, taken as a whole, would reduce revenues.
    In contrast, the Constitutional amendment would not 
necessarily require a two-thirds vote for a bill that changed 
the tax rates--if the overall effect of the tax provisions of 
the bill reduced federal revenues.
    The tax limitation amendment allows changes to the tax code 
as long as they do not increase revenues by more than a de 
minimis amount. It will make it harder for Congress to raise 
taxes, but still leaves the flexibility to cut taxes, close 
loopholes and make revenue neutral changes to the tax laws.

                                hearings

    The Committee's Subcommittee on the Constitution held one 
day of hearings on H.J. Res. 62 on March 18, 1997. Testimony 
was received from seven witnesses: Representative John Shadegg; 
Honorable James Miller, Counselor, Citizens for a Sound 
Economy; Robert Greenstein, Executive Director, Center for 
Budget and Policy Priorities; Dr. Barry Poulson, Professor of 
Economics, University of Colorado; Dean Samuel Thompson, Dean, 
University of Miami School of Law; Professor Michael Rappaport, 
University of San Diego School of Law; Daniel Mitchell, McKenna 
Senior Fellow in Political Economy, Heritage Foundation.

                        COMMITTEE CONSIDERATION

    On April 8, 1997, the Committee met in open session and 
ordered reported favorably the resolution H.J. Res. 62, with an 
amendment in the nature of a substitute, by a roll call vote of 
18 to 10, a quorum being present. The Committee adopted an 
amendment in the nature of a substitute offered by Mr. Canady 
of Florida. The amendment in the nature of a substitute made 
two changes to the underlying text: it required that all votes 
taken pursuant to the amendment be taken by the yeas and nays 
and it conformed the text of H.J. Res. 62 to the language voted 
on by the House in 1996 by making clear that the amendment 
applies to any ``bill, resolution, or other legislative measure 
changing the internal revenue laws * * *''. The Committee also 
adopted an amendment offered by Mr. Scott of Virginia. The 
Scott amendment provided that the vote required under the 
amendment should consist of ``two-thirds of those present and 
voting'' rather than two-thirds of the whole number of each 
House as was required by H.J. Res. 62 as introduced.

                         VOTES OF THE COMMITTEE

    1. An amendment was offered by Mr. Nadler and Mr. Meehan 
that would eliminate the two-thirds requirement for bills that 
repeal or reduce exemptions, deductions or credits available to 
business entities. The amendment was defeated by a 10-16 
rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith (TX)
Ms. Lofgren                         Mr. Gallegly
Ms. Jackson Lee                     Mr. Canady
Mr. Meehan                          Mr. Inglis
Mr. Delahunt                        Mr. Goodlatte
Mr. Wexler                          Mr. Buyer
                                    Mr. Bono
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Cannon
                                    Mr. Rothman

    2. An amendment was offered by Mr. Conyers that would 
remove the two-thirds requirement on bills that would increase 
revenues by adjusting foreign tax credits or deferring taxes on 
unrepatriated foreign profits. The amendment was defeated by a 
10-15 rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. McCollum
Mr. Boucher                         Mr. Gekas
Mr. Nadler                          Mr. Coble
Mr. Scott                           Mr. Gallegly
Mr. Watt                            Mr. Canady
Ms. Jackson Lee                     Mr. Inglis
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Buyer
Mr. Wexler                          Mr. Bono
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Cannon
                                    Mr. Rothman

    3. An amendment was offered by Mr. Watt eliminating the 
two-thirds requirement. The amendment was defeated by a 8-17 
rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Boucher                         Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Gallegly
Mr. Meehan                          Mr. Canady
Mr. Delahunt                        Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bono
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Cannon
                                    Mr. Rothman

    4. An amendment was offered by Ms. Jackson Lee that would 
eliminate the two-thirds requirement on any bill that raised 
revenues necessary to protect the solvency of the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal 
Disability Insurance Trust Fund, or any successor funds. The 
amendment was defeated by a 9-16 rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Boucher                         Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Gallegly
Ms. Waters                          Mr. Canady
Mr. Meehan                          Mr. Inglis
Mr. Delahunt                        Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bono
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Cannon
                                    Mr. Rothman

    5. An amendment was offered by Mr. Nadler that would 
eliminate the two-thirds provision for bills providing for more 
effective enforcement of the internal revenue laws. The 
amendment was defeated by a 9-17 rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Boucher                         Mr. Sensenbrenner
Mr. Nadler                          Mr. McCollum
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Jackson Lee                     Mr. Smith (TX)
Ms. Waters                          Mr. Gallegly
Mr. Meehan                          Mr. Canady
Mr. Delahunt                        Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Buyer
                                    Mr. Bono
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Jenkins
                                    Mr. Cannon
                                    Mr. Rothman

    6. Final Passage. Mr. Hyde moved to report H.J. Res. 62, as 
amended, favorably to the whole House. The resolution was 
ordered favorably reported by a rollcall vote of 18-10.
        AYES                          NAYS
Mr. Hyde                            Mr. Conyers
Mr. Sensenbrenner                   Mr. Boucher
Mr. McCollum                        Mr. Nadler
Mr. Gekas                           Mr. Scott
Mr. Coble                           Mr. Watt
Mr. Smith (TX)                      Ms. Jackson Lee
Mr. Gallegly                        Ms. Waters
Mr. Canady                          Mr. Meehan
Mr. Inglis                          Mr. Delahunt
Mr. Goodlatte                       Mr. Rothman
Mr. Buyer
Mr. Bono
Mr. Bryant (TN)
Mr. Chabot
Mr. Barr
Mr. Jenkins
Mr. Pease
Mr. Cannon

                      COMMITTEE OVERSIGHT FINDINGS

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT FINDINGS

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               NEW BUDGET AUTHORITY AND TAX EXPENDITURES

    Clause 2(l)(3)(B) of House rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the resolution, H.J. Res. 62, the 
following estimate and comparison prepared by the Director of 
the Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 10, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.J. Res. 62, proposing 
an amendment to the Constitution of the United States with 
respect to tax limitations.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephanie 
Weiner.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.J. Res. 62--Proposing an amendment to the Constitution of the United 
        States with respect to tax limitations

    H.J. Res. 62 would propose an amendment to the Constitution 
to require the approval of two-thirds of the members of 
Congress for the passage of any bill that would amend the 
Internal Revenue Code to increase revenues by more than a de 
minimis amount. The legislatures of three-fourths of the states 
would be required to ratify the proposed amendment within seven 
years for the amendment to become effective.
    CBO estimates that enacting this resolution would have no 
direct effect on the federal budget. H.J. Res. 62 would not 
affect direct spending or receipts, so there would be no pay-
as-you-go scoring under section 252 of the Balanced Budget and 
Emergency Deficit Control Act of 1985. This legislation 
contains no intergovernmental or private sector mandates as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA) and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephanie 
Weiner. This estimate was approved by Rosemary Marcuss, 
Assistant Director for Tax Analysis.

                   constitutional authority statement

    Pursuant to rule XI, clause 2(l)(4) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article V of the Constitution, which 
provides that the Congress has the authority to propose 
amendments to the Constitution.

                      section-by-section analysis

    Section 1. This section provides that any bill, resolution, 
or other legislative measure changing the internal revenue laws 
shall require for final adoption a two-thirds vote in either 
House unless it is determined, in a reasonable manner 
prescribed by law, that the legislation raises revenue by less 
than a ``de minimis'' amount.
    This section also requires a majority of two-thirds of 
those present and voting for passage of legislation that will 
increase internal revenue by more than a ``de minimis'' amount.
    Section 2. This section waives the requirements of section 
1 of H.J. Res. 62 when a declaration of war is in effect or 
when both Houses of Congress pass a resolution, which becomes 
law, stating that ``the United States is engaged in military 
conflict which causes an imminent and serious threat to 
national security.''
    Section 3. This section requires Congress to enforce and 
implement the article through legislation.
                            DISSENTING VIEWS

    The problems with H.J. Res. 62 are myriad and obvious: most 
fundamentally, it undercuts the very principle our nation was 
founded on--majority rule. By requiring a two-thirds 
supermajority to adopt certain legislation, the amendment 
diminishes the vote of every Member of the House and Senate, 
denying the seminal concept of ``one person one vote.''
    In addition, there is no definition of ``internal revenue 
laws'' or ``de minimis amount.'' It is unclear how or when the 
revenue estimates required under H.J. Res. 62 are to be made. 
The amendment would make it nearly impossible to plug tax 
loopholes and eliminate corporate tax welfare, or even to 
increase tax enforcement against foreign corporations. The 
amendment would also make it nearly impossible to balance the 
budget, or develop a responsible plan to restore Medicare or 
Social Security to long-term financial solvency. Further, if 
H.J. Res. 62 were to be adopted, it would be extraordinarily 
difficult to reauthorize excise taxes and related fees 
supporting such important programs as superfund, highway 
construction, and air safety. For these and the reasons set 
forth below, we dissent from H.J. Res. 62.
I. Amendment disregards constitutional principle of majority rule
    The framers of the Constitution wisely rejected the 
principle of requiring a supermajority for basic government 
functions.1 James Madison vehemently argued against 
requiring supermajorities, stating that under such a 
requirement, ``the fundamental principle of free government 
would be reversed. It would be no longer the majority that 
would rule: the power would be transferred to the minority.'' 
2
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    \1\ It is significant to note that because of population patterns, 
Senators representing some 7.3% of the population could prevent a bill 
from obtaining a two-thirds majority. See U.S. Department of Commerce, 
U.S. Census Bureau, Press Release CB-96-244, 1996 Population Estimates, 
Dec. 30, 1996.
     2 The Federalist Paper No. 58, at 393 (James Madison) (The 
Belknap Press of Harvard University, 1961). Last Congress, at the 
Constitution Subcommittee hearing, Judiciary Chairman Hyde (R-IL) 
concurred with this concern:

      I am troubled by the concept of divesting a Member of the 
      full import or his or her vote. You are diluting the vote 
      of Members by requiring a supermajority of them to do 
      something as basic to government as acquire the revenue to 
      run government. It is a diminution. It is a disparagement. 
      It is a reduction of the impact, the import, of one man, 
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      one vote.

``Proposing An Amendment to the Constitution of the United States to 
Require Two-Thirds Majorities for Bills Increasing Taxes: Hearings on 
H.J. Res. 159 Before the Subcomm. on the Constitution of the House 
Comm. on the Judiciary,'' 104th Cong. 2d Sess. 107 (1996).
    Adopting a supermajority tax requirement would repeat the 
very mistakes made in the 1780's under the Articles of 
Confederation, when we required a vote of 9 of the 13 states to 
raise revenue. It is because this system worked so poorly that 
the founding fathers sought to fashion a national government 
that could operate through majority rule.3
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    \3\ ``Proposing An Amendment to the Constitution with Respect to 
Tax Limitations on H.J. Res. 62 Before the Subcomm. on the Constitution 
of the House Comm. on the Judiciary,'' 105th Cong. 1st Sess. (1997) 
[hereinafter 1997 Judiciary Hearing] (Statement of Robert Greenstein, 
Executive Director, Center on Budget and Policy Priorities).
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    Supporters of H.J. Res. 62 have sought to justify the 
departure from majority rule by pointing to other provisions in 
the Constitution requiring a two-thirds vote, such as approving 
a treaty or convicting in a congressional impeachment 
trial.4 But supporters neglect to note that none of these 
supermajority requirements pertain to the day-to-day operations 
of the government--limiting such congressional authority is an 
invitation to gridlock.
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    \4\ U.S. Const. art. I Sec. 2, cl. 2., art. I, Sec. 3, cl. 6.
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    Moreover, the fact that fourteen states have adopted some 
form or another of a supermajority vote requirement for tax 
increases also bears little relation to the current debate. 
First, it is inappropriate to compare a state's revenue needs 
with the more comprehensive obligations of the federal 
government (such as economic policy and disaster assistance). 
In addition, many of the state requirements apply to particular 
types of taxes and do not apply to all or even the principal 
means of raising state tax revenue. For example, in Florida the 
supermajority requirement only applies to corporate income 
taxes; exempt from the requirement is the sales tax on the 
purchase of goods--the primary source of the state's 
revenues.5
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     5 See 26 Fla. Stat. Ann. V. Sec. 1(e) (West 1970). California 
sometimes acts simultaneously on taxes and spending cuts, through the 
annual budget process, which considerably diminishes the 
supermajority's impact on tax increases. See Congressional Quarterly, 
Economic & Finance, April 20, 1996, at 1033. It is also important to 
note that the total tax receipts collected by the federal, state, and 
local governments in the United States--31.5%--is lower than all of the 
other major industrialized countries. See Gregg A. Esenwein, ``U.S. 
Library of Congress, Congressional Research Service Report for 
Congress, The U.S. Fiscal Position: A Comparison with Selected 
Industrial Nations,'' (CRS Report 96-386 E, March 1, 1996). Moreover, 
federal tax revenue, as a percentage of gross domestic product, was 
19.3% in 1995--and has remained more or less constant since 1960. See 
Gregg A. Esenwein, ``U.S. Library of Congress, Congressional Research 
Service Report for Congress, The Size and Distribution of the Federal 
Tax Burden: 1950-1995'' (CRS Report 96-386 E, April 30, 1996).
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    In addition, arguments by proponents that seven states who 
have had a supermajority tax requirement in place for a number 
of years 6 have enjoyed more rapid economic growth are 
also misleading.7 A recent study by the Center on Budget 
and Policy Priorities found that such analysis was 
``simplistic'' and ``flawed.'' 8 This study found that by 
some measures, supermajority states had lower economic growth 
and more tax increases than other states. For example, when 
measured between 1979 and 1989,9 four of the seven states 
had lower than average economic growth measured by state gross 
domestic product, five of the seven states experienced lower 
than average growth when measured by changes in per capita 
income, and six of the seven states had higher than average 
increases in state and local revenues as a percentage of 
residents' income. Obviously, there are many factors which 
impact state growth other than supermajority tax requirements, 
including a state's educational system and the skill of its 
workforce.
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    \6\ Arkansas, California, Delaware, Florida, Louisiana, 
Mississippi, and South Dakota.
    \7\ See 1997 Hearings, supra note 3 (statement of Daniel J. 
Mitchell, The Heritage Foundation).
    \8\ Iris J. Lav & Nicholas Johnson, Center on Budget and Policy 
Priorities, ``Do States with Supermajorities Have Smaller Tax Increases 
or Faster Economic Growth than Other States?'' (April 10, 1997).
     9 Two years at similar points in the economic cycle.
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II. Amendment would lead to large cuts in Social Security and Medicare 
        and increased deficits

    H.J. Res. 62 would likely lead to large reductions in 
Social Security and Medicare benefits. As the Washington Post 
noted in a recent editorial:

          When the baby boomers begin to retire not that many 
        years from now, the country will be in an era of 
        constant fiscal strain. To avoid destructive deficits, 
        there will have to be tax increases and/or spending 
        cuts. By making it harder to increase taxes, the 
        amendment would compound the pressure on the major 
        spending programs: Social Security, Medicare, Medicaid 
        and the rest. Is that what Congress really wants to do? 
        The pressure on those programs is great enough as it 
        is.10
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    \10\ ``Show Vote on Tax Day,'' Wash. Post, April 9, 1997, at A20.

    H.J. Res. 62 would also effectively rule out measures to 
raise Medicare premiums for higher income individuals' levels 
as well as even modest measures to shore up Social Security and 
Medicare (such as by slowing the erosion in the share of 
employee compensation subject to the payroll tax). Indeed, when 
the Republican budget reconciliation bill reached the House 
floor in the fall of 1995, it became clear that its proposed 
increase in Medicare premiums for those at higher income levels 
constituted a tax increase.11 Similarly, expanding Social 
Security's coverage to include state and local government 
employees--which was recently proposed by the Advisory Council 
for Social Security--would also result in a revenue increase 
and be subject to the two-thirds requirement.12 Despite 
the obvious and clear cut threat H.J. Res. 62 represents to 
Social Security, when Ms. Jackson-Lee offered an amendment to 
exempt legislation necessary to preserve the Social Security 
Trust Fund's solvency from the constitutional amendment, the 
Majority rejected it on a party-line vote.
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    \11\ See infra note 32.
    \12\ See Center on Budget and Policy Priorities, ``Proposed 
Constitutional Amendment Would Make It More Difficult to Address the 
Long Term Social Security and Medicare Crisis'' (March 30, 1997).
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    Another dangerous byproduct of H.J. Res. 62 would be 
increased deficits. As the Center on Budget and Policy 
Priorities testified:

          The proposed constitutional amendment * * * would 
        effectively preclude [action to balance the budget]. 
        The amendment would make it virtually impossible to 
        amass the two-thirds majority required to pass large 
        deficit reduction packages that include both reductions 
        in federal programs and measures to raise revenue. As a 
        result, the amendment would erect serious new barriers 
        to long-term deficit reduction.13
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    \13\ 1997 Judiciary Hearing, supra note 3 (statement of Robert 
Greenstein). Between 1982 and 1993, five pieces of legislation that 
raise significant revenue were enacted. The Tax Equity and Fiscal 
Responsibility Act of 1982, passed the House by a vote of 226-207. The 
1987 Social Security rescue plan was passed by a vote of 282-148. The 
Omnibus Budget Reconciliation Act of 1987, a product of bipartisan 
negotiations that contained both spending cuts and revenue increases, 
passed by a 237-181 vote and the Omnibus Budget Reconciliation Act of 
1993 passed by a slender 218-216 vote. Last Congress, both the ``blue 
dog'' and the Republicans' proposed balanced budget bills included tax 
increases. Id.

    It is for these reasons that perhaps the nation's most 
credible advocate of deficit reduction--the bipartisan Concord 
Coalition--strongly opposes a supermajority tax requirement. In 
their view, ``enactment of [a tax limitation] constitutional 
amendment would be detrimental to the budget process. * * * No 
area of the budget--on either the spending or the revenue 
side--should receive preferential treatment such as requiring 
supermajority votes.'' 14
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    \14\ Letter from Warren B. Rudman, Co-Chair & Paul E. Tsongas, Co-
Chair, The Concord Coalition Citizens Council to Members, U.S. House of 
Representatives (April 11, 1996).
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III. Amendment will make it difficult to close tax loopholes

    H.J. Res. 62 will make it nearly impossible to eliminate 
tax loopholes, thereby locking in the current tax system at the 
time of ratification. As Dean Samuel Thompson, one of the 
nation's leading tax law authorities, observed at our hearing:

          The core problem with this proposed Constitutional 
        amendment is that it would give special interest groups 
        the upper hand in the tax legislative process. Once a 
        group of taxpayers receives either a planned or 
        unplanned tax benefit with a simple majority vote of 
        both Houses of Congress, the group will then be able to 
        preserve the tax benefit with just a 34% vote of one 
        House of Congress.15
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    \15\ 1997 Judiciary hearing, supra note 3 (statement of Samuel 
Thompson, Dean, University of Miami School of Law).

    The potential revenue loss to the Treasury Department from 
such loopholes is staggering. A recent Congressional Budget 
Office study found that over half of the corporate subsidies 
the federal government provides are delivered through ``tax 
expenditures.'' 16 Such expenditures are estimated to cost 
the federal government $455 billion in fiscal year 1996 alone--
triple the current budget deficit and a full two and one-half 
times as much as all means-tested entitlement programs 
combined.17
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    \16\ ``Congress of the United States, Congressional Budget Office, 
Federal Financial Support of Business'' (July 1995). ``Tax 
expenditures'' are provisions of the tax code that selectively reduce 
the tax liability of particular individuals or businesses. Id. See also 
Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 
1998: Chapter 3--Federal Receipts (Feb. 6, 1997) [hereinafter 
President's budget].
    \17\ Citizens for Tax Justice, ``The Hidden Entitlements,'' May 
1996.
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    In addition, H.J. Res. 62 would make it inordinately 
difficult to make foreign corporations pay their fare share of 
taxes on income earned in this country. Congress would even be 
limited from changing the law to increase penalties against 
foreign multinationals who avoid U.S. taxes by claiming that 
profits earned in the U.S. were realized in offshore tax 
havens. Estimates of the costs of such tax dodges are also 
significant. A 1992 IRS study estimated that foreign 
corporations cheated on their tax returns to the tune of $30 
billion per year.18
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    \18\ The IRS also found that on average, foreign companies report 
only 40% of what comparable American companies reported in taxes. See 
``Department of the Treasury's Report on Issues Related to the 
compliance with U.S. Tax Laws By Foreign Firms Operating in the United 
States: Hearing Before the Subcomm. on Oversight of the House Ways and 
Means Comm.'' 102d Cong., 2d Sess. 7 (1992) [hereinafter 1992 Ways and 
Means hearing] (statement of Representative Pickle, Chairman, 
Subcommittee on Oversight).
    The problem is particularly acute in the auto and electronics 
industries. For example, of foreign automotive company tax returns 
reviewed in a recent Congressional study, 28% showed no taxes due, even 
though these firms reported sales of nearly $27 billion. One foreign 
auto company had $3.4 billion in sales over two years and paid no 
taxes. Of the foreign electronics companies reviewed in the study, 40% 
paid no United States income tax whatsoever, though they reported sales 
of almost $30 billion. One electronics firm sold $2.4 billion of 
products over eight years and paid no taxes. Another company had sales 
of more than $9.4 billion in the U.S. and paid $156 in taxes. Id.
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    Adoption of H.J. Res. 62 would also make it more difficult 
to adopt legislation repealing or limiting foreign tax credits 
or the deferral of taxes on unrepatriated foreign 
profits.19 According to the OMB, this loophole costs the 
United States nearly $22 billion dollars annually, and the 
foreign deferral provision will deprive the Treasury of $2.4 
billion in revenues in 1998, and a total of $14 billion between 
1998 and 2002.20
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    \19\ The foreign tax credit allows U.S. based multinational 
corporations to reduce their taxes in this country by one dollar for 
every dollar of taxes they pay overseas. 26 U.S.C. Sec. Sec. 27, 33. 
This favorable treatment contrasts sharply with the treatment of nearly 
every other business expense--whether it be wages or taxes paid to 
state or local governments here in the U.S. The foreign deferral 
provision allows U.S. corporations to pay no income taxes on the 
profits of their foreign subsidiaries unless and until such profits are 
remitted to the U.S. parent. 26 U.S.C. Sec. Sec. 11(d), 882, 901, 951. 
If profits are never dividended to the parent, taxes never become due 
in the U.S., amounting to an interest free loan from U.S. taxpayers.
    \20\ See Internal Revenue Service, Statistics of Income Bulletin, 
``Data Release: Corporate Foreign Tax Credit, 1992: An Industry and 
Geographic Focus,'' Winter 1995-96; see also President's budget, supra 
note 16 at 73.
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    Not only do these loopholes cost the Treasury desperately 
needed funds--they cost our workers jobs.21 Despite these 
concerns, the Republicans rejected amendments offered by Mr. 
Nadler and Mr. Conyers which would have exempted the 
elimination of corporate loopholes in general, as well as the 
foreign tax credit and deferral loopholes in particular, from 
the requirements of the two-thirds majority. Republicans also 
rejected an amendment offered by Mrs. Jackson-Lee which would 
have exempted foreign taxpayers from the requirements of a two-
thirds vote.
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    \21\ Since 1979 we have lost almost 3 million manufacturing jobs in 
this country. See U.S. Department of Labor, Bureau of Labor Statistics, 
Current Employment Statistics Program, April 4, 1997. During the most 
recent downturn we lost 26,000 manufacturing jobs per month--the 
equivalent of shutting down one Fortune 500 company every 30 days. Id. 
At the same time the number of jobs with U.S.-based manufacturing 
companies abroad has skyrocketed. For example, there are nearly 40,000 
foreign workers working for U.S. corporations in Singapore alone. 
Recently, the Wall Street Journal reported that nearly half of the 
export jobs in China are linked to U.S. and other multinational-based 
companies. See Joseph Kahn, ``Foreigners Help Build China's Trade 
Surplus,'' Wall St. J., April 7, 1997, at A1.
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    In rejecting these arguments, the Majority attempted to 
argue that under H.J. Res. 62, a two-thirds majority wouldn't 
necessarily be required if the elimination of the loophole was 
linked to other tax cuts, so the overall bill was revenue 
neutral. Although it is not entirely clear the amendment would 
operate in such a fashion,22 even if it did, this 
interpretation would prevent using the funds raised from the 
elimination of such loopholes for any reason other than 
providing for tax cuts. For example, such revenues couldn't be 
used for deficit reduction, disaster assistance, education, 
Medicare, or Social Security. There is simply no legitimate 
policy reason to link a bill raising taxes on foreign 
corporations or eliminating abusive loopholes with any 
additional federal tax changes.
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    \22\ 1997 Judiciary Hearing, supra note 3 (``It is not clear from 
the text of H.J. Res. 62 whether it would only apply to a bill that 
leads on an over-all basis to an increase in tax.'') (statement of Dean 
Thompson).
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    Incredibly, under H.J. Res. 62, even measures that raised 
revenue by improving tax enforcement would require a two-thirds 
majority vote.23 As a result, new anti-fraud provisions or 
even a program of stepped up enforcement against foreign 
multinationals who avoid U.S. taxes would be subject to a 
supermajority requirement.
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    \23\ The Republicans rejected an amendment offered by Mr. Nadler 
which would have exempted improved enforcement from the provisions of 
H.J. Res. 62.
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IV. Amendment will endanger excise taxes which fund public safety and 
        environmental programs

    There are many important public safety programs funded by 
excise taxes whose extension would be subject to a 
supermajority vote. Many such excise taxes are dedicated to 
purposes such as transportation trust funds, Superfund, and 
compensation for health damages.24 H.J. Res. 62 would also 
apply to excise taxes on alcohol, tobacco, and pensions, as 
well as a variety of environmental taxes.25
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    \24\ See James V. Saturo & Louis Alan Talley, ``U.S. Library of 
Congress, Congressional Research Service Report for Congress, Tax 
Limitations Proposals: An Assessment of the Issues and Options Together 
With the Major Tax Acts, Votes, and Revenue Effects'' (CRS Report 97-
372 E, March 20, 1997); see also 1997 Judiciary Hearings, supra note 3 
(statement of Representative Rangel, Ranking Member, House Comm. on 
Ways and Means).
    \25\ See generally 26 U.S.C. Chapters 31-36, 42-47, 51-54.
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    Former White House Counsel Lloyd Cutler explained the 
difficulties a supermajority tax requirement could cause in the 
context of extending such excise taxes:

          Today a simple majority of the Senate and House could 
        restore the [expired airline ticket tax] * * * But 
        under the proposed amendment, it would take 67 of the 
        100 senators and 290 of the 435 congressmen to restore 
        this tax which, having expired on December 31, 1995, 
        would clearly be a ``new'' tax covered by the 
        amendment.26
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    \26\ A Proposed Constitutional Amendment To Require A Two-Thirds 
Vote to Increase Taxes: Hearings on S.J. Res. 49 Before the Subcomm. on 
the Constitution, Federalism and Property Rights of the Committee on 
the Judiciary, 104th Cong., 2d Sess. (1996) (statement of Lloyd 
Cutler).

    Recognizing the burdens H.J. Res. 62 would place on 
Congress' ability to extend such basic excise taxes which 
protect our health and safety, Ms. Lofgren offered an amendment 
exempting them from H.J. Res. 62--it was also rejected by the 
Majority.

V. Amendment is vague and could transfer significant authority to the 
        courts

    H.J. Res. 62 will present a variety of new and complex 
interpretational difficulties. Most notably, there is no 
definition of the term ``internal revenue laws,'' a new term of 
art with no legislative antecedent.27 For example, 
although the amendment's authors contend there is a clear 
distinction between ``taxes'' (which they believe fall within 
the concept of ``internal revenue'') and ``user fees'' (which 
they believe are not ``internal revenue''), in practice, this 
is a distinction without any meaningful difference. As former 
Republican OMB Director Darman has acknowledged, ``[i]f it 
looks like a duck and walks like a duck and quacks like duck, 
it is a duck, [and] euphemisms like user fees will not fool the 
public.'' 28
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    \27\ Proponents' arguments that the courts can resolve the meaning 
of such open-ended terms in the same way they have ``equal protection'' 
and ``due process'' also miss the point. The courts are the most 
appropriate body to protect such individual rights and liberties from 
government excesses in these areas. But judging the policy value of tax 
legislation is an inherently political judgment. Such laws shouldn't 
require court involvement to begin with.
    \28\ See ``Hearing on Nomination of Richard Darman to be the 
Director of the Office of Management and Budget Before the Senate Comm. 
on Governmental Affairs,'' 101st Cong., 1st Sess. (1989). The 
amendment's authors allowed for a loophole of potentially massive 
dimensions when they stated that efforts to adjust the Consumer Price 
Index--which would reduce indexing for tax brackets--would not 
constitute a change in ``internal revenue.'' (Transcript at 39 (``under 
the [revised] language [reducing the CPI] would not [require a two-
thirds vote], because that would not be a change to the internal 
revenue laws.'') Under this interpretation, legislation such as that 
offered by William Roth (R-DE), Chair of the Senate Finance Committee, 
reducing CPI adjustments by 1.1% per year--and which CBO has estimated 
would increase income taxes by $22.8 billion per year in 2002 and more 
than double that by 2006--would not constitute an increase in 
``internal revenue.'' See S. 2, 105th Cong. 1st Sess. (1997).
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    Another definitional problem arises from the fact that it 
is unclear how and when the so-called ``de minimis'' increase 
is to be measured, particularly in the context of a $1.5 
trillion annual budget. Would we look at a one, five or ten-
year budget window? What if a bill resulted in increased 
revenues in years one and two, but lower revenues thereafter? 
It is also unclear when the revenue impact is to be assessed--
based on estimates prior to the bill's effective date, or 
subsequent determinations calculated many years out. Further, 
if a tax bill was retroactively found to be unconstitutional, 
the tax refund issues could present insuperable logistical and 
budget problems.29 An additional problem in the 
amendment's drafting can be seen in the requirement that 
Congress provide for a law setting forth procedures to 
determine ``in a reasonable manner'' whether any tax 
legislation conforms to new supermajority requirement--yet 
another new constitutional term of uncertain meaning.
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    \29\ Jim Miller, OMB Chief under President Reagan, testifying on 
behalf of the Citizens for a Sound Economy, stated that the ``de 
minimis'' requirement should be taken out. See 1997 Judiciary Hearing, 
supra note 3.
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    All of these ambiguities point to one of the most serious 
problems inherent in H.J. Res. 62--uncertainty regarding the 
branch of government vested with responsibility for interpeting 
and enforcing the amendment's requirements. If H.J. Res. 62 is 
read to authorize judicial interpretation and enforcement, 
courts would be drawn into fundamental policy disputes best 
left to the Congress.30 But if judicial enforcement is 
unavailable, those seeking redress for improperly imposed tax 
increases would be left without a meaningful remedy, 
undermining the public's faith in the Constitution. It is 
doubtful the public would be satisfied with Congress' selecting 
an unelected bureaucrat, such as the head of the Congressional 
Budget Office or Joint Tax Committee, to police these matters. 
Yet when Mr. Scott and Mr. Watt sought to clarify enforcement 
responsibility--by more clearly providing for enforcement by 
either the courts or Congress--Republicans rejected both such 
approaches.
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    \30\ In the event judicial review is invoked, H.J. Res. 62 would 
also raise difficult questions concerning standing. For example, it 
would be unclear whether a taxpayer whose taxes were raised would be 
able to show sufficient harm to constitute a ``case or controversy'' or 
whether it would be necessary for a Member or a whole House of Congress 
to bring the legal challenge. See Balanced Budget Constitutional 
Amendment: Hearing before the Subcomm. on the Constitution of the House 
Comm. on the Judiciary, 104th Cong., 1st Sess. 229 (1995) (statement of 
Walter Dellinger, Asst. Att'y Gen., Office of Legal Counsel, Dep't of 
Justice).
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VI. Republicans have frequently waived their own house rules requiring 
        a three-fifths majority vote to increase taxes

    The unworkability of H.J. Res. 62 is illustrated by the 
fact that the Republicans have frequently ignored their own 
House Rule preventing tax rate increases from taking effect 
unless approved by three-fifths of the House.31 Last 
Congress, the Majority ignored or waived this three-fifths 
requirements for tax increases on six separate 
occasions.32 As Rep. Charles Stenholm (D-TX) noted in a 
Washington Post editorial opposing a similar proposal last 
year:
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    \31\ Rule XXI 5(c), 104th Cong., 1st Sess. (January 4, 1995).
    \32\ On April 5, 1995, during the consideration of H.R. 1215, the 
Contract with America Tax Relief Act, there was a parliamentary ruling 
that the new House rule did not apply to the bill even though H.R. 1215 
would have repealed the current 50 percent exclusion for capital gains 
from sales of certain small business stock. The net effect of H.R. 1215 
was to increase the maximum rate of tax on those gains from 14 percent 
(50 percent inclusion times 28 percent top rate) to 19.8 percent. All 
seem willing to concede now that the ruling was erroneous. (Even 
Speaker Gingrich in a June 27, 1995 letter, responding to an inquiry by 
Messrs. Gibbons, Moakley, and Gephardt, conceded that the ruling did 
not seem ``either satisfactory or overly compelling.'')
    On October 26, 1995, the House rule was waived for the 
consideration of H.R. 2491, the FY 1996 budget reconciliation bill and 
its conference report. The bill contained several tax rate increases.
    On October 19, 1995, the House rule was waived for the 
consideration of H.R. 2425, the Medicare Preservation bill (which would 
have imposed additional taxes on withdrawals from MedicarePlus Medical 
Savings Accounts and premium increases on high-income Medicare 
beneficiaries).
    On March 28, 1996, the Republicans waived the House rule for 
consideration of H.R. 3103, the Health Coverage Availability and 
Affordability bill (imposing additional taxes on withdrawals from 
Medical Savings Accounts).
    On May 22, 1996, the House rule was waived for consideration of the 
Small Business Protection Act.
    On July 31, 1996, the House rule was waived for the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1995 
(possible increases in the earned income tax credit program).

          [T]he final blow to any hope that the vote [on the 
        supermajority tax requirement] might be for real comes 
        from the dismal adherence Republicans have made to 
        their own internal House rule requiring a three-fifths 
        vote to raise taxes. After much fanfare during the 
        organization of the 104th Congress, the House 
        leadership has waived its own effort to restrain itself 
        in every potential instance except one.33
---------------------------------------------------------------------------
    \33\ Charles Stenholm, ``An Amendment Without a Prayer'', Wash. 
Post, April 15, 1996, at A21.

     In an attempt to avoid these problems, at the beginning of 
the 105th Congress, the House Rule was significantly narrowed 
to limit its application to increases in particular tax rates 
specified under the Internal Revenue Code, rather than tax rate 
increases generally.34 Such experiences highlight the 
unworkability of setting forth special procedural rules 
concerning tax laws and tax rates and these problems would be 
greatly compounded in a constitutional context.
---------------------------------------------------------------------------
    \34\ Rule XXI 5(c), 105th Cong., 1st Sess. (Jan. 7, 1997).
---------------------------------------------------------------------------

                               Conclusion

    We are surprised that a Republican Party which has a 
difficult enough time putting forth any coherent agenda or 
adopting any meaningful legislation somehow believes that they 
can accomplish more by making it even more difficult to enact 
legislation. Yet this is precisely what H.J. Res. 62 would do. 
In our view, it's time the Republican Party assumed 
responsibility for legislating, and stopped blaming the 
Constitution for their own political problems.

                                   John Conyers, Jr.
                                   Robert C. Scott.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Barney Frank.
                                   Jerrold Nadler.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
```