II

103D CONGRESS

2D SESSION S. 2486

To amend the Internal Revenue Code of 1986 to extend the deduction for

health insurance costs of self-employed individuals, to increase the taxes

on tobacco products, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 30 (legislative day, SEPTEMBER 12), 1994

Mr. KOHL (for himself and Mr. CHAFEE) introduced the following bill; which

was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to extend

the deduction for health insurance costs of self-employed

individuals, to increase the taxes on tobacco products,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. 2-YEAR EXTENSION OF DEDUCTION OF HEALTH

4 INSURANCE COSTS OF SELF-EMPLOYED INDI5 VIDUALS.

6 (a) EXTENSION.—Section 162(l)(6) of the Internal

7 Revenue Code of 1986 is amended by striking ‘‘1993’’ and

8 inserting ‘‘1995’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 December 31, 1993.

4 SEC. 2. INCREASE IN TAXES ON TOBACCO PRODUCTS.

5 (a) IN GENERAL.—

6 (1) CIGARS.—Subsection (a) of section 5701 of

7 the Internal Revenue Code of 1986 (relating to rate

8 of tax on cigars) is amended—

9 (A) by striking ‘‘$1.125 cents per thou10 sand (93.75 cents per thousand on cigars re11 moved during 1991 and 1992)’’ in paragraph

12 (1) and inserting ‘‘$1.359 per thousand’’; and

13 (B) by striking paragraph (2) and insert14 ing the following new paragraph:

15 ‘‘(2) LARGE CIGARS.—On cigars weighing more

16 than 3 pounds per thousand, a tax equal to 15.41

17 percent of the price for which sold but not more

18 than $36.25 per thousand.’’

19 (2) CIGARETTES.—Subsection (b) of section

20 5701 of such Code (relating to rate of tax on ciga21 rettes) is amended—

22 (A) by striking ‘‘$12 per thousand ($10

23 per thousand on cigarettes removed during

24 1991 and 1992)’’ in paragraph (1) and insert25 ing ‘‘$14.50 per thousand’’; and
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1 (B) by striking ‘‘$25.20 per thousand ($21

2 per thousand on cigarettes removed during

3 1991 and 1992)’’ in paragraph (2) and insert4 ing ‘‘$30.45 per thousand’’.

5 (3) CIGARETTE PAPERS.—Subsection (c) of sec6 tion 5701 of such Code (relating to rate of tax on

7 cigarette papers) is amended by striking ‘‘0.75 cent

8 (0.625 cent on cigarette papers removed during

9 1991 or 1992)’’ and inserting ‘‘0.91 cent’’.

10 (4) CIGARETTE TUBES.—Subsection (d) of sec11 tion 5701 of such Code (relating to rate of tax on

12 cigarette tubes) is amended by striking ‘‘1.5 cents

13 (1.25 cents on cigarette tubes removed during 1991

14 or 1992)’’ and inserting ‘‘1.81 cents’’.

15 (5) SNUFF.—Paragraph (1) of section 5701(e)

16 of such Code (relating to rate of tax on smokeless

17 tobacco) is amended by striking ‘‘36 cents (30 cents

18 on snuff removed during 1991 or 1992)’’ and insert19 ing ‘‘43.50 cents’’.

20 (6) CHEWING TOBACCO.—Paragraph (2) of sec21 tion 5701(e) of such Code is amended by striking

22 ‘‘12 cents (10 cents on chewing tobacco removed

23 during 1991 or 1992)’’ and inserting ‘‘14.5 cents’’.

24 (7) PIPE TOBACCO.—Subsection (f) of section

25 5701 of such Code (relating to rate of tax on pipe
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1 tobacco) is amended by striking ‘‘67.5 cents (56.25

2 cents on chewing tobacco removed during 1991 or

3 1992)’’ and inserting ‘‘81.6 cents’’.

4 (b) FLOOR STOCKS.—

5 (1) IMPOSITION OF TAX.—On cigars, cigarettes,

6 cigarette paper, cigarette tubes, snuff, chewing to7 bacco, and pipe tobacco manufactured in or im8 ported into the United States which is removed be9 fore January 1, 1995, and held on such date for sale

10 by any person, there shall be imposed the following

11 taxes:

12 (A) SMALL CIGARS.—On cigars, weighing

13 not more than 3 pounds per thousand, 23.4

14 cents per thousand.

15 (B) LARGE CIGARS.—On cigars, weighing

16 more than 3 pounds per thousand, a tax equal

17 to 2.66 percent of the price for which sold, but

18 not more than $6.25 per thousand.

19 (C) SMALL CIGARETTES.—On cigarettes,

20 weighing not more than 3 pounds per thousand,

21 $2.50 per thousand.

22 (D) LARGE CIGARETTES.—On cigarettes,

23 weighing more than 3 pounds per thousand,

24 $5.25 per thousand; except that, if more than

61 25 ⁄2 inches in length, they shall be taxable at
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1 the rate prescribed for cigarettes weighing not

2 more than 3 pounds per thousand, counting

each 23 3 ⁄4 inches, or fraction thereof, of the

4 length of each as one cigarette.

5 (E) CIGARETTE PAPERS.—On cigarette pa6 pers, 0.16 cent for each 50 papers or fractional

7 part thereof; except that, if cigarette papers

measure more than 61 8 ⁄2 inches in length, they

9 shall be taxable at the rate prescribed, counting

each 23 10 ⁄4 inches, or fraction thereof, of the

11 length of each as one cigarette paper.

12 (F) CIGARETTE TUBES.—On cigarette

13 tubes, 0.31 cent for each 50 tubes or fractional

14 part thereof; except that, if cigarette tubes

measure more than 61 15 ⁄2 inches in length, they

16 shall be taxable at the rate prescribed, counting

each 23 17 ⁄4 inches, or fraction thereof, of the

18 length of each as one cigarette tube.

19 (G) SNUFF.—On snuff, 7.5 cents per

20 pound and a proportionate tax at the like rate

21 on all fractional parts of a pound.

22 (H) CHEWING TOBACCO.—On chewing to23 bacco, 2.5 cents per pound and a proportionate

24 tax at the like rate on all fractional parts of a

25 pound.
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1 (I) PIPE TOBACCO.—On pipe tobacco, 14.1

2 cents per pound and a proportionate tax at the

3 like rate on all fractional parts of a pound.

4 (2) LIABILITY FOR TAX AND METHOD OF

5 PAYMENT.—

6 (A) LIABILITY FOR TAX.—A person hold7 ing cigars, cigarettes, cigarette paper, cigarette

8 tubes, snuff, chewing tobacco, and pipe tobacco

9 on January 1, 1995, to which any tax imposed

10 by paragraph (1) applies shall be liable for such

11 tax.

12 (B) METHOD OF PAYMENT.—The tax im13 posed by paragraph (1) shall be treated as a

14 tax imposed under section 5701 of the Internal

15 Revenue Code of 1986 and shall be due and

16 payable on February 15, 1995, in the same

17 manner as the tax imposed under such section

18 is payable with respect to cigars, cigarettes, cig19 arette paper, cigarette tubes, snuff, chewing to20 bacco, and pipe tobacco removed on January 1,

21 1995.

22 (3) CIGARS, CIGARETTES, CIGARETTE PAPER,

23 CIGARETTE TUBES, SNUFF, CHEWING TOBACCO, AND

24 PIPE TOBACCO.—For purposes of this subsection,

25 the terms ‘‘cigar’’, ‘‘cigarette’’, ‘‘cigarette paper’’,
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1 ‘‘cigarette tubes’’, ‘‘snuff’’, ‘‘chewing tobacco’’, and

2 ‘‘pipe tobacco’’ shall have the meaning given to such

3 terms by subsections (a), (b), (e), and (g), para4 graphs (2) and (3) of subsection (n), and subsection

5 (o) of section 5702 of the Internal Revenue Code of

6 1986, respectively.

7 (4) EXCEPTION FOR RETAIL STOCKS.—The

8 taxes imposed by paragraph (1) shall not apply to

9 cigars, cigarettes, cigarette paper, cigarette tubes,

10 snuff, chewing tobacco, and pipe tobacco in retail

11 stocks held on January 1, 1995, at the place where

12 intended to be sold at retail.

13 (5) FOREIGN TRADE ZONES.—Notwithstanding

14 the Act of June 18, 1934 (19 U.S.C. 81a et seq.)

15 or any other provision of law—

16 (A) cigars, cigarettes, cigarette paper, ciga17 rette tubes, snuff, chewing tobacco, and pipe to18 bacco—

19 (i) on which taxes imposed by Federal

20 law are determined, or customs duties are

21 liquidated, by a customs officer pursuant

22 to a request made under the first proviso

23 of section 3(a) of the Act of June 18, 1934

24 (19 U.S.C. 81c(a)) before January 1,

25 1995, and
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1 (ii) which are entered into the cus2 toms territory of the United States on or

3 after January 1, 1995, from a foreign

4 trade zone, and

5 (B) cigars, cigarettes, cigarette paper, cig6 arette tubes, snuff, chewing tobacco, and pipe

7 tobacco which—

8 (i) are placed under the supervision of

9 a customs officer pursuant to the provi10 sions of the second proviso of section 3(a)

11 of the Act of June 18, 1934 (19 U.S.C.

12 81c(a)) before January 1, 1995, and

13 (ii) are entered into the customs terri14 tory of the United States on or after Janu15 ary 1, 1995, from a foreign trade zone,

16 shall be subject to the tax imposed by paragraph (1)

17 and such cigars, cigarettes, cigarette paper, cigarette

18 tubes, snuff, chewing tobacco, and pipe tobacco

19 shall, for purposes of paragraph (1), be treated as

20 being held on January 1, 1995, for sale.

21 (c) EFFECTIVE DATE.—The amendments made

22 by this section shall apply with respect to cigars,

23 cigarettes, cigarette paper, cigarette tubes, snuff,
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1 chewing tobacco, and pipe tobacco removed after De2 cember 31, 1994.

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