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[Congressional Record Volume 141, Number 71 (Tuesday, May 2, 1995)]
[House]
[Pages H4485-H4486]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  LEGISLATION REGARDING EVASION OF TAX LAWS BY RENOUNCING CITIZENSHIP

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Florida [Mr. Gibbons] is recognized for 5 minutes.
  Mr. GIBBONS. Mr. Speaker, today, along with my colleagues Messrs. 
Gephardt, Bonior, Fazio, Rangel, Stark, Jacobs, Ford, Matsui, Mrs. 
Kennelly, Messrs. Coyne, Levin, Cardin, McDermott, Kleczka, Lewis, 
Neal, Payne, and Frost, I am introducing legislation to prevent the 
evasion of our tax laws by individuals who renounce their American 
citizenship.
  This legislation is identical to the bill S. 700, introduced on April 
6, 1995, by Senator Moynihan. Senator Moynihan should be commended for 
his leadership on this issue and for his efforts to respond to the 
technical concerns raised by those opposing this legislation. I must 
wholeheartedly agree with Senator Moynihan's introductory comments that 
these technical concerns could have been resolved ``if those 
criticizing the provision's technical aspects put even half as much 
effort into devising solutions as highlighting shortcomings.''
  Mr. Speaker, this bill is similar to the provision which was included 
in the House Democratic amendment which was defeated when the House 
considered H.R. 831. In addition, this proposal was included in the 
Senate amendment to H.R. 831. In addition, this proposal was included 
in the Senate amendment to H.R. 831. It would tax the unrealized 
appreciation in assets held by individuals who expatriate. The bill 
contains generous exemptions to limit its applicability to only the 
extremely wealthy. This bill contains several technical modifications 
from those earlier proposals, which I would like to quickly summarize 
to demonstrate our willingness to respond to legitimate concerns 
regarding this issue.
  Unlike the provision contained in the earlier amendments, this bill 
would also apply in cases where long-term residents of the United 
States cease to be taxed as residents. This change is in response to 
the argument that the earlier amendments were unfair in that they 
applied only to citizens and did not also apply to residents who are 
taxed in the same manner as citizens.
  During House consideration of H.R. 831, there were arguments about 
potential double taxation. This bill I am introducing today responds to 
those arguments by providing that, if a foreign person becomes a 
resident or citizen of this country, the basis of all of that person's 
assets would be stepped up to their fair market value at the time the 
person becomes subject to our tax system. Therefore, the bill creates 
parallel treatment
 under which appreciation accruing before an individual becomes subject 
to our taxes would be exempt from our taxes and tax on appreciation 
accruing while an individual is subject to our tax laws could not 
easily be avoided.

  The bill also responds to the argument that triggering the tax on 
expatriation would be an acceleration of the tax that would otherwise 
have occurred. The bill provides that each taxpayer would be allowed to 
irrevocably elect on an asset-by-asset basis to continue to be taxed as 
a U.S. citizen with respect to assets designated by the taxpayer.
  The bill also makes modifications to the administration of the tax by 
requiring expatriates to file a return within 90 days of their 
expatriation and to pay a tentative tax.
  Mr. Speaker, we had a long and heated debate on this issue in April 
and I do not wish to repeat that entire discussion today. However, 
there are several matters upon which I feel compelled to comment.
  Opponents of this provision made much of their concern over human 
rights obligations under international laws. Senator Moynihan has quite 
nicely analyzed these arguments in his introductory statement. I do not 
intend to repeat that analysis but I do want to agree strongly with his 
conclusion that the growing consensus of opinion is that this provision 
does not violate any legitimate human rights concern. For me, the human 
rights argument was never very persuasive. These individuals are not 
renouncing their American citizenship because of any fundamental 
disagreement with our political or economic system. They simply refuse 
to contribute to the common good in a country where the political and 
economic system has benefited them enormously. Some individuals went so 
far as to compare the plight of these wealthy expatriates to the plight 
of the persecuted Jews attempting to flee Russia. I can only say that I 
agree strongly with the leaders of the National Jewish Democratic 
Council who have described this argument as ``nothing short of 
obscene.''
  In the last weeks of April, some of my Republican colleagues accused 
me of engaging in class warfare because of my attempts to ensure that 
these extraordinarily wealthy individuals cannot avoid our tax system 
by the despicable act of renouncing their citizenship. During the 
welfare reform debate, Republic Members of this House compared welfare 
recipients to ``wolves'' and ``alligators'' and engaged in crude 
stereotyping of welfare recipients by referring to ``studs'' outside 
their homes. The Republican welfare bill took billions away from the 
poorest of our citizens to be used to fund a tax bill that even the 
Wall Street Journal described as a ``windfall for the well off.''
  None of this was considered class warfare by Republican members of 
this House. However, when Democratic Members suggest that billionaires 
should not be able to avoid the same taxes that middle-income taxpayers 
are required to pay, some Republicans consider that class warfare. The 
difference between the two parties could not be clearer.
  Finally, I would like to make it clear that the effective date in the 
bill I am introducing today is February 6, 1995, and that I will 
continue to insist that February 6, 1995, be the effective date for any 
subsequent legislation to end this loophole. The Democratic Members of 
this House will insist on this effective date, and the fact that a 
different effective date was contained in a motion to recommit on the 
recent 
[[Page H4486]] tax bill should be disregarded. That different effective 
date was chosen merely because the minority leader was informed that 
the motion to recommit would otherwise have been subject to a point of 
order. Had the Republicans lived up to their promise to consider tax 
bills under open procedures, the minority leader would not have been 
forced to use that different effective date.
  From the press, we already know the name of at least one wealthy 
American, and heir to the Starkist Tuna fortune, who renounced U.S. 
citizenship after February 6 of this year and, therefore, could benefit 
from a delay in the effective date of this legislation. We also know 
that other powerful lobbyists are representing families, such as the 
Getty family, in an attempt to delay this provision. We must guarantee 
that the efforts of these lobbyists will be unsuccessful.
  Mr. Speaker, I wish this legislation had been enacted earlier. I 
believe the privileged few who amass great fortunes under our laws and 
then renounce their citizenship to avoid tax here should be asked to 
pay their fair share. Those who have sought to protect these few 
extraordinarily wealthy individuals may have won the early skirmishes 
in this battle for fairness. But introduction of this bill is a signal 
that we who care about fairness will not give up until we win the war.

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