Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

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Union Calendar No. 598
106Tll CONGRESS 1
RgPOKT

2d Session HOUSE OF REPRESENTATIVS

(

106- 1036

REPORT ON THE LEGISLATIV AND OVERSIGHT ACTIVITIES
OF THE

COMMITTEE ON WAYS AND MEANS
DURING THE

l06TH CONGRESS

DECEMBER 21, 2000.-Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed

U.S. GOVERNENT PRI:-NG OFFICE
89-006

WASHINGTON: 2001

;i GOVERNMENT

i EXHIBIT
I Appendix A4

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to $7.5 bilion in "New Markets Tax

Credits" to community development entities that provide assistance to individuals and busi-

nesses in low-income areas. The bil also includes an increase in
the low income housing tax credit and an acceleration of the schedcertain environmental remediation costs.
uled increase in the private activity bond volume cap. In addition, the bill permits greater deduction (rather than capitalization) of
n.R. 5662 also renamed "medical savings accounts" as "Archer MSAs" and extended the program for two more years. The bil also extended the D.C. homebuyer credit for two years and the D.C. en-

terprise zone for one year. It extended and modifed the enhanced

deduction for corporate donations of computer technology and modi-

fied the tax treatment of Indian tribes for FUTA puroses. The bil
below).

included several administrative provisions and technical corrections, substantially identical to those in H.R. 5542 (see I.A.2:b.,
2. COMPREHENSIV TAX RELIEF PROPOSALS

a. Taxpayer Refund and Relief Act of 1999

look for the State of the US. Economy in 1999. On February 4 and March 10, 1999, the Committee held hearings on the President's

On Januar 20, 1999, the Committee held hearings on the Out-

held hearings on Reducing the Tax Burden. On June 30, 1999, the
Committee held a hearing on the Impact of U.S. Tax Rules on
International Competitiveness.

Fiscal Year 2000 Budget. On June 16 and 23, 1999, the Committee

2488, the "Financial Freedom Act of 1999." On July 13 and 14, 2000, the Committee marked up the bil (H. Rept. 106-238). The House passed the bil on July 22. 1999. The Senate passed the bil, as amended, on July 30, 1999. On August 4, 1999, the conference

On July 13, 1999, Committee Chairman Archer introduced ILR.

report on H.R. 2488 CR. Rept. 106-289), retitled the "Taxpayer Revetoed the bil on September 23, 1999.

fund and Relief Act of 1999," was filed. The House passed the con-

ference report, as did the Senate, on August 5, 1999. The President

In summary, title I of the conference report included broad-based
and family tax relief, including a reduction in individual income

tax rates and expansion of the lowest individual regular income tax rate bracket, marriage penalty relief provisions (see section I.A3.a.,

below), and repeal of the individual alternative minimum tax. Title II included capital gains tax relief and IRA changes. Title III consisted of business alternative minimum tax relief. Titles IV, V, and

VI included education savings incentives (see section I.A3.g.,

below), health care provisions (see section I.A.3.i., below), and death tax relief (see section LA3.b., below). Title VII would have

provided tax relief for distressed communities and industries, in-

cluding renewal communities (see section I.A1.g., above) and farming, oil and gas, and timber incentives. Title VIII related to tax relief for small businesses (see section LA3.h., below). International tax relief, including modification of the interest allocation rules, was included in title IX, and provisions relating to tax-exempt organizations were included in title X. Title XI consisted of real estate provisions, including an increase in the low income housing

tax credit (see section LA1.g., above) and a provision al1o,ving tax-

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able REIT subsidiaries. Title XII was composed of provisions relating to pensions (see section LA3.e., below). Title XIII included miscellaneous provisions affecting individuals, businesses, excise taxes,
cluded several revenue offsets.

and the United States Tax Court. Title XI would have extended
several expirng provisions (see section lALb., above). Title XV in-

b. Taxpayer Relief Act of 2000

5542, the "Taxpayer Relief Act of 2000." The provisions of B.ll 5542 were incorporated by reference into the conference report on H.R. 2614. The conference report on B.R. 2614 passed the House

On October 25, 2000, Representative Arey introduced H.R.

In summary, the bil included several provisions similar to or identical to provisions that had previously passed the House, including FSC repeal and extraterritorial income exclusion (see section LA.1.f., above), small business tax relief (see scction LA3.h.,
below), health insurance and long-term care insurance provisions

on October 26, 2000.

(see section LA3.i., below), pension and individual retirement ar-

rangement provisions (see section LA3.e., below), tax-exempt bond

provisions for school construction (see section LA3.g., below) and an expansion of the qualified zone academy bond program, and community revitalization (see section I.A1.g., above). The bill also
included several administrative and miscellaneous provisions and
technical corrections (see section LA.1.g., above).

3. ISSUE SPECIFIC TAX BILLS

a. Marriage Tax Penalty Relief

On Fcbruary 10, 1999, Representative Weller introduced H.R. 6. See discussion of the "Taxpayer Refund and Relief Act of 1999" at section I.A.2.a., above, for earlier action relating to marriage tax penalty relief. On February 2, 2000, the Full Committee marked up
and ordered reportcd with an amendment, H.R. 6, the ''Marriage Tax Penalty Relief Act of 2000." The report was filed on February
ruary 10, 2000. Pursuant to H.Con.Res. 290, budget reconciliation

7, 2000 (H. Rept. 106-493) and the House passed the bil on Feb-

for Fiscal Year 2001, the provisions of H.R. 6 were introduced as

H.R. 4810 and passed by the House on July 12, 2000. H.R. 4810 was amended and approved by the Senate on July 18, 2000. On

July 19, 2000, a conference report to accompany H.R. 4810 was filed (H. Rept. 106-765) and was passcd by the House on July 20
by a vote of 271-156 and by the Senate on July 21, 2000, by a vote
of 60-34. On August 5, ~WOO, the Presidcnt vetoed H.R. 4810. On

September 13, 2000, the House failed to overrde the President's veto.

In summary, H.R. 6 would have provided net tax reduction of over $50 billion during the period Fiscal Year 2000-2005. Under
the bil, the basic standard deduction for a married couple filing a

joint return would have increascd to twicc that of a taxpayer filing
would have expanded, over a six-year phase-in period beginning in

a single return, effective for tax years after 2000. The bil also

tax years after 2002, the 15 percent regular income tax bracket for

a married couple filing a joint return to twice the size of the cor-

responding bracket for a single return. In addition, H.R. 6 would

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have repealed current law provisions that offset refundable income tax credits by the amount of the alternative minimum tax (AMT),

jointly, effective for tax years after 2000. The conference agreement would have provided over $89 billon
the provisions of the House passed bilL. The primary difference re-

effective for tax years after 2001. Finally, the bil would have increased by $2,000 the beginning and endig income levels for the earned income credit (EIC) phaseout for marred couples fiing
of net tax relief over fiscal years 2001-05, incorporating many of
lated to the effective dates of the provisions. Under the conference
in tax year 2000. Finally, all of the tax reductions would have sunset Januar 1, 2005.

agreement, the standard deduction and EIC increases, together with the 15 percent bracket expansion, would have been effective
b. Death Tax Repeal On February 25, 1999, Representative Dunn introduced H.R. 8, the "Death Tax Elimination Act." On May, 25, 2000, the Committee marked up H.R. 8, retitled the "Death Tax Elimination Act of 2000"
CH. Rept. 106--51). The bil passed the House on June 9, 2000, by

a vote of 279-136 and the Senate on July 14, 2000 by a vote of 59-

39. The bill was vetoed by the President on August 31, 2000, and the House failed to override the veto on September 7, 2000.

In summary, the bill provided for a phased-in repeal of estate, gift, and generation-skipping taxes. Prior to full repeal in 2010, the
estate and gift tax rates (and the generation-skipping tax rate)

would have been reduced as follows. Beginning in 2001, the 55 percent tax rate and the 5 percent surtax would have been repealed.

Beginning in 2002, the highest rate would be 50 percent. Each of
these rates would be reduced by 1 percentage point per yel!r from

2003 through 2006, 1.5 percentage point in 2007, and 2 percentage points in 2008 and 2009. However, no rate would be reduced below the lowest general individual income tax rate for unmarried individuals and the rughest rate would not be reduced below the high-

est general individual income tax rate for unmarred individuals.

From 2003 through 2009, the State death tax credit rates would be reduced in proportion to the Federal estate and gift tax rate reduc-

tions. Beginning in 2001, the unified estate and gift tax credit would be replaced by an exemption. After repeal of the estate, gift, and generation skipping taxes, the basis of assets received from a
decedent generally would be the basis of the decedent (i.e., carryover basis); however, current law basis step up rules would be retained for $3 millon of assets left to a surviving spouse and $1.3

milion of other assets left to any beneficiary (the $3 milion and
$1.3 millon figures would be indexed for inflation). The bill would have made a number of simplifyng changes to the
generation-skipping tax prior to its repeaL. In addition, the bil

would have expanded the availability of the estate tax rule for qualified conservation easements by modifying the distance refrom a metropolitan area, national park, or wilderness area would

quirements. Under the bil, the maximum distance of eligible land

have been increased from 25 to 50 miles, and from an Urban National Forest, it would have been increased from 10 to 25 miles. The bil also would have clarified that the date for determining

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