Executive Session

Floor Speech

BREAK IN TRANSCRIPT

WORK OF THE COMMERCE COMMITTEE

Mr. NELSON. Madam President, before the Senator from South Dakota leaves the floor, let this Senator say that I am looking forward to working with him since he will be our chairman of the Commerce Committee next year. I will have the privilege of being the ranking member. We have a fairly full plate of things that must be done: FAA reauthorization, telecommunications rewrite. Fortunately, it looks as though we have just done a Coast Guard bill, but there can always be tweaks to that. There are a host of things. We are way beyond on NASA reauthorization. Fortunately, we have been able to build on the NASA reauthorization that was done in 2010, but that needs to be updated. There are all kinds of consumer legislation as we get into things such as this thorny issue of Internet access. It is going to take some real bipartisan cooperation.

In my discussions with the future chairman, Senator Thune, I am looking forward to working with him on this very important committee.

BREAK IN TRANSCRIPT

TAX EXTENDERS

Mr. NELSON. Madam President, I wish to speak about a tax bill that is coming up that is fairly necessary for the country. The Senator from South Dakota and I have the privilege also of serving on the Finance Committee, and there is an example where we just haven't been able to get a lot done. Now, here we are at the eleventh hour and fifty-ninth minute with a whole bunch of provisions about to expire that are extremely important to American taxpayers, such as the research and development tax credit.

American businesses and American taxpayers would like to have some certainty of knowing, as they are doing their planning for the year, that they can plan on this or that deduction or tax credit. In Congress, for the entire past year, we have not had etched into law, because it has expired, a number of these tax deductions and credits that I am going to go through. But the R&D tax credit is only one example.

So how in the world can American business and the American taxpayers plan? Take, for example, the Senator has a State where agriculture is predominant. So does this Senator.

There are a number of ranchers in the State of Florida who want to donate a conservation easement on their property to keep that property, in this case of ranching families, that they have been ranching for centuries. They want that way of life to continue.

There is an interest in environmental restoration; for example, the Everglades restoration, that the headwaters that ultimately flow to the Everglades be preserved from being developed. So there is an interest in the environment to obtain the development rights or a conservation easement.

It is clearly in the interests of the taxpayer, likewise, to have observed that conservation easement because that is the easiest way of cleaning up the water that ultimately flows into the Everglades. So the conservation easement is a win-win-win. It is a win for the rancher, it is a win for the taxpayer, and it is a win for the environment.

But the poor ranchers, because we have not passed the tax extenders bill, here they are at the end of the year and they would like to make the donation of the conservation easement. How are they going to get it done in the next couple of weeks if we don't pass it until almost the midnight hour?

It is just another example, and I look forward to working with the Senator from South Dakota. I hope we can pass it this week so at least some of it can be salvaged before the end of this tax year.

I have given two examples and I will give another: the wind energy production tax credit. It provides a credit for electricity produced by the wind.

There is a lot of wind out in the middle of this country. It is a good way to produce electricity. It is called renewable electricity. It has brought our electricity sector into the 21st century. It has reduced our dependence on carbon-based electricity.

It makes sense. If someone visits a country such as Denmark, look how many windmills there are. I still call them windmills, but they are wind turbines. They are highly sophisticated, finely tuned machines, blades that will take the least bit of wind and turn that big blade that is hundreds of feet long. As it turns, it is generating electricity.

Yet for the entire past year people who want to establish these wind farms don't have any certainty that they will be able to get this wind energy production tax credit.

The purpose for the tax credit is to give the businesses an incentive to establish wind farms which, No. 1, becomes a win for the environment; No. 2, becomes a win for the business that is in the business of wind energy production; and, No. 3, becomes a win for the consumers because it is weaning us from producing electricity only from a carbon-based fuel that ultimately sends CO

2 into the atmosphere. We know what is happening with a lot of CO

2 up there, it creates the greenhouse effect.

As the Sun's rays come in and bounce off the surface of the Earth and reflect or radiate back out into space, suddenly the glass ceiling--the greenhouse effect of carbon dioxide and other greenhouse gases--traps that heat. What happens? The increasing temperature of the planet, 90 percent of that heat is absorbed into the oceans and, as a result, we are seeing the

sea level rise.

For a State such as mine, the State of Florida, NASA has measured over the past 50 years--not drafts, not projections, measurements--5 to 8 inches in South Florida of sea level rise in Florida.

By the way, check the papers. Yesterday the pumps didn't work. Alton Road in Miami Beach was flooded. The mayor of Miami Beach, when he was campaigning 1 year ago, went in a kayak down Alton Road as a demonstration of how the sea level rise at high tide is flooding streets of Miami Beach. It brings me back to this extenders tax bill we need to pass this week: the wind energy production tax credit.

Another example is the work opportunity tax credit, which encourages people who work to hire disadvantaged people. It provides a tax credit for businesses that hire people who have a difficult time getting a job. It encourages the private sector to help these folks get out of a difficult spot in their lives, because they have disadvantages, to become independent, to stand on their own two feet because they can go to work. That is the purpose of a tax credit for work opportunity, but that hasn't been in effect all this year, 2014.

We pass this tax extenders bill and it will retroactively take it back to the 1st of the year and make this tax credit--and these others I have mentioned--available as people are calculating their Federal income tax for the calendar year 2014.

Another is rollover IRAs to charities. It is when you get to a certain age--and I believe the age is 70--and you have an IRA. By law, setting up the IRAs which are nontaxable--recall all the years you put money in those IRAs, you put that money into the IRA before you paid tax on it.

When you bring money out of the IRAs that you have had all of your life, you are going to pay the tax, and that more than likely is going to be during your retirement years. That is what an IRA is for. It is called an Individual Retirement Account.

By law, under the IRA law, when someone gets to be 70, they have to start taking out a certain amount of that IRA.

We have had a provision in the Tax Code that is an incentive to give that money that people have to take out to charity. Therefore, it provides an easier way for people who have to take the money out of their retirement accounts to give that money to charity because, when they take it out, it doesn't become taxable before they give it to the charity.

In other words, it is a transfer of the tax-free dollars in the IRA directly
over to charity. It is a win for the taxpayer, and it is a win for the charitable organizations because there is an incentive there to give that money to charitable organizations.
If we don't pass this tax extenders bill, that is not available for all of this year of 2014. Think what that is going to do to some charities and what it is going to be doing to taxpayers who have been planning on that deduction and suddenly find it is not available.

Another example is there are a few States--maybe half a dozen--that do not have a State income tax, but often the State government is in fact funded by the State sales tax. My State of Florida is one of those States. The State of Washington is another, and the State of Texas is another. There are about three others.

Therefore, if someone is in a State that has a State income tax, and they are calculating their Federal income tax, they can deduct the State income tax in the deduction of the Federal income tax.

What about the poor people in the States that don't have the income tax? They should be able to deduct the similar tax that we pay in our States, the State sales tax, and that provision has been there in the Tax Code, but it is not in there for 2014 because it lapsed, and we need to reenact it.

This is not a way to run a railroad and tax policy, but unfortunately, because it seems to have the word ``tax'' to it, it seems to be radioactive and, as a result, we have to wait until the eleventh hour and the fifty-ninth minute to pass it.

I certainly hope we will pass it this week.

Let me give you another example--the deduction for mortgage insurance premiums. When you want to buy a home, the bank negotiates and sets up a mortgage so you can buy the home. Most banks will require you to take out an insurance policy should you fail to pay on that mortgage. We have always had the deductibility of that insurance premium in calculating Federal income taxes, and it particularly helps low- and middle-income people deduct the amount they pay for private mortgage insurance. So, therefore, what does that do? That helps those low- and middle-income folks buy a home.

Isn't home ownership something that is desirable in America? I think so. Well, we better pass this tax extenders bill.

I will give another example--excluding forgiven mortgage debt from income. It allows people to exclude forgiven mortgage debt from their income. Why am I raising this? Well, haven't we just gone through the worst recession since the Great Depression? Didn't some people get so upside down in their mortgage--with their mortgage being at this level, but the value of their home dropping to this level--so that they owed a much greater amount on their mortgage than the value of their home? What they tried to do was work with the purchaser and the bank that holds the mortgage. That is called a short sale. The bank forgives part of that debt--the difference between the mortgage amount and the value of the home.

The poor taxpayer, the homeowner, instead of treating what they have been forgiven as income--they have just had to take a shellacking because of the value of their home dropping below the value of the mortgage. Lo and behold, when they get a break and sell in a short sale, they end up having to pay income tax on that amount of debt that was forgiven.

I don't think we want to do that. That is why we have this provision to exclude that debt forgiveness from the income tax. But for all of the last 12 months it is not going to be forgiven if we can't pass this tax extenders bill. I think we better get serious about it. We are talking about looking at this as the last piece of legislation this week to pass before we leave. We better get serious about it.

And lastly, let me say that every one of us wants to treat teachers the right way. Teachers haven't been treated the right way. As a matter of fact, a lot of teachers are pulling money out of their own pockets because their school districts are not providing enough money for school supplies for those little children. Those unselfish teachers are going into their own pockets to bring out money to provide the supplies so the kids can learn. Now if a courageous and unselfish teacher does that, should we not at least give them a deduction of that amount they paid for those school supplies for their children? Shouldn't we let them deduct that in calculating their income tax?

We have in the past. But we haven't for calendar year 2014--this present year. And that is another one of the deductions that I hope the Congress will pass this week in order to take care of our people.

But as we go through this in the future, why do we have to keep waiting until the last minute so people can't plan, so people get nervous, so people don't know what to do, so people don't know how to invest, so people don't know how to preserve their land, their business, and the future for their families? This is no way to run a railroad.

Let us at least salvage some kind of victory from the jaws of defeat. I hope we will pass this bill in short order.

I yield the floor.

BREAK IN TRANSCRIPT

Source