The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS” mentioning the U.S. Dept of Agriculture was published in the Senate section on pages S4993-S4997 on March 31, 1995.
The publication is reproduced in full below:
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. DOMENICI:
S. 657. A bill to amend the Internal Revenue Code of 1986 to repeal the 1993 Federal income tax rate increases on trusts established for the benefit of individuals with disabilities or for college education costs of a beneficiary; to the Committee on Finance.
the persons with disabilities trusts tax rate restoration act
Mr. DOMENICI. Mr. President, things aren't always as they seem--especially in the world of tax legislation. Included in the same section that raised the tax rates for higher income individuals were provisions increasing the tax rate for trusts with meager incomes as low as $1,500.
President Clinton campaigned that he wouldn't raise taxes on anyone earning less than $200,000, yet in the law the President signed in 1993, tax bracket increases begin for trusts that have income of
$1,500.
This isn't really a tax on trusts. It is a tax on people who are mentally ill and people with disabilities. It is also a tax on education.
The legislation I am introducing today would repeal that tax increase.
Trusts, at first blush, are faceless entities associated with the idle rich. But the vast majority of trusts are long-
[[Page S4994]] term financial planning tools for people with simple goals and very special needs.
Trusts are set up to save for college or to provide a living allowance for people with disabilities or mental illness. It is a way that parents can plan for the time when they have passed on. These are
``worthy purpose'' trusts that are taking a heavy tax hit under the 1993 law.
Increasing the tax rates on these faceless entities called trusts sounds appealing until we stop to realize that the money comes out of the living allowances of individuals with disabilities, or mental illnesses.
I have experienced personally the agony a family faces as they try to adequately plan and provide for the future comfort and financial management of the affairs of a person with a disability or mental illness. Parents of children with special needs feel an indescribable vulnerability and responsibility as they contemplate, ``How can we best provide for our child who has a disability or mental illness when we are gone?'' ``How can we insure that he/she will have an adequate living allowance?'' It is an inescapable worry that shouldn't be compounded by misguided and ever changing tax policy.
The problems are complex. It isn't just having enough money. Money
isn't the issue. Taxes aren't the issue. It is a management and caring dilemma. Some loved ones who are mentally ill are not suited to have immediate access to the financial resources that their parents saved for their economic security. A trust is a mechanism to provide the financial resources that parents would provide if they were still alive.
These trusts are not set up because wealthy people are trying to avoid taxes. Most of the tax avoidance schemes were written out of the Tax Code in 1986 anyway. The type of trust I am talking about is set up to provide for a loved one. Our tax policy should encourage family responsibility. Only the family can be counted on to provide financial support.
This is a terrible deed that we did to raise the rates on these trusts. Some of these trusts were set up decades ago to provide an adequate living allowance. They are irrevocable trusts. Once they are set up they cannot be changed.
These trusts are vulnerable to interest rate fluctuations and other economic variables. It is wrong to also subject them to an ever increasing tax burden.
Parents and grandparents like to set up education trusts for their children and grandchildren. It teaches children to save. But under the current law, trust income is taxed much more steeply than in the past. In fact, these tax provisions really clobber these trusts, too.
Under the old law, taxable trusts for college or for the care and maintenance of a person who is disabled or suffers from a mental illness paid a top rate of 31 percent on taxable income of more than
$11,250. That was quite steep.
But under current law, it became much, much worse. They pay 39.6 percent on income of more than $7,500.
This means that a very small trust under prior law with income of
$2,750 would have paid $562 in Federal income taxes. Under the current law, the trust pays $862--a 53-percent increase.
The bill I am introducing today would repeal that 53-percent rate increase.
Under the new tax law, trusts would pay 31 percent on income between
$3,500 and $5,500; 36 percent on income over $5,500 and 10 percent surcharge on income over $7,500 leading to a marginal rate of 39.6 percent.
For a country with a miserable savings rate, this is the wrong tax policy and the wrong message to our children about responsibility, savings and investment.
I would like to think the rate increase for these trusts was an unintended consequence of the tax law. Regardless, it is one provision that should be repealed.
I hope my colleagues will join me in cosponsoring this bill. I ask unanimous consent that a copy of the legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
S. 657
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,SECTION 1. SHORT TITLE.
This Act may be cited as the ``Persons With Disabilities Trusts Tax Rate Restoration Act''.
SEC. 2. REPEAL OF 1993 RATE INCREASES ON TRUSTS FOR
INDIVIDUALS WHO ARE DISABLED OR FOR COLLEGE
EDUCATIONS.
(a) In General.--Section 1(e) of the Internal Revenue Code of 1986 (relating to tax imposed on estates and trusts) is amended to read as follows:
``(e) Estates and Trusts.--
``(1) In general.--Except as provided in paragraph (2), there is hereby imposed on the taxable income of--
``(A) every estate, and
``(B) every trust,
taxable under this subsection a tax determined in accordance with the following table:
The tax is:e income is:
15% of taxable income..................................................
$225, plus 28% of the excess over $1,500...............................
$785, plus 31% of the excess over $3,500...............................
$1,405, plus 36% of the excess over $5,500.............................
$2,125, plus 39.6% of the excess over $7,500...........................
``(2) Special rule for certain trusts.--
``(A) In general.--There is hereby imposed on the taxable income of an eligible trust taxable under this subsection a tax determined in accordance with the following table:
The tax is:e income is:
15% of taxable income..................................................
$495, plus 28% of the excess over $3,300...............................
$2,343, plus 31% of the excess over $9,900.............................
``(B) Eligible trust.--For purposes of subparagraph (A), the term `eligible trust' means a trust which is established exclusively for the purpose of providing reasonable amounts for--
(i) the support and maintenance of 1 or more beneficiaries each of whom is an individual who is mentally ill or has a disability (within the meaning of section 3(2) of the Americans With Disabilities Act of 1990 (42 U.S.C. 12102(2)) at the time the trust is established,
(ii) the support and maintenance of 1 or more beneficiaries each of whom is under 21 years of age and whose custodial parent or parents are deceased, or
(iii) the payment of qualified higher education expenses
(as defined in section 135(c)(2)) of the grantor's children or grandchildren.
A trust shall not fail to meet the requirements of this subparagraph merely because the corpus of the trust may revert to the grantor or a member of the grantor's family upon the death of the beneficiary.''
(b) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1994.
______
By Mr. BINGAMAN:
S. 658. A bill to expand the boundary of the Santa Fe National Forest, and for other purposes; to the Committee on Energy and Natural Resources.
The Santa Fe National Forest Boundary Adjustment Act
Mr. BINGAMAN. Mr. President, today I am introducing legislation on behalf of myself and Senator Domenici to authorize the Forest Service to acquire land and easements adjacent to the Santa Fe National Forest in New Mexico. The purpose of this legislation is to preserve the Atalaya Mountain area, east of the city of Santa Fe, NM. The tracts of land in question comprise a portion of the eastern scenic backdrop of Santa Fe which provide the physical and visual edge of the city. They are logical additions to the Santa Fe Forest.
The expanded boundary will adjoin existing city-owned lands, and will connect with and contribute to the city's open space plan. This boundary adjustment will provide a more logical exterior boundary for the Santa Fe National Forest, thereby also facilitating management and administration of these Federal lands.
This property possesses outstanding scenic qualities that are presently enjoyed by the general public traveling in the vicinity. In addition, these lands are crossed by historic wood gathering trails, used by Santa Fe residents for over 300 years, and could provide permanently protected public access corridors.
Over the last several months, broad community concern has been expressed over the prospect of development of the west face of Atalaya Mountain. There is strong public support for preserving this property in an undeveloped state for public use and enjoyment. The purpose of this legislation is to protect Atalaya Mountain through acquisition of land and conservation easements by the Forest Service, thus returning the land to the public as open space. This
[[Page S4995]] legislation specifically prohibits the Forest Service from selling this land and endangering it to development in the future. It is our intent that this legislation spur Forest Service acquisition and provide the extra protection that the mountain so richly deserves.
This effort represents a high level of cooperation and compromise among several parties--the current owners of the land in question, Santa Feans concerned about the preservation of open space, and local and Federal governments. I am pleased to support this effort through introduction of this legislation, which will ensure that Atalaya Mountain, one of Santa Fe's natural treasures, will be protected. Let me take this opportunity to thank my colleague, Senator Domenici, for his cosponsorship of this legislation. Congressman Richardson has introduced companion legislation in the House of Representatives. It is my hope that we will be able to move swiftly to pass this legislation, and I urge my colleagues to support this bill.
Thank you, Mr. President. I ask that the full text of this legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
S. 658
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Santa Fe National Forest Boudary Adjustment Act of 1995''.
SEC. 2. BOUNDARY MODIFICATION.
The boundary of the Santa Fe National Forest is modified and expanded as generally depicted on a map entitled ``Santa Fe National Boundary Expansion 1994'', dated July 19, 1994. The map shall be on file and available for public inspection in the office of the Chief of the Forest Service.
SEC. 3. ATALAYA PEAK EXCHANGES.
(a) In General.--The Secretary of the Interior may exchange public land and interests in land managed by the Director of the Bureau of Land Management for private land and interests in land depicted on the map described in section 2.
(b) Withdrawal.--Upon the acquisition of land under subsection (a) by the Secretary of the Interior, and subject to valid existing rights, such land is withdrawn from--
(1) all forms of entry, appropriation, or disposal under the public land laws;
(2) location, entry, and patent under the mining laws; and
(3) disposition under all laws pertaining to mineral and geothermal leasing.
SEC. 4. EXCHANGE OF FEDERAL LANDS IN NEW MEXICO.
(a) Identification of Lands.--In conjunction with the exchange of lands under section 3, the Secretary of Agriculture and the Secretary of the Interior shall identify federally owned lands and interests in land that are within the boundary of the Santa Fe National Forest on the date of enactment of this Act and are suitable for transfer to and administration by the Bureau of Land Management. The identification of National Forest System land available for transfer shall be made under criteria that are mutually agreeable to the Secretaries.
(b) Lands Acquired for the Bureau of Land Management.--
(1) Transfer by secretary of agriculture.--The Secretary of Agriculture shall transfer to the Secretary of the Interior, acting through the Director of the Bureau of Land Management, lands and interests in land identified under subsection (a). The transfer shall be effective on publication in the Federal Register of notice of the transfer that identifies the lands and interests in land.
(2) Boundary modification.--The boundary of the Santa Fe National Forest shall be modified as of the date of notice under paragraph (1) to exclude lands and interests in land that are transferred to the Secretary of the Interior.
(3) Management.--Lands transferred under paragraph (1) shall be administered by the Director of the Bureau of Land Management as part of the public lands (as defined in section 103(e) of the Federal Land Policy and Management Act of 1976
(43 U.S.C. 1702(e))).
(c) Lands Acquired for the Forest Service.--
(1) Addition to Sante Fe National Forest.--Lands and Interests in Land--
(A) acquired by the Secretary of the Interior under section 3; or
(B) acquired by the Secretary of Agriculture within the areas identified as ``potential acquisition'' on the map described in section 2,
shall, upon acquisition, be added to and administered as part of the Santa Fe National Forest in accordance with the laws relating to the National Forest System.
(2) Management.--The Secretary of Agriculture shall manage lands and interest in land described in paragraph (1) primarily to preserve open space and scenic values and to preclude development.
(3) Availability of certain funds.--For the purposes of section 7(a)(1) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-9(a)(1)), the boundary of the Santa Fe National Forest, as modified under this Act, shall be treated as if it had been the boundary as of January 1, 1965.
SEC. 5. SAVINGS PROVISION.
(a) In General.--Nothing in this Act shall affect the authority of the Secretary of Agriculture to acquire lands in New Mexico by purchase or exchange.
(b) Management.--Notwithstanding the Act of June 15, 1926
(16 U.S.C. 471a), all lands acquired before, on, or after the date of enactment of this Act by the exchange of National Forest lands shall be managed as a part of the National Forest System.
SEC. 6. IMPLEMENTATION.
The procedures used in carrying out the land transfers under this Act shall be the procedures agreed to between the Secretary of the Interior and the Secretary of Agriculture.
______
By Mr. FEINGOLD:
S. 659. A bill to amend the Food, Agriculture, Conservation, and Trade Act of 1990 to replace the prohibition on higher State make-
allowances for the processing of milk with a requirement that the support purchase price for milk be reduced if a person collects a State make-allowance that is higher than the Federal make-allowance and the milk is purchased by the Commodity Credit Corporation, and for other purposes; to the Committee on Agriculture, Nutrition, and Forestry.
elimination of double subsidy to dairy processors
Mr. FEINGOLD. Mr. President, today I am introducing the legislation that will restore some fairness to the Dairy Price Support Program. Previous legislative and administrative attempts to correct the problem in the system have been unsuccessful. It is time to try a new approach.
Under the Dairy Price Support Program, USDA set Commodity Credit Corporation purchase prices for manufactured daily products in order to indirectly support the price of milk. Rather than requiring the processors to pay dairy producers the support price, the Dairy Price Support Program sets the support price for the individual manufactured products at levels sufficient to achieve plant returns that in turn, allow processors to pay farmers the specified support price. This requires a determination by USDA as to the appropriate plant margin. This margin is more commonly known as a ``make allowance. ''
Despite changes in the 1990 farm bill, some States in this country, are still able to set prices for milk used to make cheese, butter, and nonfat dry milk such that processing plants are guaranteed a higher profit margin--or make allowance--for their products than allowed under the dairy price support system. That allowance provides companies in those States with an artificial competitive advantage. At the same time, processors in those States sell significant amounts of surplus dairy products to the Federal Government.
The bill I am introducing today sends a clear message to those States--it says ``You can't have it both ways.''
While the specifics of this issue are complex, the fundamentals are clear and understandable. If States create pricing structures to give their milk processors a leg up, they cannot do so at taxpayers expense.
That is exactly what is happening in the State of California today. Because of the California State pricing system, cheese, butter, and dry milk processors are provided such a high make allowance that they can sell their products competitively on the east coast even with the high cost of transportation. Meanwhile, other States must abide by the manufacturing margin set by the Department of Agriculture.
Currently, the State of California provides their plants with a make allowance that is 57 cents per hundredweight higher than the national make allowance for cheese, and nearly 60 cents per hundredweight higher than the national make allowance for the processing of butter and milk powder.
California processors pay their dairy farmers less for the milk they need to make cheese, butter, and powder, and let farmers absorb the market risk, while taxpayers absorb the cost.
Meanwhile, processors elsewhere in the country who are playing by the
[[Page S4996]] rules, paying at least Minnesota-Wisconsin base price or an associated minimum price for milk used in dry milk production, are forced to compete with California's products in the grocery store's dairy
case. If we don't change this inequity, processors and dairy farmers outside of California will continue to lose.
The growth in the California dairy processing industry in the last 10 years has been dramatic--and it is due--at least in part--to the higher make allowance. The higher profitability of the plants drives the need to operate plants at capacity and build even more plants creating a demand for milk that spurs on the growth of milk production. The lack of risk for processors makes dairy manufacturing even more attractive to investors. As one might expect, Mr. President, the sales of surplus dairy product to the Federal Government from California have been dramatic as well.
Between 1990 and 1994 marketing years, one State--the State of California--sold 35 percent of all of the surplus butter purchased by the Federal Government and 42 percent of all the nonfat dry milk purchased by the Government.
Not only does the higher make allowance provide California dairy product manufacturers with an artificial competitive advantage in the market place, it encourages milk production and increases surpluses, driving down national milk prices to farmers.
Congress recognized the importance of this issue in the 1990 farm bill when we prohibited any State from having a higher make allowance than the Federal make allowance. Five years later, the law has not been implemented. The Secretary's attempt to implement the law has already been the subject of seven lawsuits. Complaints about the Department's proposed rule have at the same time charged the rule will have no impact whatsoever or be wholly devastating on both the California processing industry and the national dairy industry. Well, Mr. President, I doubt that both could simultaneously be true, but it is hard to know which will be the final outcome.
It is time to restore some reason to this drawn out administrative process. My bill does that. It simplifies the law by removing the overall prohibition on States having higher make allowances. It eliminates the existing statutory requirements for penalties and it removes the burden from the producer to bring a complaint against his processor to USDA.
My bill simply requires the Commodity Credit Corporation to reduce the price it pays to any plant or person selling surplus dairy products to the Government operating in a state with a pricing system that provides a higher make allowance, by an amount that is equal to the difference between the State and Federal make allowance. Regardless of the point of sale of the dairy products, if they were produced by a plant in a state with a higher make allowance, the CCC purchase price must be reduced.
This bill also explicitly includes cooperatives which have been exempted from the proposed USDA rules. Since dairy cooperatives market most of the milk in California, it is essential that they be compelled to comply with the requirements of this bill.
This bill is based upon a proposal by the Lakeshore Federated Dairy Cooperative in Wisconsin and their member-producers who are fed up with USDA's inability to implement current law, the artificial competitive disadvantages they face in the dairy case, and the bald-faced abuse of the dairy price support system that has gone unfettered for the last 15 years.
The appeal of this approach is obvious. It allows an individual State to have its own pricing structures, but forces them to play by the rules of the Federal dairy price support program if they wish to take advantage of it. States should not be allowed to increase the cost of the dairy price support program to taxpayers and depress national prices to other producers in the process, while providing their own dairy industry with an additional processing subsidy.
The legislation I am proposing not only makes more sense than the current proposal, it also saves money. It has less of an impact on California producer prices and will not lead to significant increases in milk production. In fact, preliminary CBO estimates indicate that this legislation, if enacted, would save upwards of $40 million over 5 years.
I think this is a solid compromise to a long-standing problem that will persist if Congress fails to act. I encourage my colleagues to support this legislation.
I ask unanimous consent that a letter from the Lakeshore Federated Dairy Cooperative be included in the Record, and that the text of the bill also be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
S. 659
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. MILK MANUFACTURING MARKETING ADJUSTMENT.
Subsections (a) and (b) of section 102 of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 1446e-1) are amended to read as follows:
``(a) Definitions.--In this section:
``(1) Federal make allowance.--The term `Federal make allowance' means the allowance for the processing of milk that is permitted under a Federal program to establish a Grade A price for manufacturing butter, nonfat dry milk, or cheese.
``(2) Person.--The term `person' includes a cooperative.
``(3) State make allowance.--The term `State make allowance' means the allowance for the processing of milk that is permitted by a State for manufacturing butter, nonfat dry milk, or cheese.
``(b) Milk Manufacturing Marketing Adjustment.--Notwithstanding any other provision of law, if a person collects a State make allowance that is higher than the Federal make allowance and the milk or product of milk that is subject to the allowance is purchased by the Commodity Credit Corporation, regardless of the point of sale, the Corporation shall reduce the support purchase price for the milk and each product of the milk by an amount that is equal to the difference between the State make allowance and the Federal make allowance for the milk and product, as determined by the Secretary of Agriculture.''.
____
Lakeshore Federated
Dairy Cooperative,
Rockford, IL, March 31, 1995.Hon. Russ Feingold,U.S. Senate,Washington, DC.
Dear Senator Feingold: Lakeshore Federated Dairy Cooperative supports your adjustments to ``Milk Manufacturing Marketing Adjustment'' in your proposed legislation.
The major impact of implementing the ``Milk Manufacturing Marketing Adjustment'' would be on cheese sales to the Commodity Credit Cooperation. The current California make allowance for cheese per hundredweight is $1.94. This compares to the $1.37 per hundredweight used by the CCC in calculating the block cheddar cheese purchase price. This section will eliminate a $0.57 make allowance advantage California has over cheese manufacturing plants in 42 other states.
California's Class 4b make allowance has resulted in the cost of milk to California cheesemakers to fall below the M-W price, which represents the minimum cost of milk to cheesemakers regulated under federal orders in 42 states. This allows California cheese plants to produce cheese at a lower raw milk cost than plants in most other states, because of a government loop-hole.
California has had this windfall for the past 10 years and is using politics and the court system to delay any new regulations.
The dairy industry in California had an opportunity to take care of the California make allowance provision that had come to the attention of the U.S. Congress and USDA in February 1992. California chose to ignore the U.S. Congress and Section 102 of the 1990 Farm Bill. They chose to add 70 cents per cwt. on milk used in Class I and Class II as a surcharge, through an emergency price relief bill passed in 1991.
This price relief bill allowed the California department of Food and Agriculture to increase the cost of milk utilized in Class I and Class II and the fluid milk consumers subsidized the California milk producer and continued to allow a high make allowance to the milk manufacturing industry. This emergency price relief bill was just another California State milk pricing scheme to allow the California milk manufacturing industry to continue to use high state ``make allowance.''
Congress recognized this make allowance issue in the 1990 Farm Bill and instructed USDA to correct the problem. USDA failed to honor the request, as they have done prior to the 1990 Farm Bill. Our cooperative filed briefs with Secretary of Agriculture, Mike Espy, in 1994 on the make allowance issue and as of today, nothing has been done.
The California Department of Food and Agriculture has denied a petition to hold hearings on whether the state's Class 4-A and 4-B milk pricing formulas
should be replaced with the Minnesota-Wisconsin price within the past month. There is no doubt
[[Page S4997]] that the California dairy industry has no respect for the U.S. Congress or USDA's internal politics. They had a chance to correct the make allowance inequity this past month and thumbed their nose at the rest of the United States.
Lakeshore Federated Dairy Cooperative is made up of three Capper-Volstead Cooperatives: Manitowoc Milk Producers Cooperative, Milwaukee Cooperative Milk Producers, Brookfield, WI, and Mid-West Dairymens Co., Rockford, IL. The combined membership of the three cooperatives includes 6,200 farm families located in Wisconsin, Illinois, Michigan, Minnesota and Iowa.
The cost to administrate this new section in the 1995 Farm Bill is zero. The CCC will make a calculation once for the States with milk pricing schemes and use the same reduction on the price per pound of products purchased by the CCC. This price per pound reduction will also reduce spending by USDA.
Members of our cooperatives feel there is little downside to your proposed legislation. There have been scenarios as to the shift of milk from cheese to NFDM production or the shift of milk from NFDM production to cheese production. These are unpublished studies with questionable assumptions and conclusions.
We would like to thank you and your staff for supporting this make allowance issue. If our cooperatives can be of any assistance to you, please let us know.
Sincerely,Dennis Donohue,
Manitowoc Milk
Producers Cooperative.James Bird,
Milwaukee Cooperative
Milk Producers.John Trei,
Mid-West Dairymens Company.
____________________
