October 7, 1978
Page 34591
Mr. McGOVERN. Mr. President, during the 94th Congress, Senator DOLE and I introduced bills designed to correct inequities in the manner in which the highway use tax currently applies to vehicles used for agricultural and closely related purposes. During consideration of the tax reform act last session; we combined our proposals and offered an amendment to correct these inequities. At the request of our colleague Senator LONG, we withdrew our proposal on the condition that the Finance Committee would carefully study our proposal during their consideration of the tax bill we have before us today. Unfortunately, due to the time constraints during committee markups of this legislation, our proposal was overlooked. Today we again ask the Senate to take action to correct this inequity.
Since its inception, the highway trust fund has proved an excellent and successful means of generating essential revenues to offset increased road construction and maintenance costs. The highway use tax, which is imposed on most heavy road vehicles, is the source of trust fund revenues. The overwhelming majority of those who pay the use tax are commercial truckers. As regular users of the road system; it is entirely appropriate to expect commercial truckers to contribute toward public expenses which are necessary to sustain their own industry.
Unfortunately, for the purposes of tax liability, the internal revenue code fails to distinguish between commercial trucking firms, which use the Federal highway system on a regular basis, and those farmers or ranchers who own heavy vehicles but seldom use them on Federal highways, and only for agricultural purposes.
Consequently, thousands of family farmers are subject to the same use tax burden that applies to large interstate trucking firms.
I am particularly familiar with one case in which the Internal Revenue Service found a farmer fully liable for the use tax on his truck despite the fact that he operated it 90 percent of the time on township roads or on his own farm. To make matters worse, this individual, as well as several others from whom I have heard, had no idea that he might be liable for the tax until he was billed by the IRS some months after he registered the truck. My earlier bill, S. 2897, in the 94th Congress, was intended to exempt farm vehicles from the use tax.
In addition to farm trucks, the IRS has also determined that vehicles used exclusively for soil and water conservation activities are liable for this tax. Even though a survey conducted in 1976 indicated that the average conservation vehicle travels only 3,000 miles per year — and 80 percent of that is traveled on State and county roads — soil and water conservation vehicles continue to be subject to an annual Federal tax of $175. Correction of these inequities is long overdue.
Mr. President, in recent years revenues generated by the highway trust fund have become increasingly important. While our Nation's interstate highway system is nearing completion, our interstates and Federal aid highways are .rapidly deteriorating. Repair and maintenance costs for this vast transportation system are rapidly rising.
Ordinarily, I would not propose any further exemptions from the highway use tax. However, I contend, and many of my colleagues agree, that it was never the intent of the Congress to impose a tax on a limited category of vehicles seldom operated on our Federal aid highways, and on the family farmer whose operations bear no resemblance to those of commercial truckers.
It makes no sense to treat farm trucks and conservation vehicles in the same way we treat commercial trucks for highway tax purposes. I cannot believe it was the intent of the Congress in the development of the highway trust fund and highway use taxes to equate the farmer transporting his own supplies or the small businessman engaged in soil and water conservation activities with long-distance truckers moving the Nation's freight.
Our amendment would correct this situation by adding heavy trucks used for farm and soil and water conservation purposes to the list of exemptions from the highway use tax. In order to insure that the exemption is limited to family farmers and small soil and water conservation concerns, the amendment specifically excludes vehicles registered in the name of any corporation with gross receipts for the last taxable year in excess of. $950,000 or which derived more than 50 percent of its gross profits in that taxable year from activities other than farming or soil and water conservation activities.
If enacted, this measure will have a minimal effect on highway trust fund revenues. Revenue from farm trucks, for example, is so small that the IRS does not bother to segregate income from this source in compiling its own internal data. Regarding soil and water conservation vehicles, Senator DOLE has estimated that an exemption would cost the Treasury approximately $7 million per year. It can be argued that the cost of collecting the tax probably comes to a high percentage of the total revenue generated by this means.
I submit that this tax is little more than a nuisance. It penalizes farmers and small businessmen unfairly, produces minimal revenue, and absorbs IRS time and energy which could better be expended elsewhere. More importantly, it is discriminatory and I cannot believe that Congress intended to enact such an unfair and discriminatory tax.
I urge the adoption of my amendment to exempt farm trucks and conservation vehicles from the highway use tax.
Mr. President, this amendment is noncontroversial. It is an amendment that Senator DOLE and I have jointly offered with cosponsorship of other Senators mentioned.
It is designed to correct an inequity in the highway user tax which was intended to cover vehicles that used the Federal highways.
I think inadvertently that measure has been applied even to farm vehicles that are used on the farm that are charged the highway user tax without regard to the fact that those vehicles are for use on farms and township roads.
This amendment would simply exempt such farm vehicles from the highway user tax.
The impact on the Treasury is minimal. It is not even separated out by the Treasury for valuation. But I checked the matter with the distinguished chairman of the committee, Senator LONG, and the distinguished ranking minority member, Senator CURTIS, who said they have no objection to it.
I hope the amendment will be adopted. I yield to the Senator from Kansas.
Mr. DOLE. Mr. President, I am very pleased to have the Senator from South Dakota (Mr. MCGOVERN) join in submitting this amendment to exempt farm trucks, and soil and water conservation trucks from the highway use tax.
This bill has been carefully drawn to limit the exemption to bona fide f arm-owned, not for hire, farm use trucks. The exemption would not apply to vehicles owned or registered in the name of a corporation whose gross receipts for the last taxable year exceeded $950,000 or which derive more than 50 percent of their gross from activities other than farming.
Under current law, the highway use tax is levied on all single unit trucks of 13,000 pounds unloaded weight; on all three-, four-, or more-axle truck/tractors; on two-axle truck/tractors if the unloaded weight is 5,500 pounds or more; and on all combination-type trucks with two axles or more if the unloaded weight is 9,000 pounds or more. Each owner is required to file annually and pay the tax. The current tax ranges between $81 and $240 annually.
The highway use tax was originally legislated to cause owners of heavy commercial vehicles to pay their fair share of the highway construction costs. However, most farm-owned or farm-use trucks are not for hire and are only on the highways a few days of the year. The Senator from Kansas believes that because of this, these trucks should be exempt. I believe this amendment is not controversial and conforms with other provisions of the use tax which exempt derrick drilling trucks, some logging trucks and other oversize vehicles.
Mr. President, I would point out that the revenue loss for this amendment is small and I hope that the Senate will see its way to agree to it.
Mr. KENNEDY. Mr. President, has the Treasury taken a position on this?
Mr. McGOVERN. Yes. The Treasury is opposed to the amendment, I say to the Senator.
Mr. KENNEDY. Mr. President, then I think we want to get into at least some discussion. I think we talked about this. Is this not the issue we talked about last evening in terms of Trailways?
Mr. LONG. No ; I do not think it is. It is not the same thing.
What the Senator is seeking to do is — he can explain it — it is to exempt these particular farm trucks from the highway user tax. In other words, that is a tax on the highway use. It is not the fuel tax. It is the tax on the trucks themselves.
Mr. KENNEDY. It is an excise tax.
Mr. LONG. it is a tax of $3 for each 1,000 pounds of gross weight or fraction thereof. So there is a tax on the truck, and it is not the matter we discussed previously.
Mr. McGOVERN. If I can say to the Senator from Massachusetts, it has nothing to do with the gasoline tax. But under the terms of the way the law has been applied, which is intended to cover commercial trucks, it is applied to those trucks that are used on the farm as well. It has little or no impact on the Federal highway system and is really designed to correct inequity.
Mr. LONG. Mr. President, the Treasury opposes the amendment and the reason they do is because generally speaking they do not want to eliminate these various excise taxes which the Government collects because they feel the Government needs the money. Of course, they have a point. On the other hand, the Senator has a good argument, and I think the Senate should hear it. Basically his argument is that these taxes are taxes on trucks that were put on there because the trucks do a lot of damage to the highways. We do not put it on passenger automobiles because they do very little damage to the highways. They put it on the trucks.
His argument is that farm trucks are for farm use and they do not use the interstate highways, and I will let the Senator explain it himself, but he has an argument that I think is certainly deserving consideration by the Senate.
Mr. McGOVERN. Mr. President, I move the adoption of the amendment.
Mr. MUSKIE. Mr. President, I have been trying to get the figures.
The PRESIDING OFFICER. The Senator from Massachusetts has the floor.
Mr. KENNEDY. Mr. President, if we are prepared to dispose of this amendment, then I am glad to yield further. Otherwise, I would like to continue in my own right.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. KENNEDY. I yield.
Mr. MUSKIE. There is budget cost here. In terms of the overall budget I do not suppose it is very big, but the figures we get at this point, without really having an opportunity to examine them closely, indicate that this breaches the ceiling as it now stands with the legislation we have approved up to this point.
Mr. McGOVERN. Could the Senator give me the figures?
Mr. MUSKIE. Yes; we will give the Senator the figures.
Mr. McGOVERN. Where did the Senator get the figures? The reason I ask the Senator where he got the figures, I was unable to get figures from the Treasury Department. They said they did not separate it out.
Mr. MUSKIE. We are still searching, I say to the Senator. I say we will be glad to make sure of the figures. The amendment is about to be passed. The figure we have is an annual cost of about $15 million. There is $6 million left in the bill. So this is $9 million in excess of what is available under the substitute bill. That seems to be the most current figures we can get.
Mr. McGOVERN. I again say I am puzzled. I am not questioning it. I just say it puzzles me why the Department of the Treasury is unable to give any estimate on this. We have tried repeatedly to get it and they say they do not separate it out.
Mr. MUSKIE. We do not get our figures from the Department of the Treasury. We get them from the Joint Committee on Taxation which is constantly monitoring these amendments, and we ask them for information and they were doing it on their own in any case. They have had considerable experience on it, and we have to depend on them for our estimates.
Mr. McGOVERN. I say, while waiting for the figures, whatever they are, it simply underscores the inequity. There is no reason why the trucks that are not using the interstate highway system should be assessed a highway user tax.
Mr. MUSKIE. I would not quarrel with the Senator on the motivation or the justification for his amendment. But if we are up at the ceiling permitted by the budget resolution, we cannot adjust the ceiling for all the inequities that might be found.
Mr. KENNEDY. Mr. President, will the Senator then set it aside so we can move along while the figures are worked out?
The Senator can modify the amendment.
Mr. McGOVERN. Mr. President, I modify the amendment so that it becomes effective on June 1, and I think that will take care of the Senator's objection.
Mr. MUSKIE. The effect of that modification will be to use all the amount that remains so we will be at zero in the bank account at this point.
Mr. McGOVERN. I move the adoption of the amendment.
The PRESIDING OFFICER. Will the Senator send the modification to the desk first?
Mr. McGOVERN. The modification simply is changing the effective date to June 1.
The PRESIDING OFFICER. The modification has been furnished to the clerk.
The amendment, as modified, is as follows :
On page 383, between lines 8 and 9, insert the following new section:
SEC. 518. EXEMPTION OF FARM AND SOIL AND WATER CONSERVATION TRUCKS FROM CERTAIN TAX.
(a) EXEMPTION.— Section 4483 (relating to exemptions from tax on use of certain vehicles) is amended by adding at the end thereof the following new subsection:
"(d) Farm and Soil and Water Conservation Trucks.
"(1) IN GENERAL.— Under regulations prescribed by the Secretary, the tax imposed by section 4481 on the use of a highway motor vehicle shall not apply to a vehicle which is
"(A) owned by an individual who is the owner, tenant, or operator of a farm; and
"(B) used primarily for farming purposes (within the meaning of section 6420(c) (3) (A) ) : or
"(C) used for transporting agricultural or horticultural commodities, livestock, bees, poultry, or fur-bearing animals or wildlife, or supplies and equipment used in connection with such farming purposes, between his farm and other places; or
"(D) used in soil and water conservation practices or in the transport of equipment used for soil and water conservation.
"(2) EXCEPTION.— This subsection does not apply to a vehicle registered in the name of a corporation the gross receipts of which for the last taxable year exceeded $950,000, or which derived more than 50 percent of its gross receipts for such taxable year from activities other than a farming or soil and water conservation.".
(b) EFFECTIVE DATE.— The amendment made by subsection (a) applies to uses after June
1, 1979.
On page 129, in the table of contents after the item relating to section 509, add the following new item:
"Sec. 510. Exemption of farm and soil and water conservation trucks from certain tax....
The PRESIDING OFFICER. The question is on agreeing to the amendment as modified.
Mr. STEVENS addressed the Chair.
The PRESIDING OFFICER. Does the Senator from Massachusetts yield to the Senator from Alaska?
Mr. KENNEDY. Mr. President, I wish to get consideration of my amendment.
Mr. STEVENS. I thought we were voting on the amendment of the Senator from South Dakota.
Mr. KENNEDY. I thought we disposed of that.
Mr. STEVENS. I do not think we have disposed of that. I do not think we have.
The PRESIDING OFFICER. No; we have not. The Chair was about to put the question on the amendment.
Mr. KENNEDY. If the Chair is going to put the question, I am glad to yield. Otherwise
Mr. STEVENS. Is there a time agreement, Mr. President?
Mr. KENNEDY. No. I yielded to the Senator because I thought he had an amendment that could be disposed of quickly.
The PRESIDING OFFICER. The Senator from Massachusetts has the floor and under unanimous consent he yielded to the Senator from South Dakota for the purposes of bringing up an amendment.
Mr. STEVENS. Yes. Time is available then.
I would like to be heard on this amendment or else suggest the absence of a quorum on the other.
Mr. McGOVERN. Mr. President, the Senator from Massachusetts has been kind enough to yield to me on what I thought was a noncontroversial amendment that was cleared on both sides of the aisle. But I do not want to tie him up any longer here.
Mr. STEVENS. Mr. President, will the Senator just give me 2 minutes to comment?
Mr. KENNEDY. I would be glad to give him 2 minutes.
Mr. STEVENS. This is the third time today in order to avoid the budgetary impact of an amendment that the amendment has been changed so that it goes into the next year.
Some of us, and I hope the Senator from Maine is listening, because some of us, have supported the Budget Committee on the whole concept of trying to bring about a balanced budget here soon.
If the way around the Budget Act is to present amendments that do not take effect for a year but become permanent law before we get around to considering the budget resolution again the next time, then I, for one, am going to reconsider my support of the Senator from Maine in his objective in trying to balance the budget. I do not think this is the way to run a railroad or the Senate or anything else, to have an amendment like this.
It is contrary to the budget resolution to adopt this amendment. But we take a modification amendment and put the whole burden into 1979 and how do we balance the budget in 1980, and 1981 or 1982 that way?
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. STEVENS. I only have 2 minutes. I apparently do not have any way to object. It is awfully late on Saturday night to get a roll call vote on the Senator's amendment. I understand it is a very laudatory amendment anyway. But the procedure is bad, and here we go. This is the way to the destruction of the discipline the Senate has learned in the Budget Act. If we keep it up we are going to destroy the goal we have already voted on in the Senator from Virginia's motion, and that is that we should try to bring about a balanced budget by 1981 or 1982 at the latest.
Mr. MUSKIE. Mr. President, I am glad to hear—
The PRESIDING OFFICER ' (Mr. FORD) . The Senator from Maine has 2 minutes. The Senator from Massachusetts has the floor.
Mr. MUSKIE. It is not exactly to the point, but it is related to the point the Senate decided just the other night on a point of order which I raised.
I mean, if you make it possible, too possible — it was possible before the other night to shift dates in order to make revenue measures conform to the current budget resolution. But now that we have opened up 1980 as well as a result of the point of order that the Senate decided against the budget process the other night, it is now possible to do more of this flexing.
I am keeping track of these, may I say to the Senator from Alaska, and I hope when we are through with this bill we can have a picture of how much hanky-panky this sort of treatment of amendments makes possible. I hope we will have a picture that will prompt the Senate to adopt remedial measures. But at the moment if Senators want to move their effective dates around the calendar, they are free to do so, and the budget process gives us no way, no effective way, to prevent it except exhortation, and I have not found exhortation to work very, well.
Mr. LONG. Mr. President, I believe the Senator—
The PRESIDING OFFICER. The Senator from Louisiana has 1 minute.
Mr. LONG. I believe the Senator must realize that this was not the point we were debating the other night.
Mr. MUSKIE. I said it was not precisely.
Mr. LONG. This amendment starts a tax reduction this year and continues it forward. This is totally irrelevant to what happened the other night. The same thing would be true about the Metzenbaum amendment. Both of those could be offered even if you took the view of the Senator from Maine.
What we are talking about, and we will run into that later, I am sure, but what we are arguing about is the ability to make a rate cut that falls in a succeeding year, not that starts in this year and merely continues next year.
Obviously, this amendment would be in order in any event whether you took the position of the Senator from Maine or the Senator from Louisiana.
Mr. MUSKIE. I agree with that. But the whole point is that 1980, now opened to increases in tax measures, you can do the same sort of thing that this does, postpone the full fiscal impact of new revenue measures into a period that is not disciplined by the budget. In this case we are postponing the effective date in the budget year in order to minimize the impact. The whole point is the foot-in-the-door technique.
Mr. KENNEDY. Put the question, Mr. President.
Mr. McGOVERN. Mr. President, I thank the Senator from Massachusetts for yielding.
I move the adoption of the amendment.
The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from South Dakota.
The amendment was agreed to.
Mr. McGOVERN. Mr. President, I move to reconsider the vote by which the amendment was agreed to.
Mr. CANNON. I move to lay that motion on the table.
The motion to lay on the table was agreed to.