individual then sells that asset for $2,000 10 years later, the amount of actual purchasing power the individual has is no different than he or she had 10 years earlier. And yet that individual has the pleasure of being able to pay capital gains tax on a thousand dollars of capital income; after paying the tax, being reduced to a position of less purchasing power than they had 10 years earli er. On the other hand, an individual could buy an asset for a thousand dollars, hold it for 1 year, and if they had been extremely sagacious in their investment, double their money, and pay the same tax that the individual who had held it for 10 years paid, and yet they would have a real gain because there was only 7 percent inflation during that 1 year. So in equity I think we need to iron this out between investors, and I think we need to encourage the investment in capital assets, particularly toward high risk type business and entrepreneurial businesses. And I believe that our legislation will go a long way in encouraging that. In addition, I personally believe that we would free up the transfer of a lot of assets that are frozen because people do not want to sell them where they have large amounts of capital gains that have occurred over a period of 20 or 30 or 40 or 50 years. And that would be a very healthy thing for the market. It would increase the volume and, in my opinion, would actually have a great opportunity to increase the revenue rather than to reduce the revenue from capital gains. If we are ever going to implement this type of legislation, it seems to me that now is the time to do it when we do have a low inflation rate. I think that it is an idea whose time has come. I compliment the chairman for his interest in this legislation, and I intend to pursue it to the greatest degree possible in the House. I might add as sort of an addendum, Mr. Chairman, that what we are urging here is something that is being picked up in other parts of the world. Canada and England have recently gone in to similar types of approaches for the treatment of taxes on capital assets. And I think it is high time that this country also pursue this endeavor in the name of equity and reform. I thank the chairman. I will be glad to respond to any questions. Senator ARMSTRONG. We are grateful to you not only for your statement this morning and for your additional observations, but I am especially grateful for the leadership you have shown on this issue. There are a lot of people in and out of the Congress who have been pushing the idea of indexing the capital gains basis, but I don't know of anyone who has been a more forceful advocate of this or who got out in front on the issue earlier than you did or who has done more to bring this concept to the floor. Victor Hugo said that "greater than the threat of a mighty army is an idea whose time has come." I am hoping that the time has come for this. And the question that I would put to you is a very simple one: How do you evaluate the prospects that we might be able to get this through the House, either as a separate bill or if somehow I could hang it on as an amendment here in the Senate? What are the chances we could get the House to buy something like this? Representative ARCHER. Well, Mr. Chairman, it seems to me that as far as getting it affirmatively adopted in the House, it probably would have to be part of some kind of packaged tax bill. If you are able to get it passed again in the Senate, inasmuch as the House has passed it-and we do have a record of support in the Ways and Means and on the floor of the House-I would hope that we would have a reasonable chance to hold it in the conference this time, particularly with the economic conditions that exist with low inflation today, and also with the reform concept that says to everyone, Democrats and Republicans, liberal and conservative, that this creates equity between different holders of capital assets. Senator ARMSTRONG. Well as you know, my colleagues here on the Finance Committee love to put together packages, so we will try and send something that we can buy. And I again thank you for coming this morning. Representative ARCHER. I wish you Godspeed, Mr. Chairman. Thank you for this opportunity. Senator ARMSTRONG. Thank you very, very much. We appreciate your coming. We are next very pleased to recognize and welcome Representative Barbara Mikulski, who I believe is going to testify on the mileage bill, of which she has been a strong advocate and a leading spokesman in the House. And, of course, we will be glad to hear her views on any of the measures that are before us this morning. But, Representative Mikulski, I am aware that you have been beating the drum for this charitable deduction issue in the House, so we are really pleased to have you here this morning and are looking forward to your testimony. STATEMENT OF HON. BARBARA MIKULSKI, U.S. Representative MIKULSKI. Thank you very much, Senator. And I appreciate the chance of being able to testify in support of the bill, Senate 1579, which you have taken the leadership for here in the U.S. Senate. As you know, what the legislation does is raise the mileage deduction that a volunteer now takes from approximately 9 cents a mile to 20 cents a mile, which in effect would be the same business deduction that business takes for its mileage deduction. There are those of us who believe that the business of being a volunteer is part of the business of America. Volunteers are a major part of our labor force. Together, they contribute over $100 billion to this Nation, measured in times and services. So when we think about the volunteers we have to think about the candy stripers, the scout leaders, the veterans, the Kiwanis Club, the people who deliver Meals on Wheels, the people who run telethons. The volunteer's time cannot be measured and should not be measured in time and money alone. We must measure it in terms of the values that they bring to our society, a sense of caring, and a heartfelt motivation to make the world just a better place, the kinds of things you just can't do with your contract with the bureaucracy. Our volunteers are working at full capacity and it is time we recognized this. With the tremendous loss in federal social programs, there is a new call to our volunteer community to step forward and fill the vacuum. We seem to assume somehow or another that volunteers are immune to society's pressures that also affect business. Right now we have tax credits for oil companies and expense accounts for executives, but volunteers are somehow or another expected to be an endless reservoir of resources, money and energy. Inflation has affected the nonprofit world in the same way as it has affected Government and profitmaking organizations. The women who work at the auxiliary at the hospital are under pressure to contribute additional money to the family. That Boy Scout leader may be also looking for a second job or he might have been laid off at the steel, housing, or automobile industry. The Meals on Wheels volunteers may be helping out grandma because her medical care costs have increased, or it might be grandma herself whose COLA has been delayed by 6 months in social security. In fact, many volunteers are on fixed incomes themselves. Times are just as tough for the volunteers as they are for the mega corporations, and yet somehow or another we expect the volunteers to give more and more. Everyone has been conscious about out-of-pocket expenses. Many volunteers have to travel miles and miles to do their good work, driving to meetings, youth centers, and so on. Three million of our volunteers give volunteer time to the Federal Government, working in the parks, visiting veterans at the VA hospitals, those forgotten people from Vietnam and even Korea; the Coast Guard Auxiliary, who really performs a very important link in backing up our Coast Guard, particularly in the area of maritime safety. In terms of the Federal Government, they can do more. What I want to do is not create a new tax loophole, what I want to is something on behalf of the good guys, the good samaritans in our society, men and women who are out there helping their neighbors and ours. They never ask for a reward. Mr. Chairman, I could give lots of examples of what this legislation would do. And when we come down to it, the cost of gasoline is a serious threat to the kind of neighbor helping neighbor society as we Americans are so proud of. In my own_community, Meals on Wheels delivers over 2,000 meals a day. That keeps 2,000 people out of nursing homes. The cost savings in just preventing institutional care is outstanding. I don't want to lose the volunteer programs, but I don't think we can have this kind of work done, and I don't think we can have it done by salaried employees. What we need to do is be able to back up our volunteers and give them an adequate mileage deduction so they can go on doing what they do best. I am deeply concerned because the American people are now suffering under the largest cutbacks in Government programs. Thousands of Government programs providing essential services have been eliminated. Therefore, the need for charitable organizations-nonprofits and volunteersis enormous. It is imperative that our Government adjust its tax policy to enable citizens to perform these good samaritan works. I urge this committee to take action to keep volunteers on the road in the programs that are so very much needed. And I thank you for offering me the opportunity to testify, and I ask unanimous consent to submit my entire statement for the record. Senator ARMSTRONG. Yes. We would like to have the whole statement in the record, and we will publish it as a part of the record of this proceeding. [The prepared statement of Representative Mikulski follows:] TESTIMONY BEFORE THE SUBCOMMITTEE ON TAXATION AND DEBT MANAGEMENT RE: S. 1579/H.R. 2697 Brilante molur товая PR. CHAIRMAN, I APPRECIATE BEING GIVEN THE CHANCE TO TESTIFY IN SUPPORT VOLUNTEERS ARE A MAJOR LABOR FORCE IN THE UNITED STATES. TOGETHER THEY CON- BUT THE VOLUNTEERS' CONTRIBUTION CANNOT BE MEASURED, AND SHOULD NOT BE MEASURED, WITH THE TREMENDOUS LOSSES IN FEDERAL SOCIAL PROGRAMS THERE IS A NEW CALL TO |
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