March 11,2008

Baucus Floor Statement Regarding the Baucus Budget Amendment

Cervantes had a character say:

“My wages . . . I have earned with the sweat of my brows.”

And so it is with America’s hard-working families. They have earned their wages with
the sweat of their brows.

This afternoon along with a number of other Senators I plan to offer an amendment that
would take the surplus in the budget resolution and give it back to the hard-working
American families who earned it.

First, our amendment makes the ten-percent tax bracket permanent. That’s a tax cut for
all taxpayers.

Second, we’re making permanent the changes to the child tax credit. That’s a $1,000 tax
credit per child. This tax credit recognizes that a family’s ability to pay taxes decreases
as their family increases. Unless we act, the child tax credit will fall to $500 per child in 2010.

We’re making permanent the marriage penalty relief. Married couples should not pay
more taxes just because they’re married. This relief makes sure that a married couple
filing a joint return has the same deductions and tax brackets as they would if they filed
as individuals.

We’re making permanent the changes to the dependent care credit. This credit is
important to working families. It recognizes the increased cost of child care for
households where both parents work outside the home.

We’re making permanent the changes to the adoption credit. Most adoptions cost more
than $20,000. This provision offers a credit of $10,000 for those willing to give a child a
home.

And in this amendment, we also believe that it is important to pause and reflect on the
sacrifices that our men and women in uniform make for us every day.

Nearly one and a half million American service men and women have served in Iraq,
Afghanistan, or both. Nearly 30,000 troops have been wounded in action.

In September, I went to Iraq. I was impressed by what an amazing job our troops are
doing.

I met many Montanans from small towns like Roundup and Townsend. I saw first-hand
what a heavy burden our troops bear for all of us. They face hardships and danger. But
they keep at it, every day.

Today, one small way to support them is to make the tax code a little more troop-friendly.

We can extend the special tax rules that make sense for our military that expire in 2007
and 2008. We can also eliminate roadblocks in the current tax laws that present
difficulties to veterans and service members.

One problem that this amendment would address is how the tax code treats survivors of
our fallen heroes. The families of soldiers killed in the line of duty receive a death
gratuity benefit of $100,000. But the tax code restricts the survivors from putting this
benefit into a Roth IRA. Today, we can make sure that the family members of fallen
soldiers can take advantage of these tax-favored accounts.

Another hazard in the tax laws impedes our disabled veterans. I’m thinking of the time
limit for filing for a tax refund. Most VA disability claims filed by veterans are quickly
resolved. But many disability awards are delayed due to lost paperwork or the appeals of
rejected claims.

Once a disabled vet finally gets a favorable award, the good news is that the disability
award is tax-free. But the bad news is that many of these disabled veterans get ambushed
by a statute that bars them from filing a tax refund claim. Today we can give disabled
veterans an extra year to claim their tax refunds.

Most troops doing the heavy lifting in combat situations are the lower-ranking, lowerincome
soldiers. Their income needs to count towards computing the earned income tax credit, or EITC. Under current law, however, income earned by a soldier in a combat zone is exempt from income tax. This actually hurts low-income military personnel under the EITC.

The EITC combat-pay exception allows combat zone pay to count as earned income for
purposes of determining the credit. That way, more soldiers qualify for the EITC. But
this EITC combat-pay exception expires at the end of 2007.

The EITC is a beneficial tax provision for working Americans. It makes no sense to deny
it to our troops. Today, we can help to make combat duty income count for EITC
purposes.

In this amendment, we’re making permanent the provision to allow combat pay as earned
income for purposes of the EITC. This amendment allows hard-working low-income
military personnel to get the full benefit of the EITC.

A soldier’s rucksack is heavy enough as it is without loading it down with tax burdens.

We owe the Americans fighting in our armed forces an enormous debt of gratitude.

This amendment is one small way that we can salute our men and women in uniform for
all that they do.

And also in this amendment, we’re giving some certainty to American families on the
estate tax.

Lowering the estate tax to 2009 levels is the least that we will do is estate tax reform.
This is the minimum that we can and will achieve.

And we are committed to exploring what more we can do. We are conducting thorough
study of the issue in hearings before the Senate Finance Committee.

And I plan to offer a second amendment that will dedicate enough additional funds to
estate tax reform that we can achieve a $5 million exemption and a 35 percent tax rate.
Through these efforts, Congress will show that we support America’s small businesses,
ranchers, and farmers.

Today’s amendment also helps to address the housing crisis. Our amendment would
allow middle-income taxpayers who do not itemize their deductions to nonetheless tax a
deduction for property taxes. That would give some relief to hard-strapped homeowners.

Now this amendment will not do everything. But we will do more. As chairman of the
Finance Committee, I’m fully committed to tax reform. Tax reform can mean giving tax
relief to American families and businesses through simplification and sound tax policy.

This year, the Finance Committee will do the spade work. We will hold hearings and
prepare for the fundamental tax reform that we all want and expect next year
But today, the amendment that we offer shows our commitment to American families.

American families earned their wages with the sweat of their brows. This amendment
takes the surplus and gives tax relief to those hard-working families. It is no less than
what they have earned.

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