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TITLE 1--SUBCHAPTER S EXPANSION -- (Senate - July 22, 1999)

    ``(c) QUALIFIED TEACHER DEFINED.--For purposes of this section--

    ``(1) IN GENERAL.--The term `qualified teacher' means an academic teacher, a special education teacher, or a bilingual teacher. The term does not include an individual teaching under an emergency or other provisional status in which any State teaching qualification or licensing criteria have been waived.

    ``(2) ACADEMIC TEACHER.--The term `academic teacher' means an individual who meets all of the following criteria:

    ``(A) The teacher has performed at a high level on academic subject matter tests, or has a bachelor's degree or higher with an academic major in each of the subjects taught by the teacher.

    ``(B) The principal of the school where the teacher is assigned asserts that the teacher is qualified to provide instruction in each academic course and in each grade level taught at the school.

    ``(C) In the case of a teacher of students in elementary school, the teacher must have demonstrated the teaching skill and general subject matter knowledge required to teach effectively in reading, writing, mathematics, social studies, science, and other elements of a liberal arts education.

    ``(D) In the case of a teacher of students in middle school or secondary school, the teacher must have demonstrated a high level of teaching skill and subject matter knowledge in all of the subject areas that they teach.

    ``(d) OTHER DEFINITIONS.--For purposes of this section--

    ``(1) ACADEMIC SUBJECTS.--The term `academic subjects' includes English, language arts, social studies, history, mathematics, science, and related subjects.

    ``(2) HIGH-POVERTY SCHOOL.--The term `high-poverty school' means a school in which at least 50 percent of the students attending such school are eligible for free or reduced-cost lunches under the school lunch program established under the National School Lunch Act.

    ``(3) SCHOOL.--The term `school' means any public school which provides elementary education or secondary education (through grade 12), as determined under State law.

    ``(4) WAGES.--The term `wages' has the meaning provided by section 3401(a).''.

    (b) CLERICAL AMENDMENT.--The table of sections for part III of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 139 and inserting the following:

   ``Sec. 138. Wages of teachers in high-poverty schools.

   ``Sec. 139. Cross references to other Acts.''.

    (c) EFFECTIVE DATE.--The amendments made by this section shall apply to amounts received in taxable years beginning after December 31, 1999.

   By Mr. EDWARDS (for himself and Mrs. HUTCHISON):

   S. 1424. A bill to amend the Internal Revenue Code of 1986 to provide the same tax treatment for special pay as for combat pay; to the Committee on Finance.

   TAX EXEMPT MILITARY PAY ORDERS (TEMPO) ACT

   Mr. EDWARDS. Mr. President, I rise to introduce with my colleague KAY BAILEY HUTCHISON the Tax Exempt Military Pay Orders (TEMPO) Act. This measure will not only correct an inequity in the way we treat our deployed armed forces, but it also will help let our soldiers know that we recognize and appreciate the sacrifices they and their families make.

   Our proposal would provide that income received by a member of the Armed Forces of the United States, while receiving special pay, should be tax exempt. Currently, members of the U.S. Armed Forces who serve in a Presidentially designated ``combat zone'' receive special tax exemptions. I think we all recall that this exemption was in effect during Kosovo. During Kosovo, soldiers did not have to pay excise taxes on phone calls that they make from the combat zone. Nor did they have to pay income taxes on the money earned while in that zone.

   The measure we introduce today provides that these same tax exemptions would be triggered when the Secretary of Defense designates his employees as eligible for ``special pay'' based on hostile conditions. Under current law, members of the Armed Forces receive special pay when: subject to hostile fire; on duty in which he, or others with him, are in imminent danger of such fire; were killed, injured or wounded by hostile fire or were on duty in a foreign area in which he was subject to the threat of physical harm or imminent danger on the basis of civil insurrection, civil war, terrorism, or wartime conditions. In the last few years soldiers in Somalia and Haiti have received special pay.

   Let me explain why I believe we need to change the tax treatment of special pay. The original tax exemption for combat pay was put in place during the Korean war. From that time until the fall of the Berlin Wall, the employment of U.S. forces almost always was in combat zones. But since the end of the cold war, as we all know, our Armed Forces have been deployed more often, and in a wider variety of circumstances. Today, a soldier with the 82nd Airborne from North Carolina may be sent on a mission that is as dangerous as any combat mission, but because it is not precisely in a combat zone, he cannot receive any tax benefits.

   Given the current uses of our Armed Forces, I believe the measure we propose today makes a great deal of sense. I also believe that making this change in the tax code would correct an inequity. Now, I think it is only right that soldiers in the Kosovo engagement are receiving tax exemptions. But during a recent visit to Fort Bragg, many soldiers and their families commented that the same benefits should have been extended to the soldiers who served in Somalia and Haiti. I have to say that I agreed with them.

   And so, this bill addresses the new realities of the post-code-war world. As the Senate knows all too well, the end of the cold war brought with it a significant drawdown in the size of our armed forces. Additionally, we shifted from an overseas-based force to one based primarily in the United States. Almost concurrently, our national security strategy has lead us into an era of seemingly continuous deployments. In the 40 years between 1950 and 1990, elements of the U.S. Army were deployed 10 times. In the less than 10 years since the fall of the Berlin Wall, elements of the Army have been deployed 34 times. The Navy's responses have doubled in the 90's. The Air Force has seen its deployed forces rise 400% while its active duty personnel dropped 33%. Some of these deployments are a few months in duration; some are part 

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of a continuous presence--such as our forces in the Sinai. All work hardship on both the members deployed and their families, particularly when there are repeated or back-to-back deployments.

   These demands contribute to both recruitment and retention problems. In recognition of these demands and of the likelihood that we will continue to see more of these deployments, this bill recognizes that we need to bring our tax c ode up to date so that it acknowledges these new realities.

   Mr. President, let me tell you more about what this proposal would do. As I previously said, members of the military who receive combat pay get certain tax e xemptions. For example:

   The income of the soldier while in the combat zone is tax e xempt. So is the income of a soldier while hospitalized for injuries received in the combat zone and that portion of a pension or retirement acquired while in a combat zone. In addition, pay received while a prisoner of war as a result of service in the combat zone is tax e xempt.

   Special tax r ates apply for the surviving spouse of a soldier who is missing in action (or presumed dead) in a combat zone.

   All taxes are eliminated for the years the soldier served in the combat zone if he is killed in the combat zone.

   There are other exemptions, and I ask unanimous consent that this copy of the relevant exemptions be printed in the RECORD.

   My bill would give those exact same exemptions to soldiers who receive special pay.

   Mr. President, as we close out this century and address the realities of the new century, I ask the Senate approve this measure as a means of acknowledging the sacrifices being demanded of our service members and their families.

   Mr. President, I ask unanimous consent that additional material be printed in the RECORD.

   There being no objection, the material was ordered to be printed in the RECORD, as follows:

   SECTION 1: SHORT TITLE.

   This Act may be cited as the ``Tax E xempt Military Pay Orders (TEMPO) Act''.

S. 1424

   Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

   SEC. 2. TAX T REATMENT OF SPECIAL PAY FOR MEMSERS OF THE ARMED FORCES.

   (a) IN GENERAL.--Subchapter C of chapter 80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following:

   ``SEC. 7874. TREATMENT OF SPECIAL PAY FOR MEMBERS OF THE ARMED FORCES.

   ``(a) GENERAL RULE.--For purposes of the following provisions, a special pay area shall be treated in the same manner as if it were a combat zone (as determined under section 112):

   ``(1) Section 2(a)(3) (relating to special rule where deceased spouse was in missing status.--

   ``(2) Section 112 relating to the exclusion of certain combat pay of members of the Armed Forces.

   ``(3) Section 692 (relating to income taxes of members of Armed Forces on death).

   ``(4) Section 2201 (relating to members of the Armed Forces dying in combat zone or by reason of combat-zone-incurred wounds, etc.).

   ``(5) Section 3401(a)(1) (defining wages relating to combat pay for members of the Armed Forces).

   ``(6) Section 4253(d) (relating to the taxation of phone service originating from a combat zone from members of the Armed Forces).

   ``(7) Section 6013(f)(1) (relating to joint return where individual is in missing status).

   ``(8) Some 7508 (relating to time for performing certain acts postponed by reason of service in combat zone).

   ``(b) SPECIAL PAY AREA.--For purposes of this section, the term `special pay area' means any area in which an individual receives special pay under section 310 of title 37, United States Code, for services performed in such area.''

   ``(b) CONFORMING AMENDMENT.--The table of sections of subchapter C of chapter 80 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

   ``Sec. 7874. Treatment of special pay.''

   (c) EFFECTIVE DATE.--The amendments made by this section shall apply to remuneration paid to taxable years ending after the date of the enactment of this Act. 

--

   Current Tax E xemptions in Effect for Combat Pay

   Under current law, these exemptions are in effect for members of the Armed Services who receive combat pay:

   The income of the soldier while in the combat zone is tax e xempt. So is the income of a soldier while hospitalized for injuries received in the combat zone and that portion of a pension or retirement acquired while in a combat zone. In addition, pay received while a prisoner of war as a result of service in the combat zone is tax e xempt. (26 U.S.C. §112)

   Special tax r ates apply for the surviving spouse of a soldier who is missing in action (or presumed dead) in a combat zone. (26 U.S.C. §2(a)(3))

   All taxes are eliminated for the years the soldier served in the combat zone if he is killed in the combat zone. (27 U.S.C. §692)

   If the soldier is killed in the combat zone, his survivors are entitled to a lower estate tax. (26 U.S.C. §2201)

   While in the combat zone, the soldier does not have to pay certain federal excise taxes on phone calls. (26 U.S.C. §4253(d))

   The surviving spouse of a soldier who is missing in action gets the option of filing a joint tax r eturn for up to two years after the termination of the combat zone. (26 U.S.C. §6013(f)(1))

   Certain tax d eadlines and liabilities while in the combat zone are defeated. (26 U.S.C. §7508)

   Mrs. HUTCHISON. Mr. President, I am pleased to join Senator EDWARDS of North Carolina to offer legislation very important to those members of our Armed Forces who are deployed in defense of our nation's interests around the world. Our bill will provide for federal tax e xemption to those serving in hostile areas not officially designated as combat zones. The current restrictions on this exemption to formally designated combat zones--which do not include many of our peacekeepers who face daily threats to their lives--are a half-century old relic of the Korean War that do not address the realities of the military missions in our post-cold-war world.

   Today there are two combat zones as designated by the President in Executive Orders. One is in the Middle East, including the Persian Gulf, the Red Sea, the Gulf of Oman, the Gulf of Aden, as well as Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. This area has been a combat zone since January 1991. The other combat zone is the Kosovo Area of Operations including the Federal Republic of Yugoslvia (Serbia/Montenegro), Albania, the Adriatic Sea, and the Ionian Sea. This combat zone has been in effect since March 1999. Members serving in those areas get a tax e xemption.

   Yet, today there are 17 areas considered so dangerous that our troops there get a special allowance known as Imminent Danger Pay that do not receive the same tax r elief that those in a designated combat zone get. In fact, combat zone tax p rovisions did not apply to our troops in Somalia, where we lost 18 Rangers in one bloody gunfight.

   Our bill argues, in effect, that if a location is dangerous enough to earn the allowance reserved for imminent danger, then it's dangerous enough to get favorable tax t reatment, too. This would include troops that are in some of the most dangerous parts of the world, including Algeria, Burundi, Pakistan, Sudan, and Yemen.

   When our troops are deployed in harm's way anywhere, there should not be a discrepancy in tax b enefits from one location to another. This is an administrative distinction that matters little to the brave young Americans who are out there defending us. These determinations are made after careful study by the Secretary of Defense, based on the inherent dangers in a foreign area.

   The Senate expressed its support for addressing this inequity in a resolution we passed as part of the FY2000 Defense Authorization Bill. Not only is this the right and fair thing to do, but during these times of increased deployments and personnel shortages, it is in our national interest to continue to show our dedicated service members that we appreciate their sacrifice and commitment.

   I commend the Senator from North Carolina for his leadership on this issue and urge other Senators to join us in this effort.

   By Mr. SPECTER:

   S. 1425. A bill to amend the Internal Revenue Code of 1986 to allow a 10 percent biotechnology investment tax c redit a nd to reauthorize the Research a nd Development t ax c redit f or ten years; to the Committee on Finance.

   BIOTECHNOLOGY TAX C REDIT A CT OF 1999

   Mr. SPECTER. Mr. President, we are faced today with the unique challenges brought by the extraordinary biological, technological, and medical advances of this decade. We have seen miraculous breakthroughs in the fight 

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against communicable diseases: the complete eradication of small pox, the near global eradication of polio, vaccines for ailments such as measles, rubella, and even the flu. Revolutionary new drugs and improved surgical techniques allow us all to lead longer, more productive lives. But past success is not a guarantee of future progress and science does not bear fruit overnight. Breaking the code for complex problems takes a steady and sustained commitment of people and money. As we enter the next century, we have a responsibility to perpetuate and improve upon our enormous capacity to prevent, detect, treat, and cure diseases of all types.

   The Congress continues to be gravely concerned with rising health care costs, as demonstrated by contentious debate as recently as last week during consideration of the Patients' Bill of Rights. According to the Health Care Financing Administration (HCFA), health care spending in this country had risen to $1.1 trillion in 1997, or an average of just under $4,000 per person. Private sources paid for a little over half of that, about $585 billion, with the remainder coming from public programs like Medicare and Medicaid. HCFA further predicts that public spending on health will nearly double over the next decade, reaching $2.1 trillion in 2007.

   I disagree with the premise that this is simply a dollars and cents problem. I believe science holds our best chance for both combating disease and controlling the ever-spiraling costs it imposes on society. For victims of cancer and heart disease, scientific research r epresents their only hope for new drugs and medical treatments that can add years to life. Research c an produce miracle vaccines that save the lives of children stricken with deadly diseases like leukemia. And for growing numbers of elderly, research h olds the key to stopping the ruinous effects of Alzheimer's disease, stroke and arthritis--all very expensive ailments to treat. To me, the equation is a simple one: less disease and illness mean less human suffering and lower health care costs.

   Over the next three decades, the number of Americans over age 65 will double. My state of Pennsylvania houses the second highest elderly population, currently totaling nearly 2 million citizens. Mr. President, unless science finds cures and effective treatments for disease and illness, our society will face even higher costs and our hospitals and nursing facilities will be strained to the breaking point.

   As Chairman of the Appropriations Subcommittee on Labor, Health and Human Services, and Education, I have said many times that I firmly believe that the National Institutes of Health (NIH) is the crown jewel of the Federal government, and substantial investment is crucial to allow the continuation of the breakthrough research i nto the next decade. In 1981, NIH funding was less than $3.6 billion. For the past three years, NIH funding has increased by 6.8 percent in fiscal year 1997, 7.1 percent in fiscal year 1998, and 15 percent in fiscal year 1999, for a total of $15.7 billion. I am continuing to fight to double the NIH budget, a sentiment which was unanimously supported in the United States Senate during the 105th Congress. Further, on January 19th of this year, I joined my colleagues, Senators MACK, FRIST and HARKIN in introducing S. Res. 19, a Sense of the Senate resolution to increase biomedical research f unding by $2 billion for fiscal year 2000. 

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