Regulated Investment Company Modernization Act of 2010

Floor Speech

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Mr. NEAL. I thank the chairman.

Madam Speaker, this legislation has already passed the House. It really was a bipartisan achievement this year, and much of the good work that went into this legislation has been years in coming.

More than 100 years ago, the first mutual fund was started in Boston, Massachusetts. Mutual funds have been a way for the ``everyman'' to invest in the market with benefits of pooling and diversification. Today, more than 50 million households invest through mutual funds with a median household income of $80,000. More than 50 percent of 401(k) plan assets were invested in mutual funds at the end of 2009.

H.R. 4337 was introduced last year by Mr. Rangel and me to modernize the tax laws regarding regulated investment companies, better known as mutual funds. The tax rules that relate to mutual funds date back more than 50 years, and although these rules have been updated from time to time, it has been over 20 years since the rules were last revisited.

The bill before us today would make several changes to the Tax Code to address outdated provisions, such as rules that relate to preferential dividends, rules that require mutual funds to send separate annual dividend designation notices to shareholders, and rules that prevent mutual funds from earning income from commodities.

In June, my subcommittee, the Select Revenue Measures Subcommittee, reviewed this legislation with a panel of experts who expressed support for the changes. Simply put, the subcommittee held a hearing, and there was broad support on the Democratic side and on the Republican side for the accomplishment that sits in front of us.

I am pleased to support this modified legislation, which is also revenue neutral. The Ways and Means Committee has a responsibility to review our tax rules from time to time and to remove the deadwood and update where necessary. This bill accomplishes that to the benefit of the investors, taxpayers, and mutual fund companies.

I urge its adoption. I thank the chairman for yielding to me, and I thank our friends on the other side for their endorsement of this legislation as well.

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