[Congressional Record Volume 140, Number 126 (Monday, September 12, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: September 12, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
INTRODUCTION OF THE CITIZENS' TAX RELIEF ACT OF 1994
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HON. MAJOR R. OWENS
of new york
in the house of representatives
Monday, September 12, 1994
Mr. OWENS. Mr. Speaker, I rise to introduce the Citizens' Tax Relief
Act of 1994, a tax cut and tax reform bill that would cut income taxes
for every American who pays taxes. Under my bill, a married couple
earning an annual taxable income of $30,000 would save $750 per year,
or about $30 per biweekly paycheck. The tax revenue lost to the
Government would be more than compensated for by eliminating a huge tax
loophole that currently permits trillions of dollars of income to
remain tax-free.
Here's how this loophole works. Suppose that in 1954, a man bought
stock for $5,000, and now that stock is worth $100,000. If the man
sells it, he will have a taxable capital gain of $95,000 and will pay
at least $27,000 in taxes. But if he dies and leaves the stock to his
son, and the son sells it, there is no tax on the capital gain of
$95,000.
This loophole permits wealthy American families to pass their
property to their children and grandchildren, while completely escaping
any income taxes on huge capital gains that have accumulated over a
period of decades.
My bill would eliminate this loophole from the Federal Tax Code, and
take the revenue generated from that to provide every tax-paying
American with a tax cut. That tax cut would be achieved by lowering the
first income tax bracket from 15 percent to 12.5 percent, which means a
lower tax rate on approximately the first $22,100 of taxable income for
an individual, or the first $36,900 of taxable income for a married
couple.
My bill also would phase-in the capital gains tax on inherited
property by providing lower tax rates for those who pay the taxes in
the next few years. This provision would motivate heirs to pay their
taxes early, producing an enormous tax revenue windfall for the
Government in the years 1995-98. Thus, the Government would have a
large pot of money available to improve the quality of education,
create jobs, and reform the health care system.
I have made sure that my bill will not punish non-wealthy individuals
who happen to own homes which have accumulated substantial value over
the years. In fact, my bill provides an exemption from tax on the first
$125,000 of capital gains on the sale of inherited homes. Such a
provision is already in the tax code for individuals over the age of 55
who sell their homes.
A study by two Cornell University professors estimates that $10
trillion worth of property will be inherited over the next 45 years.
That means that there will be several trillion dollars of capital gains
that should be taxed. But the Federal Government will lose that money
unless the law is changed as I am proposing.
Mr. Speaker, I urge all Members of Congress who care about fairness
in taxation to support and cosponsor this legislation.
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