[Congressional Record Volume 142, Number 7 (Monday, January 22, 1996)]
[Senate]
[Page S174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                FLAT TAX

  Mr. DORGAN. Mr. President, in just a couple of moments I wanted to 
make an observation about the topic of the week last week, and I expect 
the topic for the next couple of months, that will generate a lot of 
interest. That is the so-called flat tax, or the ``Grey Poupon plan,'' 
I call it. The flat tax is a fascinating one. I call it that because it 
is kind of entertaining, always, for someone who comes from a small 
town of 300 people to watch a debate between millionaires and 
billionaires about who can propose a tax plan that will allow investors 
to get to a zero tax rate the most quickly.
  We have the Armey plan, the Forbes plan, and some others. I just 
wanted to mention, in case people hear about flat taxes and they think, 
``Gee, that sounds like a good idea, flat, curved, rolling hills, up or 
down,'' I mean, I do not know what the geometry of all of this is. But 
if you think that we should not allow a deduction for your home 
mortgage interest on your tax return, then you would really like the 
flat tax because the flat tax says you cannot deduct your home interest 
mortgage. If you think you ought to be required to take your fringe 
benefits, like your health insurance that your employer might provide 
and now start paying taxes on that, declare it as income and pay taxes, 
then you would really like the flat tax because that is what you would 
have to do. No home mortgage interest deduction, no charitable 
deduction, and they would take all your fringe benefits, add them up, 
and you start paying taxes on that income.

  Then they say flat tax, except it is not flat. It is a tax that has a 
flat rate for those who work and a zero tax rate for those who invest. 
Here is the way it works. You go to work every day and work and you are 
going to pay whatever flat tax rate they talk about. But if you happen 
to have an enormous amount of money and your income comes from 
dividends and interest and you make $10 million a year in dividends and 
interest and capital gains, your tax rate is not flat, it is zero--
zero. So it is not appropriately called a flat tax. It is flat for 
people who work and zero for people who invest.
  That might sound good, I guess, if you are a millionaire or 
billionaire and you might debate, if you are a millionaire or a 
billionaire, about which plan gets you to a zero rate first. But, in my 
judgment, the more the American people dissect this they will 
understand more what Mr. Forbes and others are talking about, that they 
really want to say, if you work for a wage you pay an income tax, but 
if you get your money through capital gains or interest or dividends 
and get $10 million a year or $1 million a year or $50 million a year, 
guess what, you do not have to pay taxes in this country because you 
are going to get an exemption.
  I tell you, I think our tax system is frightfully complicated. It 
needs to be radically simplified. But we do not need a plan that says, 
if you work you pay taxes, and if you invest you have a massive 
exemption. That is not a fair tax plan. They might call it flat, but it 
is flat and no tax, a flat tax and no tax, flat tax for those who work, 
no tax for those who invest. I think when the American people dissect 
it and take a good look at it, they are going to say, no, let us 
radically simplify the tax program, but let us have everybody pay a 
little something. If you make $10 million from interest, dividends, or 
capital gains, you pay a tax. Maybe it is flat, maybe it is not, but it 
seems to me everybody ought to contribute.

  I find it interesting in this discussion that we always hear people 
say, ``Why should you penalize success?'' Whenever they use those 
terms, they all define success as someone who has had a capital gain or 
gets a dividend or interest. What about the success of someone working? 
What about someone who goes to work every day all year and takes care 
of his or her family and earns a wage; is that not success? Of course 
it is. Working is achieving success as well. Work, investing, managing, 
entrepreneurship, all of that is success. It is not just investment 
that is successful. Work is successful. Let us just make sure we have a 
tax system that recognizes that all of those folks in this country are 
successful.
  We do not want to create a circumstance where we say America has an 
income tax, but it only applies to those who work for a wage. Those who 
are fortunate enough to have inherited $100 million or reached a 
position in life where they have $50 million and they collect $1 
million or $10 million a year in dividends, they have decided that they 
do not have to pay taxes.
  So I hope, as we think through this this year, that we will come to 
an understanding of what all these proposals are and how they affect 
various parts of this country.
  Let me end where I began, Mr. President. I know that no one is 
waiting for time, and you have been generous with the time today.
  I hope that all of us, no matter how passionately we feel about all 
of these issues this year, will decide that we can work together. We 
might have deep disagreements about a lot of issues. But democracy only 
works if all of us in this room decide to work together to try to 
bridge our differences. We can spend all of our time building walls, or 
we can spend some of our time starting to build bridges. It makes a 
whole lot of sense for us to tone down the rhetoric just a bit and have 
the deep disagreements and work through these things but start solving 
problems for the American people rather than creating problems for the 
American people.
  I hope that at the end of 1996 the legacy will have been that we 
turned the corner and created a much more productive role in the life 
of this country than we did in 1995.
  Mr. President, I yield the floor.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MURKOWSKI. Mr. President, I ask unanimous consent that I may 
speak as in morning business for a few minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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