[Congressional Record Volume 142, Number 54 (Wednesday, April 24, 1996)]
[Senate]
[Pages S4082-S4083]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    A FAIR FLAT TAX TO RALLY BEHIND

 Mr. SIMON. Mr. President, there is a great deal of talk about 
what we will

[[Page S4083]]

do long term to protect Social Security.
  One relatively simple method of buttressing that fund and also 
putting the Federal Government in better financial shape is to follow 
the advice of former Massachusetts Gov. Michael Dukakis.
  He had an op-ed piece recently in the Los Angeles Times that really 
makes sense, which I ask to be printed in the Record after my remarks.
  The difficulty rests with our system of campaign financing. Those who 
benefit by the present system of not taxing incomes above $62,700 are 
the big contributors to our campaigns. Even if you do not buy the idea 
of lowering the Social Security tax, revising the exemption certainly 
makes our tax system a much more just system.
  Mike Dukakis is right.
  The article follows:

              [From the Los Angeles Times, March 15, 1996]

                    A Fair Flat Tax to Rally Behind

                          (By Michael Dukakis)

       Steve Forbes hoped to ride into the White House on a flat 
     income tax with a low-earner exemption. He apparently had a 
     lot of company, at least on the Republican side of the 
     street.
       Of course, when you look at it closely, the flat tax is 
     nothing more than another attempt to give a huge tax break to 
     wealthy taxpayers like Forbes. But it sounded good at least 
     when he first proposed it, and it transformed him, at lest 
     temporarily, into a serious challenger for the Republican 
     nomination.
       Suppose, however, that a candidate for the presidency ran 
     on a plan for a flat tax with a high-earner exemption. We'd 
     think he was out of his mind.
       Yet that's exactly how the Social Security tax works. We 
     pay a flat tax of 6.2% on every dollar we make, up to 
     $62,700. All wages above that are tax exempt.
       The high-earner exemption is as regressive as it sounds. 
     And it's taking a huge chunk out of the wages of average 
     working Americans. A worker making $60,000 a year pays eight 
     times the rate paid by someone pulling in a half-million a 
     year and 80 times the rate paid by someone making 5 million a 
     year. To put it another way: A $60,000 earner pays 6.2% on 
     all her earnings; a $500,000 earner pays the 6.2% on the 
     first $62,700, which is 0.78% of all his earnings, and the 
     earner of $5 million pays the same, which is 0.078% of his 
     earnings.
       It's bad enough that working middle class Americans are 
     feeling less and less secure. For those lucky enough to still 
     have a job in these days of massive corporate downsizing, the 
     Social Security tax is the unkindest cut of all.
       In fact, more than half the people in this country pay more 
     in Social Security taxes than they do in income taxes. And 
     you can bet they aren't among the wealthiest 20% to whom 
     virtually all income growth has gone since 1980.
       What can we do about it? It's a simple as it is common 
     sense. Get rid of the high-earner exemption, cut the Social 
     Security tax rate and apply it to all earned income--just 
     what the flat-taxers say they want to do to the income tax.
       If we made this one move, the Social Security flat tax rate 
     would decrease by 12%. Everyone earnings less than $82,000--
     that's more than 97% of American workers--would get a tax 
     break. It wouldn't increase the federal deficit one dime. But 
     it would eliminate the necessity for the kind of tax cut that 
     budget negotiators are wrestling with, which would add 
     billions to the deficit.
       Lower taxes for the overwhelming majority of working 
     Americans. Heightened fairness. A fiscally responsible tax 
     cut for the middle class. These are the goals that all fair-
     minded Republicans and Democrats should be able to support.
       Of course, people like Steve Forbes would have to pay the 
     same rate as the rest of us. But wasn't that the principle 
     behind the flat tax in the first place?

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